What is the difference between operational audit and financial statements audit?

Answer:CTerms:Difference between financial and operationalauditing Diff:ModerateObjective:LO 26-3AACSB:Reflective thinking skills3) Which of the following isnota difference between operational auditing and financialauditing?A) Both must be CPAs.B) Operational audit reports are usually of a restricted distribution while financial auditreports arewidely distributed.C) Operational audits often cover non-financial issues while financial audits do not.D) None of the above is adifference.Answer:ATerms:Difference between operational auditing and financialauditing Diff:ModerateObjective:LO 26-3AACSB:Reflective thinking skills4) A typical objective of an operational audit is to determine whether an entity's:A) internal control is adequately operating as designed.B) financial statements present fairly the results of operations.C) specific operating units are functioning efficiently and effectively.D) operational information is in accordance with generally accepted governmentauditing standards.Answer:CTerms:Objective of operational audit

125) Discuss three major differences between operational and financialauditing.Answer:•Purpose of the audit.Financial auditing emphasizes whether historicalinformation was correctlyrecorded, whereas operational auditing emphasizeseffectiveness and efficiency.•Distribution of the reports.For financial auditing, the report typically goes to manyexternal users offinancial statements, such as stockholders and bankers, whereasoperational audit reports are intendedprimarily for management.•Inclusion of nonfinancial areas in operational auditing.Operational audits cover anyaspect of efficiencyand effectiveness in an organization, whereas financial audits arelimited to matters that directly affectthe fairness of financial statement presentations.Terms:Differences between operational and financialauditsDiff:ModerateObjective:LO 26-3AACSB:Reflective thinking skills6) Operational audits are primarily geared towards improving a company's operationalefficiency andeffectiveness.A) TrueB) FalseAnswer:ATerms:Operational audits; Efficiency andeffectivenessDiff:EasyObjective:LO 26-3AACSB:Reflective thinking skillsLearning Objective 26-41) Which of the following groups couldnotbe involved in an operational audit?A) CPA firmsB) Internal auditorsC) Government auditorsD) None of the above answers are correct; that is, all of the above couldbe involved.Answer:DTerms:Operational auditsDiff:EasyObjective:LO 26-4AACSB:Reflective thinking skills2) Which of the following statements regarding types of operational audits is likelyincorrect?A) A functional audit has the advantage of permitting specialization by auditors.B) An advantage of functional auditing is its ability to evaluate interrelated functions.

Auditing is an essential activity for small-business owners. Following proper auditing procedures helps businesses avoid tax problems later on, and helps companies assess their financial situations properly as they plan for the future. Operational and compliance auditing are two types of auditing that businesses use to enhance productivity and stay on track.

Operational Audits

1. Operational audits are for determining the operational efficiency of a company or organization. An operational audit might assess the entire organization as a whole, or a single operating unit within the company, such as the shipping department. Operational audits examine such factors as purchases, shipping and receiving activities, data processing, front office operations, and logistics. In short, an operational audit is an examination and evaluation of specific activities and how they contribute to the overall growth of a company.

Compliance Audits

1. Compliance audits differ significantly from operational audits. Compliance audits are used to determine whether or not a company has complied with the various laws and regulations required in the industry. This type of audit is especially important in the financial industry, where activities are regulated primarily by the Securities and Exchange Commission. A compliance audit generally results in the completion of a report that is provided to the appropriate government agency in charge of overseeing the industry.

Accounting

1. One place in which both operational and compliance auditing can be used is in a financial audit of a company and its accounting procedures. Most businesses comply with generally accepted accounting procedures, called GAAP. These are principles established by the Financial Accounting Standards Board. Companies that comply with GAAP will generally perform occasional audits of accounting procedures to ensure that company financial statements are correct. This can have an effect on company operations also, since many activities are dependent upon spending and revenue-generating activities.

Ethics

1. Ethical components exist in both operational and compliance auditing. Both types of auditing provide management with an opportunity to ensure that a company is on the up-and-up. Operational auditing ensures that resources are being used wisely, but it also takes into account state and federal laws. It ensures that your work force is being maximized for efficiency and profit, but without unlawful exploitation. Operational accounting can reveal when various compliance issues may be of concern, and can precipitate the need for a full-blown compliance audit. Compliance audits have an inherent ethical dimension and are designed to ensure that companies operate in the best interest of the public.

What are the differences and similarities in audits of financial statements compliance audits and operational audit?

What is the difference between financial statements and audited financial statements?

How is operational audit differs from other types of audit?

What are the 3 main types of audits?