Unlike a full audit that checks everything in a business, a limited audit is done for smaller checks and is typically easier to perform. While a full audit is typically performed once a year, a limited audit can occur multiple times throughout the year. The purpose of this audit is to limit the overall work and make it easier for a business to operate without disruption, so the auditor will typically isolate his or her work to one account or purpose.
Another thing that can be limited during such an audit is the amount of years audited, in terms of accounting information. If the aspect of the activity being audited is broad, the auditor typically checks only the most essential areas instead of every detail.
A full audit is usually performed once a year and the auditor will check every aspect of the business in detail. It takes much less time, so a limited audit can be scheduled several times a year. The company may or may not be notified of the review, depending on what is being audited and the preferences of the reviewer. This commonly occurs every quarter, but can be more or less and is usually randomly scheduled.
With limited auditing, typically only a portion of the business is audited. For example, instead of going through an entire store and every account, you can only check one account. This too can be done for only one purpose. Instead of checking the company’s inventory numbers, taxes, money in and out, and potential fraud or accounting manipulation, the auditor can simply check the inventory numbers quickly to make sure they are accurate, leaving the other areas for the check later if limited or full.
During a comprehensive audit, especially with accounts, an auditor typically checks several years of financial information to make sure everything is correct. In this aspect, a limited audit will reduce the amount of years that are searched. Instead of several years, only one or two will be checked for accuracy, and it could be one or more accounts.
A limited audit sometimes covers a large area of a company, such as the company’s entire inventory. This is typically a lot more work than a limited check is supposed to encompass, so the work will usually be scaled up so that only the important items are checked.
This can include large sellers or areas that hold the majority of the company’s inventory.
Author: David Vatine
