About Audits. Part of lecture 5.docx

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Management and Organizational Studies
Management and Organizational Studies 1023A/B
Maria Ferraro

The Auditor Types of audits - Tax - Operational - Compliance - Financial statements - Fraud Tax Auditing Sales tax Are on goods and services Payroll Tax Government deducts it on your cpp, and other taxes, where you work. Income Tax Tax deducted on personal income. Revenue Canada does not use GAAP because business can lower tax. They will make decisions on how much can a corporation deduct. - Non-profits don’t get audited for tax. Internal Auditing - Internal audit department, are the employs within the corporation. - Internal audits report to Chief financial officer - Help company accomplish objectives - Not necessary to do internal audits. Mostly publically traded companies will have internal audits or growing companies. - Compliance with laws, regulations and contracts. - Reliability and integrity of financial and operational information. - Effectiveness and efficiency of operations. External Auditing - Companies prepare information to be used by financial decision makers. - Theses companies do so to obtain loan or sell stock.  Example. If you were buying a variety store, you would want to look at its statements. - Verification reduces the risk about the information misleading. Relationship between accounting and auditing Auditors Role o Doesn’t include financial report production o Auditing in financial reporting is a process of reducing information risk
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