Anaudit is a thorough investigation and verification of a company’sfinancial records and other supporting materials by a qualifiedindividual, often a certified public accountant(PricewaterhouseCoopers, 2013). Companies are required by law to prepare financial statement aftercertain duration, in adherence to the generally accepted accountingprinciples. An auditor evaluates these financial records to examinewhether the company has followed the accounting standards. The aim ofauditing is to ensure that the financial statements reflect a fairrepresentation of the company financial position. More often thannot, the management of a company is tasked with preparing financialstatements. The auditor usually expresses an opinion highlightingwhether there are material misstatement, which may happen due tohuman error or fraud, and confirms that they are fairy represented asper the accounting standards. Nonetheless, auditing may fail todetect fraud but can provide sound assurance that financialstatements are misstated as a result of fraud(PricewaterhouseCoopers,2013).
Accountingfor not for profit organizations is different in many ways fromaccounting for- profit making organizations. The most fundamentaldifference is the concerns of the stakeholders. Stakeholders inprofit making organizations are concerned about the profitability ofthe business operation while the non-profit making bodies areconcerned about the utilization and allocation of resources based onthe firms objective (PricewaterhouseCoopers, 2013). Accounting fornon-profit focuses on tracking the contribution made to anorganization and how efficiently they are utilized. The maindifference between the accounting for profit and non-profit firms isthe concept of funds accounting. The former focuses on profitability,while the later focuses on accountability. Accounting for health careorganization (non profit accounting) would entail representation of acollection of funds each meant to achieve a specific goal and assuch should be balanced individually. Therefore, financial reportswould detail expenditure and revenue for each fund and reviewfinancial activities across all groups of funds.
PricewaterhouseCoopers(2013).Understanding a Financial Statement Audit. London,United Kingdom. Retrieved from:https://www.pwc.com/en_GX/gx/audit-services/publications/assets/pwc-understanding-financial-statement-audit.pdf