What is special audit
A special audit is a type of audit that is conducted to look at a specific set of activities within an organization. It can be initiated internally or externally. For example, a government agency may require any entity to conduct a special audit to investigate any specific client or a specific area.
Third parties mostly initiate the special audit. Like investigating the accuracy of income heads, a tax authority may require a company to conduct a special audit. This audit is conducted to enhance the confidence over figures and processes in place for the effective and efficient preparation of financial reports.
Why special audit is conducted
The main intention behind this audit is to prove that if any abnormal behavior suspected within the organization actually exists or not. In most circumstances, a special audit investigation is initiated when there is the probability of violations of laws and regulations related to finances or other matters within an organization. This audit doesn’t need to be only conducted when there are any fraud litigations against a company.
It can also be initiated when a special case arises that needs to be addressed via conducting actual research on that problem. E.g., if there are any institutional breaches of law pertaining to responsibilities, internal controls, duties, authorizations, etc., the special audit is conducted to investigate such matters. Similarly, a special audit can also be conducted in case of bankruptcy of organizations.
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