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It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics started identifying an “Audit Society”. The auditor perceives and recognises the propositions before them for examination, obtains evidence, evaluates the same and formulates an opinion on the basis of his judgement which is communicated through their audit report. Any subject matter may be audited. As a result of an audit, stakeholders may effectively evaluate and improve the effectiveness of risk management, control, and the governance process over the subject matter. The word audit is derived from a Latin word “audire” which means “to hear”.
During the medieval times when manual book-keeping was prevalent, auditors in Britain used to hear the accounts read out for them and checked that the organisation’s personnel were not negligent or fraudulent. United States auditing was viewed mainly as verification of bookkeeping detail. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business. Hence, statistical sampling is often adopted in audits. But recently, the argument that auditing should go beyond just true and fair is gaining momentum. In most nations, an audit must adhere to generally accepted standards established by governing bodies.
These standards assure third parties or external users that they can rely upon the auditor’s opinion on the fairness of financial statements, or other subjects on which the auditor expresses an opinion. The purpose of an assessment is to measure something or calculate a value for it. Although the process of producing an assessment may involve an audit by an independent professional, its purpose is to provide a measurement rather than to express an opinion about the fairness of statements or quality of performance. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Management Accountants or Certified Management Accountants. Government Auditors review the finances and practices of federal agencies. These auditors report their finds to congress, which uses them to create and manage polices and budgets.
Government auditors work for the U. Government Accountability Office, and most state governments have similar departments to audit state and municipal agencies. These are Specialized Persons called Company Secretaries in India who are the members of Institute of Company Secretaries of India and holding Certificate of Practice. The IIA has defined internal auditing as follows: “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes”. Thus professional internal auditors provide independent and objective audit and consulting services focused on evaluating whether the board of directors, shareholders, stakeholders, and corporate executives have reasonable assurance that the organization’s governance, risk management, and control processes are designed adequately and function effectively.