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Introduction to Audit.

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Presentation on theme: "Introduction to Audit."— Presentation transcript:

1 Introduction to Audit

2 History of Audit Phase -1 (1840-1920) Phase-2 (1920-1960)
Phase-4(1990 till date)

3 History of Auditing in India
Companies Act 1913 1932 constitution of Accounting Board Charted Accountants Act 1949 Companies Act 1956 Manufacturing and other companies order 1975 Companies Act 2013

4 Definition of Auditing
According to ICAI “Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances of an enterprise for a stated purpose. In any auditing situation the auditor perceives and recognises the propositions before him for examination, collects evidence, evaluate the same on this basis formulates his judgement which is communicated through his audit report.”

5 Objective of Auditing Primary Objective(expression of opinion)
Secondary Objective(Detection of errors and frauds)

6 Types of Errors Error of Principle Error of Omission
Error of Commission Compensating Error

7 Fraud Misappropriation of Asset Misappropriation of goods
Misappropriation of cash

8 Principles governing An Audit
Integrity Confidentiality Skill and Competence Work performed by others Documentation Planning Audit evidence Accounting System and internal control Audit conclusions and Reporting

9 Advantages of Audit Authenticity of Accounts
Detection of errors and frauds Identification of loopholes Acceptable to taxation authorities Increased creditworthiness Settlement of dispute among partners Settlement of insurance claims Helpful in making comparisons Accounts department becomes vigilant

10 Limitations Time consuming Frauds not detected Costly
Depends on judgement All frauds can not be detected Dependence on others

11 Qualities of an Auditor
Integrity Objectivity Independence Confidentiality Skills Responsible Intelligent Vigilant Communication skills

12 An Auditor is a watchdog and not a blood hound

13 Difference Between Accounting and Auditing

14 Difference Between Accounting and Book - Keeping

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