AUDIT OVERVIEW

 Primary function of independent audit is to lend credibility to the financial

statements(fs) of an entity
 Auditor’s opinion enhances the value and usefulness of the fs
An audit is a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between the assertions and established criteria and communicating the
results to interested users. (American Accounting Association)
TYPES OF AUDIT:
A. FINANCIAL STATEMENT AUDIT - to determine whether the financial statements of
an entity are fairly presented in accordance with the applicable financial reporting
framework
B. COMPLIANCE AUDIT - review of an organization’s procedures to determine
whether the organization has adhered to specific procedures, rules or regulations
C. OPERATIONAL AUDIT - is a study of specific unit of an organization for the
purpose of measuring its performance
COMPARISON AMONG THE DIFFERENT TYPES OF AUDIT:
FINANCIAL AUDIT COMPLIANCE OPERATIONAL AUDIT
AUDIT
ASSERTIONS MADE BY Financial The organization The organization’s
THE AUDITEE statement are has complied activities are
fairly presented with laws, conducted effectively
regulations or and efficiently
contracts
ESTABLISHED CRITERIA Financial reporting Laws, regulations Objective set by the
standards or other and contracts board of directors
financial reporting
framework
CONTENT OF THE An opinion about Reports on the Recommendations or
AUDITORS REPORT whether the degree of suggestions on how
financial compliance with to improve
statements are applicable laws, operations
fairly presented regulations and
inconformity with contracts
the applicable
financial reporting
framework
AUDITORS WHO External auditors Government Internal auditors
GENERALLY PERFORM auditors
 BASIS FOR ACCOUNTING AUDITING
COMPARISON

Meaning Accounting means systematically Auditing means inspection of the

keeping the records of the books of account and financial
accounts of an organization and statements of an organization.
preparation of financial
statements at the end of the
financial year.

Governed By Accounting Standards Standards on Auditing

Work performed by Accountant Auditor

Purpose To show the performance, To reveal the fact, that to which

profitability and financial position extent financial statement of an
of an organization. organization gives true and fair
view.

Start Accounting starts where Auditing starts where accounting

bookkeeping ends. ends.

Period Accounting is a continuous Auditing is a periodic process.

process, i.e. day to day recording
of transactions are done.