Reasons for auditing
An obvious starting point in the discussion of any topic is the definition of
the term to be discussed or studied. So what do we mean by ‘auditing’?
Auditing has at its root a fundamental mistrust of other people. We cannot
be sure that passengers on a subway train have a valid ticket so we have
ticket inspectors to check or automatic barriers to prevent passengers
passing except on the presentation of a valid ticket. This is a form of
check or control or ‘audit’. This sort of activity has a number of benefits;
it prevents or reduces fare-dodging (a preventative effect), it means that
more passengers will purchase a valid ticket since they may fear being
caught (a deterrent effect) and it lends a sense of credibility and fairness
to the whole system in the eyes of the public who one way or another are
financing the system.
This is a simple form of check or control. I am sure that you can think
of many more examples from everyday life. A common feature will be
mistrust, even though we may not like to see things in that way. Audits
therefore have the ability to add trust to a situation and they come in
many forms, including:
• financial audits
• compliance audits
• management efficiency audits
• environmental audits
• energy audits
• social audits
• academic audits
• religious audits
• software licence audits
• circulation audits for newspapers.
Although the term ‘audit’ is used in conjunction with each of the above
items, it is probably more correct to consider most of them under the
general heading of ‘assurance’. The audit of financial statements is
one form of assurance service but assurance services are not limited to
financial information.
All these different types of assurance have different objectives and
different contexts, but they generally share one common feature – they
involve some notion of an independent check by one person upon the
actions or activities of another.
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