Please explain the type of audit and describe them

Rucha rajesh shingvekar

1. Internal audit Internal audits take place within your business. As the business owner, you initiate the audit while someone else in your business conducts it. Businesses that have shareholders or board members may use internal audits as a way to update them on their business’s finances. And, internal audits are a good way to check in on financial goals. Although there are many reasons you may conduct an internal audit, some common reasons include to: Propose improvements Monitor effectiveness Make sure your business is compliant with laws and regulations Review and verify financial information Evaluate risk management policies and procedures Examine operation processes 2. External audit An external audit is conducted by a third party, such as an accountant, the IRS, or a tax agency. The external auditor has no connection to your business (e.g., not an employee). And, external auditors must follow generally accepted auditing standards (GAAS). Like internal audits, the main objective of an external audit is to determine the accuracy of accounting records. Investors and lenders typically require external audits to ensure the business’s financial information and data is accurate and fair. Audit reports When your business is audited, external auditors usually give you an audit report. Audit reports include details of the audit process and what was found. And, the report includes whether your financial records are accurate, missing information, or inaccurate.