Audit is an independent economic supervision activity authorized or entrusted by the state to examine and supervise the authenticity, correctness, compliance, legality and efficiency of the audited entity's finance, financial revenue and expenditure, business management activities and related materials, evaluate economic responsibility and verify economic business in accordance with national laws and regulations, auditing standards and accounting theory, so as to maintain financial discipline, improve business management and improve economic efficiency.
Classification by audit execution subject
According to the nature of the subject of audit activities, audit can be divided into three types: government audit, independent audit and internal audit.
Government audit (government audit)
Government audit is an audit conducted by government audit institutions according to law, which is generally called national audit in China. China's national audit institutions include the Audit Office located in the State Council and its dispatched offices, and the audit offices (bureaus) established by local people's governments at various levels. State audit institutions independently exercise the power of audit supervision according to law, and conduct audit supervision over the finance, financial revenue and expenditure and economic benefits of various departments and local people's governments, national financial institutions, state-owned enterprises and institutions and other units with state-owned assets in the State Council. Government audits in all countries have the compulsion to perform the audit supervision duties entrusted by law.
Independent audit (independent audit)
Independent audit, that is, the audit activities entrusted by certified public accountants with compensation, is also called private audit. In the Basic Standards for Independent Auditing issued by China Institute of Certified Public Accountants, it is pointed out: "Independent auditing means that certified public accountants are entrusted by law to independently review the accounting statements and related materials of the audited entity and express their audit opinions." Independent audit has great risks and heavy responsibilities, so the emergence, development and reform of audit methods are basically carried out around independent audit.
Internal audit (internal audit)
Internal audit refers to the independent review and evaluation of the financial revenue and expenditure and economic activities of the unit by specialized internal audit institutions and personnel, and report the audit results to the main person in charge of the unit. This kind of audit is obviously constructive and introverted, and its purpose is to help units improve internal control, improve management and improve economic benefits. In western countries, internal audit is generally regarded as the eyes and ears, assistant and consultant of the general manager of an enterprise. In 1999, the board of directors of International Institute of Internal Auditors (IIA) adopted a new definition of internal audit, pointing out: "Internal audit is an independent and objective guarantee and consulting service. With the goal of adding value and improving operation, it evaluates risks and improves risk control and organizational governance structure through systematic and standardized means, thus achieving the established goals of the organization. "