Audit Definition, Functions, Stages, And Types

Understanding Audit, Functions, Stages, and Types –  In running a company or business, the more data you have, the better for the company. However, having low-accuracy data will only render it useless.

Misinformation in a data can cause new problems in a decision-making process. These mistakes can then have an impact on the business that is being run, such as the business becoming stagnant or not growing, and even resulting in losses on a large scale.

So that potential data and information errors do not occur, a company or business manager will do something that is better known as an audit. In short, this activity is intended to review all forms of data and information that will be managed by the company in order to avoid mistakes that may occur.

1. Definition of Audit

In a broad sense, an audit is an evaluation activity of an organization, from its systems, processes, to its products.

The audit is usually carried out by a competent, objective, and impartial auditor. In general, the purpose of the audit itself is to verify that the data evaluated by the audit is in accordance with applicable standards, regulations, and practices.

Meanwhile in the business world, audits are better known in their role as financial statements carried out by public accountants in assessing the appropriateness of a presentation of financial statements that have been made by the company with reference to legally applicable accounting principles.

Several experts have also expressed their opinions in reviewing the definition of audit in more depth.

1.1 Definition of Audit According to Experts:

  • Sukrisno Agoes (2004)

According to Sukrisno Agoes, an audit is an examination conducted by an independent party critically and systematically on the financial statements, financial records, and supporting evidence prepared by members of the company’s management in order to provide an opinion on the feasibility of a financial report.

  • Arens and Loebbecke (2003)

According to Arens and Loebbecke, audit activity is a process of collecting as well as evaluating the evidence of measurable information on an economic entity in a competent and independent manner in determining and reporting that the available information is in accordance with the established criteria.

  • Mulyadi (2002)

According to Mulyadi, audit is the process of obtaining and evaluating evidence objectively and systematically on allegations of economic activity in determining the level of conformity between existing reports and established criteria, which will then be conveyed the results to the users concerned.

2. Difference between Accounting and Audit

Auditing and accounting are terms that often appear in the study of the field of business science. Basically, the two terms have different purposes and methods. A accounting describes an activity to identify transactions and evidence that can affect a company or government.

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