Special audit

The special audit examines an organization’s procedural aspects regarding operations/finance and other business areas.

For instance, a special audit may aim to examine/understand financial processes, applicable internal controls, business policies, accounting policies, operational compliance, operational efficiency, financial reporting, record keeping, production efficiency, and any other specialized business area consuming resources.

The prime purpose of a special audit is to use a subject expert to understand specific business area, identify friction, and provide solutions to improve relevant processes.

It’s important to note that the regulator or other stakeholders may require a special audit to provide financing or enter into some agreement with the business. However, it’s also implemented to be proactive in terms of fraud, inefficiencies, non-compliance, etc.

What can trigger a special audit?

The following events/conditions can trigger the special audit.

1. Any suspicious activities noted within the business.
2. Concerns raised by stakeholders.
3. Any recent fraud/vulnerability identified in the business processes.
4. Compliance/regulatory requirement.

Advantages of special audit

The following are the advantages of a special auditing.

1. Identification of internal control weakness.
2. Reduced risk of fraud/financial irregularities.
3. Reduced chances of non-compliance.
4. Controlled accounting and operational errors.
5. Enhanced accuracy in terms of financial reporting and record keeping.

Disadvantages of special audit

The following are the disadvantages of special audits.

1. Consumes financial resources.
2. This might lead to operational distraction.
3. It might be perceived as an excess burden on business employees.

Conclusion

A special audit refers to the examination of specific business processes/areas. This examination aims to identify any process gaps and improve them subsequently. Management, regulators, or any other stakeholder may request a special auditing.

There are various advantages of special audits. For instance, they can identify weak controls, reduce fraud risk, reduce chances of non-compliance, reduce accounting errors, and improve financial recording and record-keeping efficiency. It’s important to note that special audits can be conducted on any of the business areas/operations.