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CLASS: I B.

COM AF A
SUBJECT: CONTEMPORARY AUDITING

GROUP MEMBERS:
ABHISHEK JABEZ. N.K 18BCF002
AGARSHANA. N 18BCF003
SARRAVANESH. R 18BCF046
NARMADHA. E 18BCF061
According to the general guidelines on
internal auditing issued by ICAI i.e. Institute of
Chartered Accountant of India, Auditing is
defined as a systematic and independent
examination of data, statements, records,
operations and performances, financial or
otherwise often enterprises where stated
purpose.
 Audit is a systematic and scientific
examination of the books of accounts of a
business;
 Audit is undertaken by an independent
person or body of persons who are duly
qualified for the job.
 Audit is a verification of the results shown by
the profit and loss account at the statement
of affairs as shown by the balance sheet.
 Audit is a critical review of the system of the
accounting and internal control.
 Audit is done with the help of vouchers,
documents, information and explanations
received from the authorities.
 The auditor has to satisfy himself with the
authenticity of the financial statements and
report that they exhibit a true and fair view of
the state of affairs of the concern.
There are two main objectives of auditing.
They are:
→ Primary objective

→ Secondary objective or incidental


objective
As per Section 277 of the Companies Act
1956, the primary duty of the auditor is to report
to the owners whether the balance sheet gives a
true and fair view of the Companies State of
affairs and the profit and loss A/C gives the
correct figure profit or loss for the financial year.
It is called the incidental objective as it is
incidental to the satisfaction of the main
objective. The incidental objective of auditing
are:
 Detection and prevention of Frauds, and
 Detection and prevention of errors.
Businessman’s point of view,
 Detection of errors and frauds
 Loans from banks
 Builds reputation
 Proper valuation of assets
 Government acceptance
 Update accounts
 Useful for agency
Investor’s point of view,
 Protects interest
 Moral check
 Proper valuation of investments
 Good security
Other Advantages,
 Evaluate financial status
 Using of shares
 Settlements of clients
 Evidence in court
 Settlements of accounts
 Facilitates taxation
NON-DETECTION OF ERRORS/FRAUDS:
Auditor may not be able to detect certain frauds which are
committed with malafide intentions.
DEPENDENCE ON EXPLATION BY OTHERS:
Auditor has to depend on the explanation and information
given by the responsible officers of the company. Audit report is
affected adversely if the explanation and information prove to
be false.
EFFECT OF INFLATION:
Financial statements may not disclose true picture even after
audit due to inflationary trends.
NO ASSURANCE:
Auditor cannot give any assurance about future profitability
and prospects of the company,
DETAILED CHECKING NOT POSSIBLE:
Auditor cannot check each and every transaction . He may
be required to do test checking.
AUDIT EVIDENCE is evidence obtained by
auditors during a financial audit and recorded in
the audit working papers. Auditors need audit
evidence to see if the company has the correct
information considering the financial
transactions so a C.P.A ( Certified Public
Accountant can conform their financial
statements.
AUDIT PLANNING is a vital area of the audit
primarily conducted at the beginning of audit
process to ensure that appropriate attention is
devoted to important areas, potential problems are
promptly identified, work is completed
expeditiously and work is properly coordinated.
“Audit Planning” means developing a general
strategy and a detailed approach for the expected
nature, timing and extent to the audit. The auditor
plans to perform the audit in an efficient and timely
manner.
THANK YOU