An audit, where an auditor expresses positive assurance, is the highest level of service an auditor can perform. However, there are three main types of audits that can be performed. Each type of audit has a different objective, however many of the standards and procedures tend to be the same.
- A financial statement audit’s goal is to make sure the financial statements are in conformity with generally accepted accounting principles (GAAP). Auditors perform financial audits by complying with Generally Accepted Auditing Standards (GAAS). These standards help an auditor obtain reasonable assurance that the financial statements are free of material misstatements.
- An integrated audit, is similar to a regular financial statement audit, however according to the Sarbanes Oxley Act, it is required specifically for public companies. An integrated audit provides positive assurance that the financial statements are free from material misstatements and reports on the operating effectiveness of internal control over financial reporting.
- A compliance audit is an audit which requires testing to evaluate if an organization has complied with laws, regulations and agreements. All compliance audits are conducted in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Governmental Auditing Standards (GAGAS).
- Governmental and not for profit entities who receive financial assistance of $500,000 or more from the federal government are subject to audits in accordance with the Single Audit Act (OMB Circular A-133).
- An operational audit is when an internal auditor measures the efficiency, effectiveness and economy of an entity's operations to consider whether managements objectives are being met. These audits help managers determine which unit or section of a business are profitable, efficient and most effective in carrying out the entity’s goal.
- According to the Institute of Internal Auditors (IIA), internal auditing helps an entity achieve its objectives. It not only helps evaluate an entity's operations but also helps determine if they are running efficiently. Lastly, internal auditors have there own auditing standards they must comply with.