What is Auditing?

Based on A. Tuovila (2020), A financial statement audit is the most common type of
audit. A financial audit is an impartial analysis and review of an organization's financial
statements to ensure that they are a fair and correct reflection of the transactions they
appear to represent. The audit can be carried out internally by company employees or
externally by a firm of Certified Public Accountants (CPAs).
Types of Audits
External Audits
Audits conducted by third parties can be extremely beneficial in removing any bias from
a review of a company's financials. Financial audits are conducted to determine whether
the financial statements contain any material misstatements. A financial statement user
can be confident that the financials are accurate and complete if the auditor's opinion is
unqualified, or clean. As a result, external audits enable stakeholders to make better,
more informed decisions about the company under audit.
External auditors work under a different set of criteria than the corporation or agency
that hired them to do the job. The most significant distinction between an internal and an
external audit is the principle of the external auditor's independence. When third parties
conduct audits, the resulting auditor's opinion on the things being audited (a company's
financials, internal controls, or a system) can be frank and truthful without impacting
everyday work relationships.
Internal Audits
Internal auditors are hired by the corporation or agency they are auditing, and the audit
report is sent to management and the board of directors directly. Although consultant
auditors are not paid by the organization they are auditing, they use the company's
standards rather than their own. These auditors are used when a company does not
have the capacity in-house to audit some aspects of its operations.
The internal audit's findings are used to make managerial changes and strengthen
internal controls. An internal audit's goal is to ensure that laws and regulations are
followed, as well as to ensure that financial statements and data collection are reliable
and timely. It also benefits management by finding weaknesses in internal control or
financial statements before external auditors examine it.
Source: https://www.investopedia.com/terms/a/audit.asp