Difference between Audit and Inspection

Key Difference: Audit is the inspection, examination or verification of a person, organization, system, process, enterprise, project or product. Inspection is the act of examining something, often closely.

Audit is an independent review and examination of records and activities to assess the adequacy of system controls, to ensure compliance with established policies and operational procedures, and to recommend necessary changes in controls, policies, or procedures. It is used to determine the authenticity and validity or to ensure that a process is being followed. Also, an audit is mainly used in accounting to ensure the validity and reliability of information in the statements and that the information is free from material error. An audit can be done anytime.

 Inspection indicates that the regulatory authorities are checking documents, records, facilities and any other resources to verify a certain set of standards. It is the act of examining something, often closely. Inspection is one of the important tools for controlling the affairs of bank and also judging the efficiency of management. It is a multi purpose function, and includes all the elements of audit. It basically helps in overall improvement in the working and efficiency of the branch.

Comparison between Audit and Inspection:

 

Audit

Inspection

Description

Audit means the inspection, examination or verification of a person, organization, system, process, enterprise, project or product.

Inspection indicates that the regulatory authorities are checking documents, records, facilities and any other resources to verify a certain set of standards.

Owners

Audit is conducted on behalf of owners only and they make the appointment.

Inspection is conducted by any person or owner according to one’s need of a particular thing.

Purpose

To determine the true and fair view.

To determine the true and fair view.

Process

Routine process

Frequent/Routine process

Period

Once a year

Weekly or monthly

Employees

Does not examine personally

May examine personally

Types

  • Legal Compliance Audit
  • Internal Standards Audit
  • System Audit
  • Statutory Audit
  • Internal Audit
  • Tax Audit
  • Cost Audit
  • VAT Audit
  • Integrated Audit
  • Operational Audit
  • Follow-up Audit

Onsite inspections:

  • Announced Inspection
  • Unannounced Inspection
  • Targeted Inspected
  • General Inspection
  • In-depth Inspection
  • Scheduled Inspection
  • Occasional Inspection

National Inspections:

  • Pre-license Inspection
  • Facility Inspection
  • Routine Inspection
  • Challenge Inspections

Image Courtesy: netsq.com, fire.columbus.gov

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