External Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions.
The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organization at a given date. There are various types of external audits, each conducted to provide assurance to the investors, detect any errors and frauds, check accounting policies and verify accounts and statements.
The different types of External Audit include:
Financial Audit: A financial audit is an opinion engagement – performed independently by an audit professional – who is acting with due diligence, working in line with the professional standards, and preparing an audit report for the consumption of investors and management, to aid in decision-making, leading to business growth.
Compliance Audit: A compliance audit is one conducted in many large-scale enterprises for data privacy and critical infrastructure protection. A compliance audit ensures that the established rules and procedures are followed to ensure the above.
Operational Audit: An operational audit is nothing but a thorough check on the processes being followed within an organization. The objective for this is clear – where can there be process improvements to minimize risk and maximize growth within the company? Through an operational audit, an audit develops recommendations for improvement, thereby simplifying methods being followed. Simultaneously, auditing services in DAFZA also include statutory audits, which are performed keeping in mind the requirements of the free zone.
The goal for all external audits is simple – to ensure that every organization adheres to managerial procedures and requirements, and to provide an opinion on the organization’s financial statements.
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