Auditing is the on-site verification activity, such as inspection or examination, of a process or quality system, to ensure compliance to requirements. Auditing is a process of examining the financial statements of an organisation or client to view if they fairly present the operations and the financial position of an entity in order to give an opinion if they reflect the truth about the state of the affairs of the organization. As defined in (ISO 19011:2011—Guidelines for auditing management systems), an audit is an “independent systematic and documented process for collecting audit evidence (records, statements of fact or other information which are relevant and verifiable) and evaluating it objectively to determine the extent to which the audit criteria (set of policies, procedures or requirements) are fulfilled.”
They are different types of audit and some audits are named according to their purpose or scope. The scope of a function audit is a particular department or function. The purpose of a management audit relates to management interests such as assessment of area performance or efficiency. An audit is classified as internal or external, depending on the interrelationships among participants. Internal audits are performed by employees of the organization. External audits are performed by an outside agent. Internal audits are often referred to as first-party audits, while external audits can be either second-party or third-party. The auditors, both internal and external scrutinise the activities of the firm and writing reports expressing their views of their examination of the accounts.
It is so difficult to define auditing and the following are some of the authors views or definitions. International Federation of Accountants (IFAC, 2017) defined auditing as the, “independent examination of financial information of, an entity, whether profit oriented or not and irrespective of its size, or legal form, when such an examination is conducted with a view to expressing an opinion thereon.” According to, Spicer and Pegler, (2017) also defined auditing as an examination of the books, accounts and vouchers of a business, as will enable the auditor to satisfy himself that the Balance Sheet is properly drawn up, so as to give a true and fair view of the state of the affairs of the business, and whether the Profit and Loss Account gives a true and fair view of the profit or loss for the financial period, in the best interest of his information and the explanations given to him and as shown by the books; and if not, in what respect he is not satisfied.