1} What are the types of Audit ?

Ans)Main types of audit engagements

and services include:

• 
  

External

External audit, also known as financial audit and statutory audit, involves the examination of the truth and fairness of the financial statements of an entity by an external auditorwho is independent of the organization in accordance with a reporting framework such as the IFRS. Company law in most jurisdictions requires external audit on annual basis for companies above a certain size.

The need for an external audit primarily stems from the separation of ownership and control in large companies in which shareholders nominate directors to run the affairs of the company on their behalf. As the directors report on the financial performance and position of the company, shareholders need assurance over the accuracy of the financial statements before placing any reliance on them. External audit provides reasonable assurance to the owners of the company that the financial statements, as reported by the directors, are free from material misstatements.External auditors are required to comply with professional auditing standards such as the International Standards on Auditing and ethical guidelines such as those issued by IFAC in order to maintain a level of quality and trust of all stakeholders in the auditing exercise.

Internal

Internal audit, also referred as operational audit, is a voluntary appraisal activity undertaken by an organization to provide assurance over the effectiveness of internal controls, risk management and governance to facilitate the achievement of organizational objectives. Internal audit is performed by employees of the organization who report to the audit committee of the board of directors as opposed to external audit which is carried out by professionals independent of the organization and who report to the shareholders via audit report.

Unlike external audit, whose scope is primarily restricted to matters that concern the financial statements, the scope of work of an internal audit is very broad and can encompass any matters which can affect the achievement of organizational objectives. Internal audit is typically centered around certain key activities which include:

2} What are the features of Audit ?

Ans) The essential features of auditing (as per ICWAI, India) are:

1. making a critical review of the system and procedures in an organisation;

2. making such tests and enquiries into the results as well as the operation of such systems and procedures, as the auditor may consider necessary to form an opinion;

3. expressing that opinion in the accepted phraseology that has been developed;

4. Ensuring that the opinion covers all aspects which are required to be covered by law or accepted professional norms.

The value of audit is in its independence and the auditor should report directly to the managing director.