This document provides an overview of auditing. It defines auditing as the systematic examination of records of a business or organization to verify financial operations and results. The document outlines the key features, types, and classifications of auditing. It also discusses the qualities needed in an auditor and the advantages and disadvantages of auditing.

1. TO THE WORLD OF AUDIT.

2. Presented by :
ROHIN.P.NADAF
Please Check Explanation Video on YouTube which is on
last slide.

3. PRESENTATION ON
AUDITING :

4. Introduction.
Definition of audit.
Features of auditing.
Types of auditing
Classification of auditors.
Qualities of an auditor.
Advantages of audit.
Disadvantage of audit.

6. INTRODUCTION:
The term audit is derive from the Latin word “AUDREY”
which means to “here”.
Auditing is as old as accounting.
The VEDAS contain reference to accounts on auditing.
‘Arthasashthra’ by Kautilya gives detailed rules for
accounting and auditing of public finance.
The original objective of auditing was to deduct and
prevent errors and frauds.

7. DEFINATION OF AUDIT:
L.R.DICKSEE :
“Auditing is an systematic examination of records
of business or other organization, in order to ascertain or
verify the facts regarding its financial operation and result
therefore”.

8. FEATURES OF AUDITING :
1. Auditing is a systematic, scientific, examination of the
books of accounts and records of a business.
2. Auditing implies physical verification of the assets and
liabilities of a business.
3. Auditing or audit examination is made only by an
independent person or a body of a persons duly qualified
by the purpose.
4. Auditing is undertaken by both business concern and
non-business concern.
5. Auditing may be undertaken periodically or throughout
the financial period.

9. TYPESOF AUDIT :
ON THE BASIS OF BUSINESS
ORGANIZATION
STATUTORY AUDIT
PRIVATE AUDIT
GOVERNMENT AUDIT
ON THE BASIS OF DEGREE OF
INDEPENDENCE
INTERNAL AUDIT
EXTERNAL AUDIT

10. BUSINESSORGANISATION:
a) Statutory audit:
Statutory audit means legally compulsory audit. It is
provided under the provision of a state or law. It is also
known as Annual audit.
b) Private audit :
Private audit means the audit which is not
compulsory by the act. It is also known as voluntary audit.
c) Government audit :
Government audit refers to the audit of government
departments, statutory co-operation and government
companies.

11. TYPESOF AUDIT :
ON THE BASIS OF BUSINESS
ORGANIZATION
STATUTORY AUDIT
PRIVATE AUDIT
GOVERNMENT AUDIT
ON THE BASIS OF DEGREE OF
INDEPENDENCE
INTERNAL AUDIT
EXTERNAL AUDIT

12. DEGREEOFINDEPENDENCE:
a) Internal audit :
Internal audit is an independent ,objective assurance and consulting activity
designed to add value and improve an organizations operations.
b) External audit :
Refers to the audit of a business concern undertaken by a professional
qualified auditor.

13. CLASSIFICATION OF AUDITORS:
INTERNAL AUDITOR EXTERNAL AUDITOR
1) Auditor will be appointed by management of the
entity.
Appointment of auditor will be made by owners
e.g. Shareholders.
2) Scope to be defined by appointing authority. Scope is defined by law.
3) The internal auditor is not entirely independent
of the management.
The external auditor is entirely independent of
the management.
4) The internal auditor receives salary for working
as an employee in the organization.
The external auditor received his fees for his
professional services.
5) Report will be submitted to the management. Report will be submitted to owners of entity.
6) The internal auditor fulfills the needs of the
management.
The independent or external auditor fulfills the
needs of the owners of the business as well as
those of law.

14. QUALITIESOF AUDITOR :
1. PROFFESSIONAL QUALITIES
1.Knowledge of Accounting
2.Knowledge of Cost Accounting
3.Knowledge of Management Accounting
4.Knowledge of Techniques of Accounting
5.Knowledge of Tax Laws
2. GENERAL QUALITIES
1.Honesty and Integrity
2.Responsibility
3.Open and Free Mind
4.Confidential
5.Sincere and honest

15. PROFESSIONALQUALITIES
1) Knowledge of Accounting:-
The auditor must possess full knowledge of the
conceptual framework of accounting, principles and practices of
general accounting etc.
2) Knowledge of Cost Accounting:-
He must fairly acquainted with the principles and
practices of cost accounting so that he is fully conversant with the
various cost concepts such as direct and indirect costs, cost
allocation of overhead costs etc.
3) Knowledge of Management Accounting:-
He must be fairly acquainted with the principles and
practices of management accounting. This knowledge enables him
to conduct general audit and management audit.
4) Knowledge of Techniques of Accounting:-
He must be a master of various techniques of auditing.
He must also keep himself abreast with the changes and
developments in the techniques of auditing.

16. GENERALQUALITIES
1. Honesty and Integrity:-
The auditor must be a man of high degree of honesty and integrity. He must
possess high moral courage.
2.Responsibility:-
The auditor must be a man of great responsibility. Because public
confidence in the audit profession arises from high standards of performance and a
high sense of responsibility to the public interest on the part of the auditor.
3.Open and Free Mind:-
In course of audit, the auditor must have an open and free mind. When
suspicion arises, he must probe the matter thoroughly, calmly and intelligently.
4.Confidential:-
The auditor must not disclose to others any confidential information of his
client which he receives during the course of audit.
5.Sincere and Honest:-
The auditor must be sincere and honest in his profession; He must follow
professional ethics, customs and regulations properly.

17. ADVANTAGESOF AUDIT :
 TRUE AND FAIR VIEW OF BUSINESS TRASACTION.
MORAL CHECK.
DETECTION OF ERRORS AND FRAUDS.
HELPS IN FILING OF RETURNS.
ADVISE AND SUGGESTIONS BY AUDITOR.

18. DISADVANTAGESOF AUDIT :
CORRUPT PRACTICES TO INFLUNCE THE AUDITOR.
CONFLICT WITH OTHERS.
EFFECT OF INFLATION.
NO ASSURANCE.
DEPENDENCE OF OPINION OF OTHERS.