Essential Features of an Audit
Auditing is concerned with the verification of accounting data by determining the accuracy and reliability of accounting statements and reports.
The audit is structured into activities that follow a logical sequence. The audit will focus on the management and delivery of the electronic device, which supposes fluxes of electronic equipment and procedures of treatment specific associated.
There are six essential features or characteristics of Auditing are;
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
The audit is one of the most dynamic areas of the accounting sciences.
The word “audit” has Latin origins (audire, means listening). During the time, this word has known a lot of definitions and classifications. In general, it is a synonym to control, check, inspect, and revise.
While the accounting has suffered a little change in time, the audit has permanently evolved, answering to the changes in the environment and modifying its objectives starting the middle age, passing through the industrial revolution up to the 21st century.
Companies prepare financial statements of their activities, which represent their overall performance. These financial statements are examined and evaluated by independent persons, who assess them according to the industry’s generally accepted standards.
This examination and evaluation is an audit.
Thus, an audit is an examination and verification of a company’s financial and accounting records and supporting documents by an independent professional against established criteria.
The vital functions of Auditing are explained below;
- Systematic process
- Auditing is a systematic and scientific process that follows a sequence of activities, which are logical, structured, and organized.
- Three-party relationship
- The audit process involves three parties, that is, shareholders, managers, and the auditors.
- Subject matter
- Auditors give assurance on a specific subject matter. However, the subject matter may differ considerably, such as – data, systems or processes and behaviour.
- Auditing process requires collecting the evidence, that is, financial and non-financial data, and examining thereof.
- Established criteria
- The evidence must be evaluated regarding established standards, which include International Accounting Standards, International Financial Reporting Standards, Generally Accepted Accounting Principles, industry practices, etc.
- The auditor has to express an opinion as to the reasonable assurance on the financial statements of the entity.
Conclusion on Audit Features
Audit Features influences the objectives of the audit to refer to the
security of the information and systems, the protection of the personal data, the access to
some databases with a sensitive informational character.