Audit Scope Definition
Audit scope, defined as the amount of time and documents which are involved in an audit, is an important factor in all auditing. The audit scope, ultimately, establishes how deeply an audit is performed. An audit scope can range from simple to complete, including all company documents. Audit scope limitations can result from the different purposes listed below.
Audit Scope Meaning
Audit scope means the depth of an audit performed. Audits are performed for several purposes: regular “checkups” of company records, to check for internal errors, for the purpose of finding fraud inside a company, for the purpose of finding fraud in another company, or even for the purpose of finding tax income and other offenses against IRS law. Due to this fact, audit scope and objectives have a different meaning depending on the person performing the audit as well as the reason behind the audit.
If the audit is being performed for regular internal processing it will generally only have a scope which includes the latest period which has passed. This is because the previous period probably already has been audited.
If the audit is being performed to find fraud, however, it will generally have a deeper audit scope. It may include records from years or even decades ago. This is due to the fact that, at the very least, a violation of company policy occurred. Dedicated auditors, either company employees or hired auditors, spend their entire career in this. They often spend much more time and look far deeper in this process.
IRS auditors may even look at documents which were created during the birth of a company. This is because they are trying to find errors which result in increased income for the government as well as civil or criminal charges. A company will want to keep pristine records to assure that the auditor does not look deeper than the audit scope documents which a company can support.