Complete Audit

Definition

A complete audit, often referred to as a comprehensive audit, involves a detailed review and assessment of a company’s internal control systems and the particulars of its books of account, including subsidiary records and supporting documentation. This type of audit seeks to ensure that financial statements are accurate, complete, and in compliance with applicable accounting standards and regulations.

Examples

Annual Financial Audit: Conducted by external auditors to provide a report on a company’s financial statements for stakeholders, investors, and regulatory bodies.
Internal Control Audit: Performed by internal auditors to assess and improve the effectiveness of the company’s internal control over financial reporting.
Compliance Audit: Reviews the company’s adherence to regulatory guidelines, laws, and internal policies.

Frequently Asked Questions (FAQs)

What is the purpose of a complete audit?

The primary purpose of a complete audit is to verify the accuracy and completeness of financial statements, ensure compliance with accounting standards, and evaluate the effectiveness of internal controls.

Who performs a complete audit?

A complete audit can be conducted by external auditors (independent firms) or internal auditors (employees of the company). External auditors provide an objective opinion, while internal auditors work to improve internal processes.

What are internal controls?

Internal controls are mechanisms and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

How frequently should a complete audit be conducted?

A complete audit is typically performed annually, especially for publicly traded companies. However, some companies may conduct internal audits more frequently to monitor and improve internal controls.

What documents are reviewed during a complete audit?

Auditors review various documents including financial statements, ledgers, journals, bank statements, invoices, receipts, contracts, and compliance records.

Accountant’s Opinion: A professional opinion provided by a certified public accountant (CPA) after examining the financial statements of a company, which outlines the accuracy, completeness, and fairness of the financial statements.
Internal Audit: An ongoing process conducted by a company’s internal auditors that reviews the company’s internal control systems and procedures to ensure effectiveness and efficiency.
Financial Statement Audit: An examination of a company’s financial statements and accompanying disclosures by an independent auditor to provide an opinion on their accuracy.

Online References

Suggested Books for Further Studies

“Auditing and Assurance Services” by Alvin A. Arens, Randal J. Elder, and Mark S. Beasley
“Principles of Auditing & Other Assurance Services” by Ray Whittington and Kurt Pany
“Internal Auditing: Assurance & Advisory Services” by The Institute of Internal Auditors

Fundamentals of Complete Audit: Auditing Basics Quiz

### What is the primary purpose of a complete audit? - [x] To verify the accuracy and completeness of financial statements. - [ ] To generate immediate revenue for the company. - [ ] To replace the financial management team. - [ ] To avoid tax payments. > **Explanation:** The primary purpose of a complete audit is to verify the accuracy and completeness of financial statements, ensuring compliance with standards and evaluating internal controls. ### Who typically conducts a complete audit for publicly traded companies? - [x] External auditors - [ ] Internal financial team - [ ] Shareholders - [ ] Government officials > **Explanation:** For publicly traded companies, complete audits are usually conducted by external auditors who provide an independent assessment. ### What are subsidiary records? - [ ] Main financial statements - [ ] Records of minor company assets - [x] Detailed supporting accounts - [ ] Personal employee logs > **Explanation:** Subsidiary records include detailed supporting accounts that back up the main ledger entries, providing a detailed layer of accuracy. ### How often is a complete audit conducted for publicly traded companies? - [ ] Monthly - [ ] Quarterly - [x] Annually - [ ] Every five years > **Explanation:** Publicly traded companies are typically required to undergo a complete audit annually to ensure the accuracy of their financial reports. ### Which document often results from an external complete audit? - [ ] Budget report - [x] Accountant's opinion - [ ] Marketing strategy - [ ] Employee handbook > **Explanation:** An external complete audit often results in an accountant's opinion, which is a professional report on the accuracy and completeness of the financial statements reviewed. ### What is a key focus of a complete audit? - [x] Financial statements and internal controls - [ ] Employee performance evaluations - [ ] Marketing materials review - [ ] Product development > **Explanation:** A complete audit focuses on financial statements and internal controls to ensure accuracy and compliance. ### What is the accountant's opinion? - [ ] A general comment about the company's market position - [x] A report on the fairness of financial statements - [ ] An assessment of employee morale - [ ] A critique of operational strategies > **Explanation:** The accountant's opinion is a report that provides an assessment of the fairness and accuracy of the financial statements. ### Which body generally regulates auditing standards? - [ ] The company’s internal finance team - [ ] Marketing departments - [ ] Human resource departments - [x] Professional accounting bodies like the AICPA > **Explanation:** Professional accounting bodies such as the AICPA regulate auditing standards to ensure professionalism and accuracy. ### What type of audit focuses specifically on compliance with laws and regulations? - [x] Compliance audit - [ ] Internal control audit - [ ] Resource audit - [ ] System audit > **Explanation:** A compliance audit specifically focuses on whether the company complies with external laws, regulations, and internal policies. ### How do internal audits differ from complete audits? - [ ] Internal audits review only financial documents. - [x] Internal audits are ongoing and focus on improving internal processes. - [ ] Internal audits are conducted by external auditors. - [ ] Internal audits are less detailed than complete audits. > **Explanation:** Internal audits are usually ongoing and focus on improving the company's internal processes, whereas complete audits are more extensive and often performed annually by external auditors.

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