Classification of audit

The audit may be classified into following groups:-

1. On the basis of legislative control- Statutory audit, Government audit, Private audit
2. On the basis of relation of auditor with management - External audit , internal audit.
3. On the basis of periodicity of audit- Continuous audit, interim audit, periodical audit, occasional audit.
4. On the basis of subject matter of audit- Financial audit, operational audit, cost audit, management audit.
5. On the basis of coverage of audit- Complete audit, partial audit.
6. On the basis of manner of checking- Standard audit, balance sheet audit.

• Legislative control:-

Statutory audit is a compulsory audit and is to be carried out each year by an auditor called statutory auditor. In India the accounts of the joint stock company, banking companies, insurance companies, co-operative societies, trust institutions are subject to compulsory (statutory) audit.

                   Government audit is the audit of the accounts of Union of India, Sates, Government departments, undertakings, local bodies are done by government auditors. The appointment of auditor is as per the articles of the constitution of India. Under article 148 of the constitution, the president of India shall appoint "the Comptroller and Auditor General of India" who is the prime authority in the audit hierarchy of government accounts.

                      In  case of private audit there is no statutory compulsion to get the accounts audited.

• Relation of Auditor with Management:-

The audit is said to be external if the appointment of auditor is made by persons other than those whose performance is evaluated by auditor. They present an accounts of company's performance to the share holders through P&L account and Balance Sheet. The external auditor is an independent person. The scope of his audit cannot be curtailed by the management. Generally the external auditor verifies the truth and fairness of financial information as reflected in financial statements of the entity.

                           On the other hand an audit is said to internal when the auditor is appointed by persons who are responsible for the performance of the entity. An internal auditor is usually appointed by management of the company. In many cases the internal auditor is in regular employment of the entity. The internal auditor is not independent as the scope of his work can be controlled by the management. The internal auditor submits his report to the management.

• Continuous audit:- 

         Continuous audit or a detailed audit as it is sometimes called  is an audit which involves a detailed examination of the books of accounts at regular interval if time i.e month,  months etc. The auditor visits his clients at a regular or irregular interval during the financial year and checks each and every financial transactions. A continuous audit is not much use to a small concern as its accounts can be audited at the end of the financial year without much loss of time.

• Periodical audit or final audit:-

          It is an audit which is taken up at the end of the financial year when all the accounts have been balanced and a Trading and P&L accounts and Balance sheet have been prepared. It may also commence before the final accounts are prepared and continue till the audit is completed even after the close of the financial or trading period.

• Interim audit:-

         It is an audit which is conducted in between two annual audits to find out the interim profits to enable the company to declare interim dividends.

• Occasional audit:-

          As the name indicates this type of audit is conducted once a while whenever the need arises and the client desires it to be carried out.