This document discusses the introduction, objectives, and advantages of auditing. It covers the history of auditing from double-entry bookkeeping to modern practices. The objectives of auditing are to verify the accuracy of financial statements and detect errors and fraud. Auditing ensures the primary objective of reporting accurate financial information to management and compliance with laws. It also aims to detect and prevent errors, frauds, and false representations in financial records through systematic examination of books and accounts.
3. Auditing,Anjani Antony,St.Mary’s College
Meaning of Auditing
Systematic examination of books
Verify authenticity and accuracy
Derived from latin word audire which means to hear
Auditor means one who hears
Find out whether the transactions entered are correct or not.
4. Auditing,Anjani Antony,St.Mary’s College
Investigation
An act of detailed examination of books and accounts.
Specific purpose.
Referred as special audit.
Involves enquiry into facts behind the books of accounts.
Disclose the true and fair position of the business.
5. Auditing,Anjani Antony,St.Mary’s College
Submission of Investigation Report
On behalf of an intending purchaser of
On behalf of an incoming partner
On behalf of management where fraud suspected
Misappropriation of cash
Misappropriation of goods
Manipulation of accounts
6. Auditing,Anjani Antony,St.Mary’s College
Objects of auditing
Primary object
Primary objective of auditing is reporting to the management and
to see whether the final accounts are drawn as per law.
Subsidiary objects
Detection and prevention of errors
Detection and prevention of frauds
8. Detection and prevention of errors
Errors of ommission
Errors of commission
Compensating errors or offsetting errors
Errors of principles
Detection and prevention of fraud
Fraud means false representation or making a wrong entry
intentionally to defraud somebody
Auditing,Anjani Antony,St.Mary’s College
9. Types of fraud
Misappropriation of cash
Omitting to enter a receipt
Acknowledging lesser amount than actual receipts
Entering fictitious payment
Computer related fraud
Computer fraud
Auditing,Anjani Antony,St.Mary’s College
10. Qualities and qualifications of a
professional auditor
Professional qualifications- statutory qualifications
Professional qualities or personal qualifications
Personal qualities- general qualities
Auditing,Anjani Antony,St.Mary’s College