Introduction to Auditing
The practice of auditing existed even in the Vedic period. Historical records show that Egyptians, Greeks and Roman used to get this public account scrutinized by and independent official. Kautaly in his book “arthshastra” has stated that “all undertakings depend on finance, hence foremost attention should be paid to the treasury”.
Auditing as it exists today can be associated with the emerging a joint stock company during the industrial revolution. The company’s act of 1956 gives regulations regarding the audit work.
Meaning of Audit:
The word audit is derived from the Latin word “AUDIRE” which means to hear. Initially auditor was a person appointed by the owners to check account whenever the suspected fraud, he was to hear explanation given by the person responsible for financial transactions. Emergence of joint stock companies changed the approach of auditing as ownership was pestered from management. The emphasis now is clearly on the verification of accounting date with a view on the reliability of accounting statement.
Definition:
Spicer and Peglar define auditing as “An examination of the books, accounts and vouchers of a business’s shall enable the auditor to satisfy himself whether or not the balance sheet is properly drawn up so as to exhibit a true and correct view of the state of affairs of the business according to his best of the information given to him and as shown by the book.
Mautz: defines auditing as being “Concerned with the verification of accounting data with determining the accuracy and reliability of accounting statements and reports.”
The international auditing practices committee defines auditing as “the independent examination of financial information of any entity whether profit oriented or not and irrespective of size/legal form when such an examination is conducted with a view to express an opinion thereon”.
Scope of Audit.
The scope of audit is increasing with the increase in the...