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Auditing is the on-site verification activity, such as inspection or examination, of

a process or quality system, to ensure compliance to requirements. An audit can


apply to an entire organization or might be specific to a function, process, or
production step.
3types:

Product audit An examination of a particular product or service


(hardware, processed material, software) to evaluate whether it conforms to
requirements (that is, specifications, performance standards, and customer
requirements).

Process audit A verification that processes are working within


established limits. It evaluates an operation or method against
predetermined instructions or standards to measure conformance to these
standards and the effectiveness of the instructions.

System audit An audit conducted on a management system. It can be


described as a documented activity performed to verify, by examination and
evaluation of objective evidence, that applicable elements of the system are
appropriate and effective and have been developed, documented, and
implemented in accordance and in conjunction with specified requirements.

4 Phases of an audit
1. Audit preparation Audit preparation consists of everything that is done
in advance by interested parties, such as the auditor, the lead auditor, the
client, and the audit program manager, to ensure that the audit complies
with the clients objective. The preparation stage of an audit begins with the
decision to conduct the audit. Preparation ends when the audit itself begins.
2. Audit performance The performance phase of an audit is often called
the fieldwork. It is the data-gathering portion of the audit and covers the
time period from arrival at the audit location up to the exit meeting. It
consists of activities including on-site audit management, meeting with the
auditee, understanding the process and system controls and verifying that
these controls work, communicating among team members, and
communicating with the auditee.
3. Audit reporting The purpose of the audit report is to communicate the
results of the investigation. The report should provide correct and clear data
that will be effective as a management aid in addressing important
organizational issues. The audit process may end when the report is issued
by the lead auditor or after follow-up actions are completed.
4. Audit follow-up and closure According to ISO 19011, clause 6.6, The
audit is completed when all the planned audit activities have been carried
out, or otherwise agreed with the audit client. Clause 6.7 of ISO 19011
continues by stating that verification of follow-up actions may be part of a
subsequent audit.

External audit, also known as financial audit and statutory audit, involves the
examination of the truth and fairness of the financial statements of an entity by an
external auditor who is independent of the organization in accordance with a
reporting framework such as the IFRS.
Internal audit, also referred as operational audit, is a voluntary appraisal activity
undertaken by an organization to provide assurance over the effectiveness of
internal controls, risk management and governance to facilitate the achievement of
organizational objectives.

external AuditingGives confidence in the integrity of corporate reporting for the benefit of
stakeholders and society as a whole, by providing an external and objective view on the reports
given by management.
Internal Auditing An independent, objective assurance and consulting activity designed to add
value and improve an organizations operations
. Objective is to assist management and staff in the effective discharge of their duties.
Value for Money Audit An investigation into whether or not the use of resources is economic,
efficient and effective.
To identify and recommend ways in which the return for resources employed may be maximised.
Environmental Auditing A performance evaluation which aims to help safeguard the environment.

Facilitates management control of environmental practices.

Assesses the degree of compliance with environmental legislation, external regulations and
company policies.

Public Sector Auditing National and local government, agencies, commissions, etc

Scope and objectives are affected by interests and requirements of third party organizations.
Specific requirements, relevant regulations, ordinances or ministerial directives may affect the
audit mandate.