The audit is an independent examination of information to provide assurance on the information or examined the subject matter.
There are 3 types of audits.
Historical financial statements audit. This audit involves an independent examination of the entity’s financial statement in order to issue an opinion on its truth and fairness.
Compliance audit. This type of audit involves performing audit procedures to determine if the entity has complied with relevant laws and regulations. For example, the auditor may audit the entity to see if it complies with environmental laws, tax laws or money-laundering laws. In many cases, a compliance audit is performed by internal auditors to help the organization avoid the risk of fines and punishment due to going contrary to laws and regulations.
Value for money audit. This is an audit that aims to establish the economy, effectiveness, and efficiency of organization operations to see if they are in line with acceptable benchmarks. Value for money audit is conducted in the situation in which it is difficult to measure the return of funds spent.