It is a general rule of thumb that if you want everything to go smooth within your business, you have to pay a lot of attention to your records’ accuracy. Unfortunately, most business owners do not underestimate the importance of audits within a business, whereas audits can be quite beneficial for your organization.
Therefore, Prestige Auditor’s team is going to tell you the different types of audits that every taxpayer should be aware of. Also, you can read this blog, and learn how to improve your business by yourself.
But, first of all, let’s try to understand the main purpose of an audit for your business.
Generally, the main goal of an audit is to examine records and transactions in order to ensure their accuracy. As a rule, both you and your employee can conduct an audit; however, if you want to do everything in accordance with all the IRS’ requirements, it is better to trust this process to professional experts like Prestige Auditors.
Types of Audits
Different types of audits can vary depending on the type of business. However, their main goal is to ensure that everything goes well within your business. So, let’s start.
Generally, the necessity of this type of audit comes when a business has several shareholders, and one of them initiates to conduct an audit. An internal audit is the best way to check the company’s financial goals.
As a rule, there are different issues which may become a reason for conducting an internal audit, among them are:
- Monitoring the effectiveness of operation
- Proposing the company’s effectiveness
- Verifying the company’s financial information
- Checking whether the business is compliant with laws and requirements.
- Examining the company’s entire operation
This type of audit is conducted by a third party: the IRS, an accountant or tax professionals. The main idea is that the external auditor must not have any connection to your business and have to be guided by generally accepted auditing standards (GAAS). The main goal of an external audit is to make sure of the accuracy of your accounting records.
Having finished the audit, a business owner is provided with an audit report which includes detailed information concerning the audit process and all the errors which have been found during the process.
IRS Tax Audit
The main aim of the IRS tax audit is to ensure that your company’s tax returns are filed in proper way. Additionally, auditors have to ensure that your organization did not overpay or underpay taxes, and find out all the mistakes that you have made when you were filing your tax returns.
This type of audit is one of the most popular and commonly used ones. In the process of conducting a financial audit, the auditor checks the fairness of your company’s financial statements. Among the main functions are: review transactions, procedures and balances to run a financial audit. After conducting an audit, an auditor comes up with their audit opinion concerning your business. We also suggest that you read this blog about how to develop your financial goals.
An operational audit has lots of similarities with an internal one. This type of audit analyzes your business’s main goals, planning process, and results. Usually, it is conducted internally; however, there are some cases when it can be conducted in an external way. The main purpose of an operational audit is to develop businesses and detect possible errors.
This type of audit is aimed to examine your business’s policies in order to understand whether they comply with all the required standards and with the IRS regulations.
Information System Audit
Information system audit mostly refers to software and IT companies in order to identify issues concerning software development and computer systems.
A payroll audit’s main goal is to check your business’s payroll processes. During a payroll audit, the auditor considers different payroll aspects such as wages, tax withholdings, pay rates and employee information.
The main goal of a pay audit is to detect pay discrepancies among employees. During this audit, the auditor analyzes factors such as employees’ religion, gender and disparities. Additionally, you can ensure whether your employees are paid fairly or not.
Any audit is an important part within a business. That’s because it will help you detect any errors in advance, and take proper steps for solving them. In this case, you will be able to find serious problems at their early stages.
If you have difficulties in your business and want to find a way to solve them, then you should contact Prestige Auditors and we will gladly help you improve your business. Among our services: Detecting errors, staying organized, finding financial errors, developing your business. Guess what? There’s more! Visit our website and you will find more information concerning services provided by our team.