Difference Between A Formal Compliance Audit U6Q3 Public Policy - 275 Words

Difference Between A Formal Compliance Audit U6Q3 Public Policy (Coursework Sample) Content: U6Q3 Public PolicyStudents NameInstitutional AffiliationsU6Q3 Public PolicyDifference between a formal compliance audit and a performance auditThe audit is the scrutinization of financial reports such as income statement, cash flow statement, and balance sheet, a statement of changes in equity, and other notes that compose of essential accounting policies and evaluative account of a company or of an organization (Mohseni, 2014). Auditing is very important for every organization, and its main purpose is to form a judgment on whether the data described in the financial report is wholly captured, and reflects the current financial situation of an organization. Having considered the importance of auditing, there are different types of auditing, a formal compliance audit and a performance audit (Bleibtreu, 2017). A compliance audit is a traditional configuration of the auditing process. In Compliance audit, the auditor attempts to figure out the extent of a given firm ha s handled its fiscal management ventures in assent to the credited standards and laws (Bleibtreu, 2017). In this auditing method, an auditor pays a visit to faraway parts of the organization every year carrying out analysis and entries of financial ledgers and journals. After the exercise, the auditors carry out analysis of the organization entries for accuracy and if no mistakes are found, the auditor goes ahead and certifies the entries (Mohseni, 2014).However, performance audit, on the other hand, evaluates the productivity and success of the entries besides analyzing concurrence with the accepted standard, law and regulations (Mohseni, 2014). Efficiency audit does a comparison between organizations undertaking and its objective assigned. The extended range of audit is to examine the potency of an organization to attain its objectives which are not rendered in a formal compliance audit. A good example of this audit is US government income levy system. In this income tax system, tax collecting bureaus scrutinize whether the collection of taxes is done in an appropriate manner apart from just tax collection. A good example for performance audit is when the auditor examines the efficacy of purchasing raw materials from any given supplier through worthwhile methods and when the...