Types of audit can be classified as under:-
- Statutory Audit:- Where the appointment of the auditors, manner of audit, contents of audit reports etc are specifically mentioned in the Act, the audit conducted according to them is called statutory audit. Statutory audit is carried each year by an auditor, is called statutory auditor. In India, the accounts of joint stock companies, banking companies, insurance companies, co-operative societies, trust institutions are subject to compulsory audit.
- External Audit:- When the auditor is not appointed by the management. For example director of the company can not appoint the statutory auditor directly but the statutory auditor is appointed by the shareholders. It means the statutory auditor is also called an external auditor.
- Internal Audit:- When the appointment of auditor is made by the person responsible for the performance of the entity, he is called internal auditor and the audit done by him is called internal audit. Internal auditor is the employee of the company and gives his report to management only. Internal auditors not only audits the financial data but also evaluates the existing systems, operations and policies to suggest improvement in respect of them.
- Continuous Audit:- When the auditor visits his client in regular or irregular intervals during the financial year and checks each and every transaction. At the end of the year, he checks the profit and loss account and balance sheet.
- Final Audit or Complete Audit:- It is done after the close of financial year or when the final accounts are prepared. The audit is completed in one continuous session.
- Interim Audit:- An audit which is conducted in between the two annual audits with a view to find out out interim profit to enable to company to declare an interim dividend, is called interim audit. It is a kind of audit which is completed between the periodical or balance sheet audit.
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