Auditing Profession - Example

Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria (Arens, Elder, & Beasley, 2010). Auditing should be done by a competent, independent person. Accounting is the recording, classifying, and summarizing of economic events in a logical manner for the purpose of providing financial information for decision making (Arens, Elder, & Beasley, 2010). Many people confuse auditing with accounting because auditing is usually concerned with accounting information, and many auditors have a considerable amount of experience in the accounting profession. This confusion results from the certified public accountant title given to individuals who perform audits (Arens, Elder, & Beasley, 2010). Auditors must understand the accounting data to accumulate and interpret audit evidence
Certified public accountants perform three primary types of audits; operational, compliance, and financial statement audits (Arens, Elder, & Beasley, 2010). Operational audit evaluate the efficiency and effectiveness of any part of an organization’s operating procedures and methods. At the completion of an operational audit, management notmally expects recommendations for improving operations (Arens, Elder, & Beasley, 2010). An example of an operational audit is evaluating whether the computerized payroll processing for a subsidiary is operating efficiently and effectively. Compliance audit is conducted to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority (Arens, Elder, & Beasley, 2010). They determine whether accounting personnel are following the procedures prescribed by the company controller, review wage rates for compliance with minimum wage laws, and examine contractual agreements with bankers and other lenders to be sure the company is complying with legal requirements (Arens, Elder, & Beasley, 2010). An

References: Arens, A., Elder, R., & Beasley, M. (2010). Auditing and Assurnace Serives an Integrated Approach (13 ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall. International Auditing and Assurance Standards Board. (2011). Retrieved June 27, 2011, from IFAC: http://www.ifac.org/IAASB/About.php