Auditing

AUDITING

Audit is derived from Latin word Adile,

Auditing is the examination of Books, Accounts, and vouchers of the business. The purpose is to satisfy that the balance sheet shows a true and fair view of the state of affairs of the business and the profit or loss derived by the business during the financial period. The auditor, to satisfy himself of the above facts, may obtain such information and explanation that would be necessary in the matter. Further if he is not satisfied with the position of the business as shown in the Balance sheet and profit and loss, he must report as to why he is not satisfied.

Spicer and Pegler.

Auditing is concerned with the verification of Accounting data, determining the accuracy and reliability of accounting statements and reports.

Objectives of Auditing

1) Main objectives of an Audit

a) As per AAS-2, the main objectives of audit of financial statements is to state whether the accounts prepared within the framework of recognised accounting policies , is to enable an auditor to Express an Opinion on such financial statements.

b) As per Section 227 of the Companies Act 1956, the primary duty (objective) of the auditor is to report to the owners whether the balance sheet gives a true and fair view of the Company’s state of affairs and the profit and loss A/c gives a correct figure of profit of loss for the financial year.

c) The main objective of audit is to find the reliability of financial position and profit and loss statements.

d) The primary object of an audit is to find out whether the financial statements are compliance with the statutory requirements and True and Fairness of financial position shown by the financial statements.

2) Subsidiary objectives

a) The minor and secondary objective is to detect frauds and errors to make sure the arithmetical correctness of financial statements and to make necessary recommendations to the appointing authority, so as to...