TYPES OF AUDITOR

TYPES OF AUDITOR

AUDITING CAN BE CLASSIFIED BY ORGANIZATION:

1.     STATUTORY AUDITS: These are audits carried out because the law requires them, statutes which requires audits to be done include the companies act 1985, the building societies act 1986, CAMA 1991 etc.

2.     PRIVATE AUDITS: A private audit is conducted into a firm's affairs by independent auditors because the owners desire it, not because the law requires it e.g. Are the audits of the account of sole traders and partnership.

3.     INTERNAL AUDIT: It is an independent appraisal of activities within the organization for the review of operation as a service to management. It is a management controls which function by measuring and evaluating the effectiveness of other controls.

CLASSIFICATION OF METHOD OF APPROACH TO WORK

The extent of work performed and the manner of audit execution differentiate them from above classification. In this regard, audits may be generally groups under the following.

1.     COMPLETE AUDIT: A complete audit is described as one in which the auditor is given unrestricted scope as to the work which he is to perform, and in which he uses his own discretion as to the extent of the detailed work. He would as such be held for failure to exercise reasonable skill and care in his work as a result of negligence. His focus is evaluating the reliability and accuracy of the internal control system and substantiating document and entries richer than by checking every item.

2.     PARTIAL AUDIT: Here the auditor is instructed to carry out particular work only or is restricted in any way to his powers of enquiry or examination. The auditor cannot be held liable for any loss arising which could only have been discovered on his instructions prevent him from examining but it is advisable that the auditor should set out clearly the fact of the case in reporting on accounts which have been subjected to a partial audit.

3.     INTERIM AUDIT: n interim audit is one that is conducted to cover certain within financial year e.g. months to months and full within the framework of complete audit to be carried out later. Here care must be taken not to overlooked aspect of full audit and to ensure work on interim audit is in anyway not altered without the full knowledge's of the auditor.

4.     SYSTEM BASED AUDIT: The system audit is a modern auditing technique which emphasis on investigating the system of internal control and its operation backed by test to substantiate the accuracy and reliability of the records. Formally an auditor has to vouch numerous documents as it was thought that the greater the amount of checking undertake the more efficient would be the audit and the more reliable auditors report. This old fashioned method of working has suspended by more scientific and statistically based methods.

5.     VOUCHING AUDIT: Vouching is the examining of document and investigating the transaction, to such an extent as the auditor considered would form a representative proportion of the whole. This method of audit is applicable to small business or newly formed companies where there is virtually no internal control system.

6.     BALANCE SHEET AUDIT: A balance sheet audit consists of verification of every item in the balance sheet. It fall essentially into partial audit class since in the main it aims at dealing with the balance sheet Items only and not with the general transaction of the period since the last balances sheets. While appropriate e.g. in the case of fixed assets and liabilities, the balances are linked up with corresponding balances at the previous date by a full consideration of the transaction giving rise to a change in the amounts such as capital expenditure, saler of assets, deprecation of assets and issued capital. The idea is closely attaching to the ascertainment of profits based on single entry bookkeeping.

7.     Management Audit: A management audit is an enquiry into the effectiveness of management e.g. intem41 auditing.

8.     Continuous and final audits: Here the auditor attends at regular or irregular intervals during the accounting period. The continuous audit must be distinguished to some extent from the "interim audit". In continuous audit; the work may be carried on the date and it is not usual to take out trial balance of the books at each attendance, but for important totals. In an interim audit, the work is usually completed to a particular interim date and the work is carried out for fixed period e.g. each quarter of the year and a trial balance is extracted. It is prepared for the purpose of dividend -declarations in the case of a company or various contractual obligations.