What is an Audit Guide?

An audit guide is a written manual containing specific guidelines or instructions for conducting an audit. These guides are usually specific to business industries or sectors, such as brokerages, finance companies, and insurance companies. Audit guides may be based on national accounting framework principles or government regulations relating to specific business industries or sectors. Auditors use these guides to assess the financial or business operations of a company and determine if any violations or material weaknesses exist in the company’s internal or external information.

An audit guide may be developed for each type of audit conducted by a public accounting firm or other organization. Common types of audits include financial, compliance, or operational audits. The audit guide may be used by internal auditors employed directly by the company or by public auditors who conduct external audits. Internal audit guides and external audit guides usually differ in their scope for evaluating the company’s information. Internal audits are usually less formal and intended for management use only. An external audit guide is often used to assess the company’s information for release to external business stakeholders.

An internal audit guide usually tests the internal controls companies implement to protect their business and financial information. Internal controls may limit the number of duties one individual can complete in the company, restrict access to sensitive business or customer information, ensure the company is meeting requirements for professional designations, or meeting specific governmental and legal requirements. Accounting managers are often responsible for developing the internal audit guide and ensuring that the guide covers all the important business functions in the company.

External audit guides are usually developed in accordance with national accounting principles, industry regulations, third party organizations guidelines, or other various standards. An external audit guide based on the specific framework or set of principles is often seen as authoritative in that particular industry. External non-financial audit guides may also be used as a benchmark when assessing the company’s operations against the industry leader. These guides often cover technical business topics and may require an official audit opinion to be prepared once the audit is complete.

Government entities may also face audits from independent, private sector organizations that audit and assess the use of taxpayer funds collected by the entity. Government audits may use a special audit guide based on governmental accounting standards. Separate government accounting standards may be used for federal, state, or local governments, depending on the information being audited. Government audit guides typically review how the municipality separates tax receipts used to pay for public services. This information may be released in a report according to government accounting standards or requirements.