To every season... turn, turn, turn. Even in accounting...
The audit cycle represents the circular process accountants go through to audit a company's financial information. The cycle is typically represented as having between five and seven steps, depending on how the stages are delineated.
(Side question: are going to sleep and waking up two different things? Or two sides of the sleeping process? That's the kind of distinction that comes up in figuring out how many steps there are in the audit cycle. Everyone agrees on the general path of the cycle, but some sources break the steps down more finely.)
Generally, the process works like this:
1. Identify what's being audited
2. Figure out what standards to use in order to judge the situation
3. Collect data
4. Compare the data with the agreed-upon standards
5. Implement change (if necessary)
Some sources then include the step of "re-audit" which basically restarts the cycle.
Related or Semi-related Video
Finance: What is non-voting stock?4 Views
finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't
vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.
understand that notion. but really that's it in most cases common stock carries
with it the right to vote. and in fact it's the common shareholders who elect
the board of directors. but every now and then a potentially hostile investor
comes along and buys or wants to buy a big chunk of stock in a company. well the
amount might be a block large enough to elect that potentially hostile investor
slate or the group of people that investor wants to place on the board to
represent her evil intentions .when that happens companies will often create a
class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]
voting rights stripped away .that way the investor can own an economic interest in
the company but not monkey with the board.
Up Next
What is Adverse Audit Opinion? An adverse audit opinion signals that an auditor has found flaws in a company’s financial statements. Adverse audi...
How does a board of directors function? Public companies, as well as some private corporations and non profit groups, have a board of directors. Us...
What is a proxy? Proxy statements are documents that are sent to shareholders of public companies that contain detailed information on agenda subje...
What is Cumulative Voting? When public companies have ballots for shareholders to vote for board members, shareholders have a total number of share...