Page 13 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes 4. Scope: The scope of the statutory audit is fixed by the Companies Act, 1956. It cannot be
changed by mutual consent between the auditor and the management of the audited
business unit. The scope of the internal audit is fixed by the mutual consent of the auditor
and the management of the unit under audit.
5. Remuneration: Remuneration of the statutory auditor is fixed by the appointing authority,
i.e. in case of first auditors; the auditors the directors fix the remuneration in case of the
subsequent auditors the company in its general meeting fixes the remuneration. In case of
internal auditor the management who appoints him fixes his remuneration.

6. Report: The statutory auditor submits his report to the shareholder of the company in its
general meeting. The internal auditor submits his report to the management of the
company who is also his appointing authority.
7. Removal: The procedure of removal of the statutory auditor is very complex. Only the
company in the general meeting can remove the auditor. It also has to take the permission
of the Central Government. The management of the entity can remove internal auditor.
An audit is a detailed examination of records, frequently financial in nature, in a search for
existing errors or inaccuracies. Audits are typically related to tax records, and the Internal
Revenue Service frequently conducts them to find inconsistencies in income and tax findings.
Companies also conduct audits to make sure their book keeping operations are correct and
funds are not missing. While audits can be useful, they are not perfect and correcting audit errors
can be a time-consuming process.

Notes Always keep business expenses and personal expenses entirely separate to make
for easier tax returns and financial reporting. Keep copies of all your business records and
have receipts and statements for any expenses or tax deductions that you claim.

Task Elaborate misrepresentation and misappropriation of accounts with few examples
and how audit can help in curbing fraud and errors?

1.7.1 Instructions

1. Create copies of any files or paperwork that can prove the audit information is incorrect.
Always keep the originals, but the copies will be needed to prove your claim.
2. Hire an accountant who can look over your evidence and verify that your figures are
correct. He can then compare it to the audit results and help your draft up a report reporting
the discrepancies.
3. Notify the auditing firm in writing of the audit mistakes and include the copies of your
records that verify your report. Your account’s report should also be included. If this is a
tax audit, your accountant can assist you in refilling your tax returns that point out the
discrepancies of the audit.

8 LOVELY PROFESSIONAL UNIVERSITY