Audit FAQ
Q: What is an audit?
A: An audit is an unbiased evaluation of an organisation’s financial accounts and records to determine its accuracy.
Q: Why audit?
A: An audit is necessary to:
- Locate errors in the business
- Identify areas of improvement in the company
- Discover fraudulent occurrences, if any
- Increase the credit standing of a business
- Determine and improve the efficiency of employees
- Settle business disputes (e.g. infringement of trademarks and patents)
- Analyse your company's financial data
- Protect the public from exploitation
- Inform the shareholders about the performance of management
Q: What is an internal audit?
A: An internal audit is an analysis of a company’s reports and records by its own employees. Internal audits aim to prevent fraud and guarantee compliance to company policies and board directives.
Q: What is an external audit?
A: An external audit, on the other hand, is an evaluation of a company’s reports and records by an outside party.
Q: Who conducts audits?
A: In Australia, private audits are typically conducted by Certified Practising Accountants, Chartered Accountants, Public Accountants or Certified Internal Auditors. Auditing of the federal government is conducted by the Australian National Audit Office. The Australian Taxation Office conducts tax audits on individuals and businesses as well.
Q: What does RCA mean?
A: RCA stands for registered company auditor. Registration of RCAs is approved by the Australian Securities and Investments Commission.
Q: What is a statutory audit?
A: A statutory audit is a legally required analysis of a company’s financial accounts. The purpose of a statutory audit is the same as any audit: To see if the organisation is giving an accurate representation of its financial standing.
Q: What are the standards in auditing?
A: The Auditing and Assurance Standards Board is an agency of the Australian government, which develops, issues and maintains auditing standards in the country. The board issues Australian Auditing Standards, which are based on International Auditing Standards. This means Australia’s auditing guidelines are in line with international standards.
Q: Why should organisations have internal audits?
A: Internal auditing serves as an organisation’s safeguard for following regulations and best business practices. It also analyses the effectiveness of operations. Organisations that don’t audit internally are missing out on benefits that professional auditors provide. They also risk depending too much on management, who may not always be able to provide skilled and impartial judgments.
Q: What is internal auditing’s role in averting, uncovering and investigating fraud?
A: Internal auditors help management in evaluating internal regulations used for uncovering fraud, assess the organisation’s fraud risk and take part in fraud inquiries.
In terms of preventing fraud, internal auditors can help several ways:
- Advise an organisation's leadership on methods to safeguard honesty and integrity.
- Improve training programmes related to fraud.
- Detect potential fraud risks and recommend ways to improve.
Auditors can also help greatly in fraud investigations by doing the following:
- Gather evidence and study why guidelines fail and enable fraud.
- Make recommendations for improvement.
- Assist in detecting and investigating fraud.