Types of Audit:

External Audit:External Audit is that which is concerned with the critical review of the
representations made in public financial statements.
Continuous Audit: Under Continuous Audit, an auditor is required to attend at regular
intervals during financial year, say monthly, or quarterly and examines the books of
accounts.
Final Audit: A final or periodical or complete audit is that which is commenced at the
end of accounting year when all accounts have been closed and final accounts have
been prepared and is carried on until the audit work for the entire period is completed.
Interim Audit: This type of audit is conducted when the management of an
organization desires to know the trading results of the business in order to declare
interim dividend, or where audited financial statements are required to be issued soon
after the close of financial year.
Cost Audit: Cost audit is concerned with the verification and examination of books of
cost accounts in order to ensure whether these have been correctly maintained in
accordance with the system of cost accounting employed by the company.
Government Audit: The government audit is an instrument of financial control. It is
mainly concerned with the audit of receipts, expenditure, sanctions, provisions of fund,
rules and orders, debt and remittance transactions, stores and stock.
Internal Audit: Internal audit is a continuous process of reviewing and appraising all
business activities pertaining to accounting, financial and other operations. It is
conducted for providing day-to-day informations to the management.
Propriety Audit: Propriety audit is concerned with the assessment of executive actions
and plans bearing on the finance and expenditure side of thee company. This audit is
basically an expenditure audit.
Management Audit: It is an audit is to examine, review and independently appraise
the various policies of the management on the basis of objective standards. Its aim is to
reveal the shortcomings or irregularities to the management.
Usefulness of Auditing:
Fraud Detection:An auditor may detect fraud. In this way, the audit not only helps the
management in preventing and detecting frauds but also limits the temptation of
employees to perpetrate funds.
Errors Detection: It is the duty and responsibility of the employees of the business to
maintain books of accounts and other financial records correctly and accurately but a
sound system of audit may detect material errors and provide assurance to the
management.
Regularity and Vigilance of the Staff: The staff of the accounts department become
regular and vigilant due to conduct of an audit. They keep the books of account up-todate and correct. For this, the management can get any information easily without any
delay.
Reliance of Audited Accounts by Outside Parties: Audited accounts and financial
statements are considered to be more reliable for the purposes of income tax
assessments, claim for compensation, raising a loan, proposed sales of the business.
Improvement of Internal Control System: An independent audit of the entitys
account may pin point the weak areas of the internal control of the organization and

provide valuable suggestion to the management for improving the internal control and
accounting procedures.