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What Are the Different Audit Objectives?

Audits can vary by business, but their primary goals are the same.
Audits can define and test controls, such as the procedures put in place to ensure that a manager signs off on all time cards.
A woman performing an audit.
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  • Written By: Carol Francois
  • Edited By: J.T. Gale
  • Last Modified Date: 19 October 2014
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There are typically four different audit objectives: define and test controls, verify proper procedure was followed, determine risk of audit error, and write audit opinion. There are a range of different types of audits, from financial to health and safety, but regardless of the focus, the objects remain the same. The tests used to complete the audit vary widely, however, depending upon the industry and area of focus.

An audit always is conducted by people who are not involved in the process under review. This may include staff from the internal audit department or from external auditors who work for a separate organization. The primary objectives are to review the original data to determine the level of procedural compliance, review the procedures themselves, and produce an audit opinion on the accuracy of the data and level of compliance. This usually is important in a range of different industries since business owners need to know how much they can rely on data from different areas and the level of risk in different areas of the operation.

Defining and testing controls are important audit objectives. A control is a procedure or task that prevents staff from failing to follow policy. For example, requiring the signature of the supervisor on every employee time card is a way to stop people from getting paid for time they did not work. The quality of the control, however, is based on the supervisor knowing where staff is and making sure that the time card is accurate.

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The best way to verify that the proper procedure was followed is to take a random selection of documents or information from a data set. These documents are tested for evidence of compliance. Using statistics, the auditor can determine how many documents need to be tested and the chance of an error in the data set. It is important to note that most auditors use specialized computer programs to select the appropriate number of documents to review and from where each should be selected.

Each document is then compared against company policy for compliance, in keeping with the main objectives of the audit. The rate of compliance is weighed against the data set size and the degrees of compliance failure. For example, if there was significant evidence of unauthorized payment processing, then the validity of the accounts-payable amounts would be questioned, as well as the strength of internal controls surrounding payment processing.

The risk of audit error is important. This value is the chance that the auditor arrived at the wrong conclusion. For example, if the purpose of the audit was to identify the rate of compliance with health and safety rules, and the auditor confirmed compliance was found, the audit risk is the chance that this is not the case and that the auditor missed it.

Typically, the final output of any audit is the auditor's opinion. The report is issued by the auditor to identify the procedures used, the scope of the audit, and the results of the tests. This is the final audit objective and is the report that usually is reviewed by business owners, investors, and other interested agencies.

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Discuss this Article

MarkEllis
Post 4

@lionbuild - I agree. Getting negative feedback on an audit is hard to listen to but really the best way to get better at your job.

kaifish
Post 3

Time cards seem to be where a lot of fraud takes place in my small business. This article gave me ideas on how to create stronger internal controls, like having supervisor signatures on any time cards. I will implement this right away!

kurobean
Post 2

I worked at a bank for many years as a manager. I was always surprised at how often my staff took shortcuts on what they knew was going to be audited daily, weekly, or monthly. It made me really glad we had these controls in place and could correct the sloppy procedures.

lionbuild
Post 1

As a former Emergency Call Handler I was under audit every week to ensure that calls were handled appropriately and followed protocol.

In this instance it was more a case of being educated as we advanced in the job; reviewing a difficult call was an excellent reflective tool for learning how you might be able to do it better next time.

Of course, people's safety was at risk so it could be argued that the audit was more stringent than a cold-calling sales company's.

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