Audit services are an accounting function offered by public accounting firms or private certified public accountants (CPA) in the business environment. Audits are typically an external review of the company’s financial or business information for a variety of purposes. Companies typically use audits to assure company stakeholders that the company’s financial information is accurate or that the company is operating according to a specific set of guidelines. Common audits used in the business environment include financial, operational, compliance, information technology and advisory services.
Financial audit services are perhaps the most common type of audit. These audits include a review of the company’s financial accounting processes and measure how well the company is recording and reporting financial information to internal and external stakeholders. Auditors usually test the company’s financial information against a standardized set of accounting principles, such as the generally accepted accounting principles (GAAP) in the United States (U.S.) or the International Financial Reporting Standards (IFRS) used in many countries.
Operational audit services help ensure that a company’s individual business departments are operating according to specific business standards. While companies may use external auditors to perform this function, operational audits may also be conducted by company employees. When company employees conduct the audit, it is commonly referred to as an internal audit. Internal audits are usually less formal than external audits and are primarily used for management review.
Compliance audits are conducted to ensure that companies are following a specific set of guidelines, usually from an external organization. These audit services may be used by government regulators, insurance companies or professional organizations that give companies a professional designation. The Occupational Health and Safety Association (OSHA) is an organization in the U.S. that uses compliance audits to ensure its members meet certain business operational standards.
Information technology audit services are conducted by external auditors to ensure that companies are properly maximizing the business technology currently used in their operations. This audit usually reviews the individual business technology components used by the company and ensures that no opportunities exist for internal or external abuse. Companies with high levels of business technology, such as Internet retailers or business fulfillment companies, may require more information technology audit services to ensure important business information cannot be compromised by hackers or computer viruses and worms.
Consultation or advisory audit services may be offered by public accounting firms as an initial review of a company’s business operations. These services are usually less intense than traditional audits. Consulting and advisory services are normally used to determine what type of audit a company may need and how much it may cost. Public accounting firms that provide consulting services may not be able to conduct an audit of the company, depending on the particular jurisdiction's industry accounting rules and regulations.