Auditing typically refers to budget audits or an objective examination and evaluation of a company’s financial statements – usually performed by an external third party. There are mainly three types of Audits, Internal audits, External audits, and Government audits.

Internal Audits: Internal audits are performed by the employees of the company, these audits are not shared with outsiders except the internal employees of the organization. It is usually prepared for the usage of management and internal stakeholders. Management teams also can utilize internal audits to spot flaws or inefficiencies within the corporate before allowing external auditors to review the financial statements.

External Audits: External Audits are performed by third parties and external organizations. They provide unbiased views that internal auditors might not be able to give. External financial audits are utilized to work out any material misstatements or errors during a company’s financial statements. The main difference between internal and external auditors is that external auditors provide the right set of information that is unbiased and independent whereas internal auditors might not provide unbiased information because it is affected by the employee-employer relationship.

Government Audits: Government audits are prepared to make sure that the financial statements are maintained accurately by the opposite parties, to not misrepresent the quantity of taxable income of a corporation. Government auditing is also known as Yellow Book, it provides a high-quality standards framework to bring parity with integrity, professionalism and competence. It is usually an independent and systematic examination of financial statements like other public operations. It is for the purpose of evaluating and verifying, that is presented as a report containing explanatory reports comments on audit findings.