Which type of audit focuses on compliance with laws and regulations?

The focus of a compliance audit is specifically on determining whether an organization is adhering to relevant laws, regulations, policies, and procedures. This type of audit is designed to ensure that the entity is in compliance with external requirements, such as governmental regulations or industry standards.

In a compliance audit, auditors examine various documents, records, and processes to verify that the organization has followed prescribed rules and regulations. This could involve everything from ensuring that financial practices comply with laws to verifying adherence to environmental regulations. The primary aim is to identify any areas of non-compliance and recommend improvements to avoid potential legal repercussions or penalties.

In contrast, a financial audit concentrates on the accuracy and fairness of financial statements, while an operational audit evaluates the efficiency and effectiveness of operations within the organization. An internal audit can cover both compliance and operational aspects but isn’t solely focused on compliance. Therefore, the compliance audit is distinct in its targeted approach to ensuring that laws and regulations are met.