Definition of Audit: Types, Objectives, and Stages in the Audit Process

Definition of Audit – Most people who have had dealings with business or corporate affairs certainly understand data ownership. In running a business or operating a company, data ownership plays a very important function. It is a tool that can make a business or company a prospect and progressive.

Ownership of data is important for the purpose of evaluating sales data, available product stocks, and mandatory financial data from business people or company owners. If data ownership can be managed properly, it will have an impact on making a business or company more effective and have the ability to grow more quickly.

However, it will be a problem and can cause problems if a lot of data that is managed does not have high accuracy. Useless data is very likely to produce wrong information resulting in inappropriate decisions. Making the wrong decision will greatly impact business development, which in turn can result in a business or company losing money on a large scale.

In avoiding the emergence of useless data or wrong information, a business or company can carry out an activity to conduct a review. Review activities are commonly referred to in the business world as an audit. Audit can basically be interpreted as an activity that aims to review accurate data based on correct data and information.

Even though it seems not so impactful for a while, auditing plays a very broad role in improving the operation of a business or company. Audit itself can be a source of consideration for business people or company owners in determining appropriate and relevant decisions or actions.

Well, this article will discuss the ins and outs of an audit. Starting from the definition, type, purpose, to the benefits. For those of you who want to know and understand audit matters, you can listen to the explanation below carefully.

A. Definition of Audit

In accordance with what has been stated above, an audit is an activity to review all correct data from each report made. This is intended to check data that can be used to ensure its accuracy. The audit process itself requires data or information in a written report to be examined in detail so that nothing is useless or wrong.

The audit process also has a meaning as an evaluation activity of the organization, system, process, to products in a business or company. The audit process itself cannot be carried out by just anyone, given its important nature, audits must be carried out by parties who understand auditing so as to produce objective and honest decisions. The party conducting the audit is usually referred to as the auditor.

An audit is generally an evaluation of only financial statements, starting from individual components, even up to the company level. Furthermore, the audit process produces data that can be used by the company to become the basis and material for consideration in determining a decision.

Audit actually has a very important role like a financial report. If there is an error in the financial statements, it will certainly greatly affect the final results of the financial statements to be incorrect. Therefore, accurate data will greatly influence all decisions that can be made by a business or company. The right data will ultimately make financial reports in future policies more precise or accurate.

For example, there is a food factory that does financial reports. According to the data in the financial statements, the capital disbursed from the purchase of raw materials is said to be in accordance with reality. The truth has also been included in the financial statements. Well, the auditor can re-test the correctness of the data. Audit is the same as being the final tester of data so that the company can have the right data for the future.

If the party conducting the audit finds that income is not optimal and expenses are not effective, then the business or company has logical and appropriate reasons in accordance with the financial statements to evaluate and make changes in the future. That is what makes auditing a very big influence in a business or company related to operations for a certain period and subsequent company developments.

B. Types of Audits

After listening to the explanation of the definition of audit above, the following will explain the types of audits. Audit itself has two types which can be grouped based on the scope of its activities. Two types of audits based on the scope of activities carried out, namely:

1. General Audit

A general audit can be interpreted as a review activity as well as an evaluation carried out by an independent and competent audit or auditor. The general audit is actually almost the same as the audit process in general, the audit can be carried out using the basic professional standards of public accountants to the applicable code of ethics. This makes a general audit the type of audit most often used by companies in re-examining reports to get the right information.

2. Special Audit

Unlike general audits, special audits only have a more limited scope. However, its function is almost the same as a general audit. Special audits are quite often used in companies to carry out checks on several specified divisions, this is also only in the last year.

C. Types of Auditor Opinion on Financial Audits

Next, it will be discussed further about the types of auditor’s opinion as in financial audits. In the audit process, the auditor will sometimes express an opinion regarding the financial statements that have been examined. The auditor’s opinion here is also grouped into several types, including:



1. Unqualified Opinion

First, unqualified opinion or commonly known as unqualified opinion. This auditor’s opinion can be intended to be an opinion from the auditor without including an objection option regarding various important business or company financial points submitted by parties from management. This audit report is a form of report that is often made by auditors when they find certain circumstances.

The first situation that is often faced by the auditor for an unqualified opinion is the evidence from the audit is complete and sufficient as needed. The auditors themselves have almost the same role as well, so they need to ensure that there is compliance in carrying out field work. Not only that, the general standards that have been approved must be adhered to by the auditor in the process of conducting a review.

Meanwhile, the next situation is that the financial statements have been determined consistently and have used general accounting principles that apply in Indonesia. This includes the inclusion of sufficient explanations in the footnotes, as is the case with the financial statements.

Well, the final condition of an unqualified opinion is that there is no information that is uncertain about the development of a business or company for some time to come. This means, the contents of the report being audited can be used to make estimates and can be solved correctly and properly.

2. Qualified Opinion

After an unqualified opinion, the type of auditor’s opinion on a financial audit is a qualified opinion or it can be said to be a reasonable opinion, but with an exception. This type of opinion means that the party from the auditor who is conducting an examination of the financial statements expresses an opinion on a particular matter. Even so, the problems disclosed by the auditor on the financial statements did not have a material impact.

The thing that makes the auditor express a qualified opinion is usually a lack of evidence of competence or limitations on financial statements within the audit scope that are material. However, the absence of evidence in the financial statements is not sufficient to have an overall impact.

In addition, the auditor gives a qualified opinion when he believes there is a deviation from accounting principles in the financial statements. Financial reports where there are indications of deviations can also have a material impact, it’s just that it doesn’t really have an overall impact on the financial statements. That means, the financial reports submitted lack sufficient evidence of competence so that they are not in accordance with accounting principles.

3. Disclaimer Opinions

Disclaimer opinion is an auditor’s opinion that has a type as an opinion expressed to reject. The intended refusal is the same as the auditor’s refusal to give an opinion on management’s financial statements. This usually occurs due to the emergence of restrictions on the extent of inspection. Not only that, rejection can also be influenced by the number of uncertain estimates in the financial statements provided.

4. Adverse Opinions

The last type of opinion from the auditor can be called an adverse opinion. Adverse opinion itself can be understood as an opinion given by the auditor regarding disapproval of the audited financial statements. This adverse opinion may arise because the auditor believes the data contained in the audited financial statements does not meet the due diligence.

D. Purpose of Conducting an Audit

A business or company conducting an audit is basically a re-examination activity. In a business or company, the goal is that the audit can provide assistance to the business or company so that it can further develop. In conducting an audit, the auditor examines matters such as completeness, accuracy, existence, assessment, classification, disclosure, up to cut off.

As an activity that has a very large impact, auditing is able to influence a business or company in making appropriate and accurate policy decisions. Therefore, a business or company that has complete and accurate data has the potential to advance and develop. That is what makes auditing so important, so that businesses and companies can have and use the right data, thereby minimizing any assumptions or unfounded policy decisions.

E. Important Stages of the Audit Process for Success

In maximizing audit activities, there are several stages and steps that really support the implementation of these activities. However, please note that each stage and step in the audit determines the success of the audit carried out in a business or company. So, here are 6 stages or steps that really determine the maximum or not the maximum of an audit activity.

1. Prepare the Required Documents

The first stage or step for the success of the audit process is that the business or company completes the documents requested by the auditor. The auditor usually sends a list of files to business or company management before the audit process runs. The list of files from the auditor himself is usually called an audit checklist.

The audit process usually requires documents such as bank statements, financial notes, and general ledgers. Sometimes also, the auditor gives directions to management to send an organizational chart or structure of a business or company to be audited. Knowledge regarding the organizational structure is used by the auditor to find out the list of names from the board to other committees that play an important role in the organization.

2. Planning the audit process to be carried out

Next, the second stage or step is planning the audit process. The audit process carried out will be adjusted to the documents that have been sent by management. The audit process carried out is different, it adjusts the characteristics possessed by the auditor. However, the auditor basically still has to follow the applicable code of ethics, it looks like a number of points or lines that must be followed.

In certain circumstances, the auditor and his team may also suggest holding a risk workshop. This aims to build understanding so that the audit process runs smoothly and does not cause potential problems. When the workshop finds potential problems in the audit process, the auditor will develop an appropriate audit plan.

3. Look for the Open Meeting Implementation Schedule before the Audit Process

After the documents are ready and the auditor’s plan has been determined, the next step is to determine the schedule for conducting an open meeting before the audit process is carried out. In preparing the schedule, the auditor will present several important company staff in an open meeting before the audit process is carried out, such as Senior Management, Main Administrative Staff, or General Affair.

This open meeting is held with the aim that the auditor can explain information about the Audit Scope. Audit Scope can also be said to be the scope of the audit process carried out on business or company management. The open meeting before the audit process usually conveys the duration of the audit to a number of other matters that need to be discussed further.

This open meeting can provide an overview of the audit process to be carried out. In addition, the auditor can also reveal important points that need to be conveyed by the company’s chief of staff to the organization he leads. That is because, the audit process usually conducts interviews with several important employees of a business or company. Implementation of this open meeting will greatly determine the smooth running of the audit process.

4. Start Carrying out Fieldwork after the Open Meeting

The next step is to start fieldwork by communicating to company staff members to review procedures in the audit process. Several auditors will also examine the management compliance aspects of a business or company related to written financial reports through PSAK provisions.

In addition, the auditor will also evaluate internal controls to ensure that management has prepared an adequate and accountable audit process. Business parties or companies that are in accordance with the applicable code of ethics, the auditor will continue the audit process at the next stage.

In the next stage, usually the auditor will discuss with the business or company about the problems that arise. Thus, the business or company can make preparations or provide opinions on problems that arise in the audit process being carried out.

5. Prepare an Audit Report

The next stage of the audit process is to prepare and prepare audit reports that have been carried out. The audit report will contain various information obtained from the audit process. An audit report is information that describes in detail about the errors or problems found after re-examining data owned by a business or company.

There is information regarding errors or problems found in the audit report, the auditor will provide suggestions and input. Businesses and companies that receive the results of the audit report indicate that the audit process has been completed. This will greatly impact the company to understand the solutions that can be done.

6. Solicit Client Feedback at the Closing Meeting

The final stage in the audit process is to hold a closing meeting with the company or business in order to obtain more detailed and more precise data. In this closing meeting, the auditor will listen to all responses and opinions from the company or business regarding problems or findings in the audit report. The auditor will also make a description regarding the planning on the part of the company or business so that they can overcome the findings or problems in the audit report.

During the closing meeting, the auditor also provided information regarding the completion date of the audit process to be agreed upon by the company or business. In addition, the company and the auditors can also hold discussions about the contents of the audit report, so they can produce a more complete audit report.

If during the discussion again problems are found in the implementation of the audit process, the company and the auditors can determine a joint solution in the closing meeting. It is intended that when the audit has been completed, the company does not propose to discuss the audit again. Therefore, the company or business must be competent and adequate in complying with all audit processes.