Page 7 - DCOM204_AUDITING_THEORY

Pooja, Lovely Professional University Unit 1: Introduction to Auditing

Unit 1: Introduction to Auditing Notes

CONTENTS
Objectives
Introduction
1.1 Origin of Audit
1.2 Defining Audit

1.3 Difference between Auditing and Accounting
1.4 Objects of an Audit
1.5 Advantages of Auditing
1.6 Different Types of Audit
1.7 Difference between Internal Audit and Statutory Audit
1.8 Objectives of Audit
1.8.1 Primary Objectives
1.8.2 Secondary Objectives
1.9 Summary

1.10 Keywords
1.11 Review Questions
1.12 Further Readings

Objectives

After studying this unit, you will be able to:
Describe the origin of audit;
Define audit;
Differentiate between accountancy and auditing;
Know the objectives of auditing;
Know different classes of audit;
Locate errors.

Introduction

It is clear from the above definitions that auditing is the systematic and scientific examination of
the books of a accounts and records of a business so as to enable the auditor to satisfy himself
that the Balance Sheet and the Profit and Loss Account are properly drawn up so as to exhibit a
true and fair view of the financial state of affairs of the business and profit or loss for the
financial period. Unit explains the origin of audit and standards as defined by Company’s Act
and by the Institute of Chartered Accountants of India. Unit tries to define audit, and explain
various aspects of auditing and duties and responsibilities of an auditor. Two objectives of
auditing are primary and secondary. The main object of auditing is to help the auditor to form
an opinion as to whether the books of account and the financial statements show true and fair
view of the business and the subsidiary object of auditing is to detect and prevent errors and

LOVELY PROFESSIONAL UNIVERSITY 1