What is an audit? How do Auditing Firms get Audited?

There are many auditing clients you may encounter and there are different reasons that each of them require auditing. As you gain experience here are a number of clients and types of audits you may need to carry out. 

Wikipedia describes audit in the following words, “An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial.”

Here are different ways that different types of auditing are carried out and where they are carried out.

How do Auditing Firms get Audited?

In any big Audit firm, you will find there are "Audit Partners" and there is also a tax and advisory division. The tax and advisory along with all other non-audit lines of service are formed under the paradigm of Limited Liability Company (or equivalent). The audit practice will then be called "Partnership".

This stems from an age-old policy that Auditors, Lawyers, and Accountants should not have limited liability for providing wrong advice or assurance to third parties.

The current times dictates that most country legislation will still require an audit firm to be in a partnership with the audit partners.

As it is a partnership you do not require a legal document to be audited.
The partners, however, are required to provide for their personal income tax and are audited by the tax authority (IRA/IRS) personally.

Large audit firms get audited by the licensor of the firm's brand name such as individual KPMG, PWC, EY, and Deloitte have to follow some specific financial guidelines internally so that they can stick to the brand name, and hence these KPIs are under the scanner and monitored closely. However, it is in no way comes near to a full audit that some of the private companies face.

VRamaratnam & Company are distinguished auditors in Chennai that meet up to applicable reporting standards with perseverance. There are a number of by-products of the audit process such as finding out the internal management issues and other important insights that can cater to the present and future challenges too.

While some of the rules of the game stand transformed as of today some of the basic fundamentals remain unchanged.  The investor must add accuracy, completeness, and fair presentation of information in the financial statements and disclosures. The auditing process helps maintain the confidence of both the company and the financial system too. For the accountingfirms in Chennai and the other cities of the country, the main challenge is keeping up with a fast-evolving corporate reporting environment.