Audit

An audit involves the review of the accounting books of the company. An audit may
be done through forensic accounting, or conducted by the company itself. If the
company is traded on a stock exchange, the audit is usually done by an official
independent body. The audit process is an in-depth examination of each financial
transaction made by a company and encompasses the total year-end accounts. Upon
the completion of the independent audit, the books and accounting procedures are
verified as accurate.

Audit Scope Definition

Audit scope, defined as the amount of time and documents which are involved in an audit, is an
important factor in all auditing. The audit scope, ultimately, establishes how deeply an audit is
performed. It can range from simple to complete, including all company documents. Audit scope
limitations can result from the different purposes listed below.
Audit Scope Meaning
Audit scope means the depth of an audit performed. Audits are performed for several purposes:
regular “checkups” of company records, to check for internal errors, for the purpose of finding
fraud inside a company, for the purpose of finding fraud in another company, or even for the
purpose of finding tax income and other offenses against IRSlaw. Due to this fact, audit scope
and objectives have a different meaning depending on the person performing the audit as well
as the reason behind the audit.
If the audit is being performed for regular internal processing, then the audit will generally only
have a scope which includes the latest period which has passed. This occurs because the
company has probably already audited the previous period.
If An Audit Reveals Fraud
If the audit is being performed to find fraud, however, it will generally have a deeper audit scope.
It may include records from years or even decades ago. This is due to the fact that, at the very
least, a violation of company policy occurred. Dedicated auditors, either company employees or
hired auditors, spend their entire career in this. They often spend much more time and look far
deeper in this process.
IRS auditors may even look at documents which were created during the birth of a company.
This is because they are trying to find errors which result in increased income for the
government as well as civil or criminal charges. A company will want to keep pristine records to
assure that the auditor does not look deeper than the audit scope documents which a company
can support.