Meaning and objectives of auditing pdf
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The system of accounting and auditing of slate revenue and expenditure is believed to have existed in India under Maurya and Hindu Kings. Kautilya in his Arthashastra had given details regarding accounting and auditing of state finances. Hence, foremost attention shall be paid to the treasury. In the olden days whenever the proprietors of a business concern suspected fraud, they appointed a person to check the accounts and to hear the explanations given by the persons responsible for keeping the accounts. In modern period, Auditing, has its origins in industrial revolution. This gave rise to new form of organisation, where, the shareholders contributed capital and had no control over the day-to-day working of the organisation.
It is done to make sure whether all the financial transactions are accurately recorded. Auditing aims at finding out the errors from books of accounts of the business. It aims at the prevention of frauds. The person doing auditing should be qualified for the job to perform it with accuracy. This can be performed either by internal employees of a business or the person who are external to business.
Objectives of Auditing. The objective of an audit is to express an opinion on financial statements. The auditor has to verify the financial statements and books of accounts to certify the truth and fairness of the financial position and operating results of the business. Therefore, the objectives of audit are categorized as primary or main objectives and secondary objectives. The primary or main objective of audit is as follows:.
Objectives of an Audit – 2 Main Audit Objectives
In ancient times when the person who has possession of business suspected fraud, they assign particular individuals to inspect the accounts, such individuals were appointed as an accountant and perceived what they had to say in respect of accounts. From the above statement, it is precise that auditing or audit consists of three elements. They are as follows:. An audit can be categorized under various groups on a distinct basis. Types of auditing based on different aspects are as follows:. In this class, the audit is classified on the basis of the nature of the company for which auditing task is initiated.
Audit scope, defined as the amount of time and documents which are involved in an audit , is an important factor in all auditing. The audit scope, ultimately, establishes how deeply an audit is performed. It can range from simple to complete, including all company documents. Audit scope means the depth of an audit performed. It walks you through steps to accelerate your career in becoming a leader in your company.
Many companies within the UK are likely to require an audit, but are unsure what an audit is and when is it needed. Even if a company is below these thresholds it will be required to have an audit if it is part of a group which breaches certain size thresholds. Therefore, even small companies can be required to have an audit. The objective of an audit is to form an independent opinion on the financial statements of the audited entity. The opinion includes whether the financial statements show a true and fair view, and have been properly prepared in accordance with accounting standards.
What is an Audit?
An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon. Auditors consider the propositions before them, obtain evidence, and evaluate the propositions in their auditing report. Audits provide third-party assurance to various stakeholders that the subject matter is free from material misstatement. The term is most frequently applied to audits of the financial information relating to a legal person. Other commonly audited areas include: secretarial and compliance, internal controls, quality management, project management, water management, and energy conservation.
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