The document discusses the evolution of the auditor role from a historical account checker to a modern business advisor. Initially, auditors were assumed to be trustworthy but lacked formal qualifications. Over time, business grew more complex with technology, globalization, and competition requiring auditors to have specialized expertise in areas like finance, industry knowledge, economics, and technology. Modern auditors help identify risks, opportunities, and create effective control environments for businesses. The role expanded from verification of historical accounts to providing strategic advice and ensuring financial discipline.

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2. 2
AUDIT
TO HEAR OR LISTEN
AUDIO

3. 3
INTIALLY WAS ASSUMED TO BE
TRUST WORTHY PERSON OF
OWNERS IRRESPECTIVE OF HIS
QUALIFICATION.EYES &EARS OF
THE OWNER.

4. 4
SALES OF DATES 2000.00
1262.50
PURCHASE OF DATES
SALARY
MAZDOORI
OCTRIO
CLEANING OF DATES
PACKING
1000.00
200.00
10.00
0.50
2.00
50.00
CASH IN HAND WITH MUNSHI 737.50
KHATA (ACCOUNTS IN ANCIENT AGES
(1-10-1550)

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ASSETS
CASH
1000
2000
3000
OPENING CASH
LOANS TAKEN
SALES
TOTAL RECEIPTS
500
500
5000
6000
LIABILITY
OWNERS MONEY
500
2500
3000
ASSETS PURCHASED
PURCHASES
EXPENSES
TRANSPORT
LABOR
PACKING
TOTAL PAYMENTS
CASH IN HAND
1000
2000
100
200
700
4000
2000
DEVELOPING DAYS IN ACCOUNTINGPROFESSION

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BALANCE SHEET Rs. in Million
CAPITAL
RESERVES
PROFIT FOR THE YEAR
LONG TERM DEBITS
CURRENT LIABILITIES
ACCOUNTS PAYABLE
TAX PAYABLE
OTHERS
100,000
2000
1500
103,500
100,000
50,000
2,500
5,000
261,000
FIXED ASSETS
CURRENT ASSETS
ACCOUNTS RECOVERABLE
BILLS RECOVERABLE
100,000
100,000
61,000
261,000
PROFIT & LOSS Rs. in Million
SALES
PURCHASED
LABOR
MARKETING EXP
SELLING EXP
REPAIRS
FINANCIAL EXP
DEP
PROFIT BEFORE TAX
TAX
PROFIT AFTER TAX
100,000
50,000
2500
2500
7000
15000
20000
3000
1500
1500
200000
200,000
200000

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(A) GLOBALIZATION IMPORTS EXPORTS
TRAVELLING
(B) COMPETITION QUALITY MACHINES
COMPUTERIZATION
QUALITY SERVICE
QUALIFIED STAFF.

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ACCOUNTANTS - CHARTERED ACCOUNTANTS
(MUNSHI’S)
MARKETING - MBA MARKETING
PRODUCTION - MASTER – TEXTILE
- TEXTILE ENGINEERS
MANAGERS - IT EXPERTS
- TOP OF THE LINE
SALES BANKING IMPORTS/ QUALIFICATIONS
EXPORTS

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THE CONCEPT OF EYES & EARS OF MANAGEMENT FAILED
QUALIFICATION LIMITATIONS CAME IN.

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AS THE AUDITOR WAS CONSIDERED
ONLY TO CHECK FINANCIALS.
THE OWNER APPOINTED
•- EITHER A PERSON MORE QUALIFIED
THAN ACCOUNTANT OR
• EQUAL TO ACCOUNTANT’S
QUALIFICATION

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PAYMENT - PRE AUDIT
DEBITS & CREDITS
ACCOUNTS - ARITHMATICAL
ACCURACY
HISTORICAL AUDITOR

13.  LIQUIDITY & VIABILITY ISSUES
 CHANGES IN INTERNAL CONTROL
 UNUSUAL TRANSACTION
 TRANSACTIONS WITH RELATED PARTIES
 TRANSACTIONS INVOLVING OFF BALANCE
SHEET ITEMS
 ADEQUACY OF DISCLOSURE
13

14. SPECIFIC FINANCIAL STATEMENTS RISKS
 Long termed Assets goodwill and other tangible assets.
 Impairment of inventory
 Revenue Recognition
 Accounting Estimates
 Deferred taxes
 Restructuring changes
 Debt covenants
 Other than temporary declining in value of
 Marketable debt and equity securities.
 Pension and other post retirement benefits
 New issued standards.
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BUSINESS PERSON
KNOWLEDGE OF INDUSTRY
KNOWLEDGE OF ECONOMY
KNWOLEDGE OF TECHNOLOGY
- BEST PRACTICES – BENCHMARKING
MARKET TRENDS

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- VALUE ADDITION
- WOULD ONLY SEE HISTORICAL ACCOUNTING
ONLY AS IT RELEATES TO FUTURE DECISION
MAKING
- INVOLVED IN ORGANISATION PLANNING &
STRATEGY
- IDENTIFY BUSINESS RISKS & EXPOSURES
- IDENTIFY MISSED OPPORTUNITIES
- RISK MANAGEMENT FOR RISK TAKERS

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- OWNER’S PRE-OCCUPATION DUE TO EXPANSION
OF BUSINESS
- FINANCIAL DISCIPLINE WAS REQUIRED
- PROCESSES GAINED COMPLEXITIES
- TECHNOLOGICAL ADVANCEMENTS
- CREATE CONTROL ENVIRONMENT
- USED AS A TOOL FOR CHECKS & BALANCES
- RISK MANAGEMENT

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UNDERSTANDING RELATIONSHIP BETWEEN RISK
AND CONTROL.
RISK AS POTENTIAL FOR LOSS.
THREAT.
VULNERABILITY.
IMPACT.
PROBABILITY.
RISK OF INFORMATION SYSTEM (AVAILABILITY,
CONFIDENTIALITY INTEGRITY).