Objectives of Auditing
The principal objectives of auditing are changing with the advancement of business techniques Earlier it was only to check the correctness of receipts and payments, which was extended to detection of frauds. The methods of auditing of accounts have improved, the detection of frauds is simply an incidental object. The main objective is not detection of frauds and errors, unless the auditor is appointed for only this purpose.
This main object of the audit is to find the reliability of financial position and profit and loss statements.
It can be concluded that the main object of auditing is to form an independent judgment and opinion about the reliability of accounts and truth and fairness of financial state of affairs and working results.
Objects of an Audit
(A) main object
Verification of accounts and financial statements.
(B)Subsidiary objects
The main object of an audit is to verify and establish that at a given date balance sheet presents true and fair view of financial position of the business and the profit and loss account gives the true and fair view of profit or loss for the accounting period. It is to be established that accounting statement satisfy certain degree of reliability.
It is required under Companies Act that whether the books of accounts are kept according to the Act and whether they show true and fair view of the state of affairs of the company.
The auditor has to conduct an independent review of financial statement about their reliability. The auditor must examine the system of internal control and internal check, arithmetical accuracy of books of accounts, validity of transactions entered in the books and confirm the existence and values of assets and liabilities.
To judge the accuracy of the books of accounts, the auditor must
(i)assess the system of internal control
(ii)verify the accuracy of posting, balancing etc.
(iii) Confirm the validity of transaction with supporting documents
(iv) Ascertain whether distinction has been made between capital and revenue items
(v) Confirm existence of assets and liabilities
(vi) Ascertain all statutory requirements of maintenance of books and records have been complied with.
The principal objectives of auditing are changing with the advancement of business techniques Earlier it was only to check the correctness of receipts and payments, which was extended to detection of frauds. The methods of auditing of accounts have improved, the detection of frauds is simply an incidental object. The main objective is not detection of frauds and errors, unless the auditor is appointed for only this purpose.
This main object of the audit is to find the reliability of financial position and profit and loss statements.
It can be concluded that the main object of auditing is to form an independent judgment and opinion about the reliability of accounts and truth and fairness of financial state of affairs and working results.
Objects of an Audit
(A) main object
Verification of accounts and financial statements.
(B)Subsidiary objects
- Detection and prevention of fraud
- Detection and prevention of errors
The main object of an audit is to verify and establish that at a given date balance sheet presents true and fair view of financial position of the business and the profit and loss account gives the true and fair view of profit or loss for the accounting period. It is to be established that accounting statement satisfy certain degree of reliability.
It is required under Companies Act that whether the books of accounts are kept according to the Act and whether they show true and fair view of the state of affairs of the company.
The auditor has to conduct an independent review of financial statement about their reliability. The auditor must examine the system of internal control and internal check, arithmetical accuracy of books of accounts, validity of transactions entered in the books and confirm the existence and values of assets and liabilities.
To judge the accuracy of the books of accounts, the auditor must
(i)assess the system of internal control
(ii)verify the accuracy of posting, balancing etc.
(iii) Confirm the validity of transaction with supporting documents
(iv) Ascertain whether distinction has been made between capital and revenue items
(v) Confirm existence of assets and liabilities
(vi) Ascertain all statutory requirements of maintenance of books and records have been complied with.
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