Why is an audit considered to be the final phase of a budgetary process?
We will write a custom Assessment on Audit in Business and Public Organizations specifically for you
301 certified writers online
Auditing is a crucial process undertaken by accounting professionals to inspect an organization’s performance. The ultimate objective is to ensure that the presented non-financial and financial statements or reports are fair and justifiable. Santiso (2015) indicates that auditing should be studied as the final stage or phase of every budgetary process. The financial plan of every corporation has a lifecycle. Typically, the process begins with the planning stage and ends with the evaluation phase (Santiso, 2015). However, monitoring must be done continuously in order to maintain internal control and ensure that budgetary constraints are taken into consideration.
During the process, discrepancies and overruns (or overspendings) tend to be identified by auditors. There is always a need for a thorough auditing process in every public or private organization. This practice will usually take place at the end of every fiscal year. It is undertaken to examine end-year statements and financial reports in order to ensure that they are accurate. Recommendations are provided by the audit team after the procedure is successfully completed. After this practice is undertaken, it can be asserted that the budgetary phase has been completed effectively. Many experts acknowledge that auditing is a powerful procedure since it makes it easier for stakeholders to assess compliance with accounting requirements and budgetary practices (Pitt, 2014). This final phase of the budgetary process examines how funds have been spent throughout the year, and if the targeted organization or institution has realized its financial objectives. Emerging issues are identified and shared with different policymakers. Such stakeholders are required to make appropriate decisions or implement desirable changes.
What organizations undertake governmental program evaluations, and why do they do it?
Governmental program evaluations are usually undertaken in order to determine whether a specific project will be effective and meet the needs of different stakeholders. Such practices are needed in an attempt to strengthen existing programs and ensure that new ones transform the lives of the greatest number of people. There are various organizations that are required to undertake governmental program evaluations. Some of them include public institutions and state-managed corporations (Posavac, 2016). Examples include public universities, airlines, and hospitals. Non-governmental organizations (NGOs) such as the American Red Cross can also complete such studies if they want to achieve their potential.
There are several reasons why the above public organizations undertake governmental program evaluations. The first one is that the procedure presents meaningful insights regarding the effectiveness of a given project. The inclusion of different stakeholders, such as community members and policymakers, is an approach that ensures that every issue is identified and addressed efficiently. The second one is that the evaluation process can present evidence-based insights for improving the targeted program and ensuring that most of the challenges affecting different people are addressed. Thirdly, program evaluation can also be undertaken to estimate the number of funds that are required to support the intended project. Fourthly, public organizations, and projects have been associated with increased cases of embezzlement and corruption (Posavac, 2016). The efficient evaluation has, therefore, been outlined as one of the powerful approaches for improving the level of accountability. This means that different individuals involved in the project will be willing to complete their tasks diligently and utilize public resources effectively. When these issues are understood or taken into consideration, every governmental program evaluation will ensure that the needs of the greatest number of citizens are met.
What is the difference between a formal compliance audit and a performance audit?
There are different types of audits that are completed in business organizations. Some of them include performance (also known as operational) and compliance auditing. The main difference is that performance auditing seeks to improve the effectiveness of an organization while compliance auditing is undertaken to examine whether procedures and financial reports are in accordance with existing policies, procedures, or regulations (Santiso, 2015). This means that it would be impossible to execute better business practices using compliance auditing. In terms of focus, performance auditing targets a company’s objectives while compliance auditing monitors accounting practices or transactions. According to Santiso (2015), performance auditing is unique for every business organization or company. This is true because different methods can be embraced. On the other hand, compliance auditing must follow standardized criteria and methods. Inferences are made after the process is completed successfully. Compliance audits should be presented in standardized formats, while performance audits can use diverse versions.
A good example of a performance audit is a budgetary procedure undertaken to monitor the efficiency of an organization and/or its approaches to waste management (Santiso, 2015). This type of audit can present inferences for making timely improvements or changes. Another example is an audit completed to examine the profitability of a given department or unit in a business organization (Pitt, 2014). The best example of a compliance audit is the one undertaken to determine if a given corporation follows the outlined Environmental Protection Act (EPA) guidelines for disposing of wastewater. These types of audits are, therefore, crucial since they work synergistically to ensure that a given organization is profitable and operates in accordance with every existing regulation.
Pitt, S. A. (2014). Internal audit quality: Developing a quality assurance and improvement program. New York, NY: Wiley.
Posavac, E. J. (2016). Program evaluation: Methods and case studies (8th ed.). New York, NY: Routledge.
Santiso, C. (2015). Why budget accountability fails? The elusive links between parliaments and audit agencies in the oversight of the budget. Brazilian Journal of Political Economy, 35(3), 601-621. Web.