Auditiing Flashcards
Auditing
“Auditing is the independent examination of financial information of any entity, whether profit oriented or not and irrespective of its size and legal form when such an examination is conducted with a view to expresses an opinion thereon”
Errors of duplication
They occur if the same transaction has been recorded twice in the books of original entry and also posted twice in the ledger
Teeming and lading
It is a device for misappropriating cash. Under this method, the money received from the first customer is misused or misappropriated by the cashier. The money received from the second customer is credited to the account of the first customer, the money received from the third customer is credited to the accounts of second customer and so on. This practice is continued till such time that the cashier finds it possible to put back the money misused by him
Annual or final audit
annual audit is done at the close of the financial year when the final accounts are prepared. The auditor visit the his client only once a year and checks the accounts in one visit. The audit work does not create any inconvenience to the client and it is less expensive also.
Audit programme
Audit programme contains step by step instructions to be carried out by team members Le. it is simply a list of audit procedures to be executed by team members. The main purpose of audit programme is that every material area has been audited appropriately and sufficient appropriate audit evidence has been obtained in respect of every important areas of audit.
Routine checking
Routine checking is the checking of the daily transactions of a business. It means checking the arithmetical accuracy of the entries in the books of account to detect any clerical errors and minor frauds.
Audit engagement
An audit engagement is an arrangement that an auditor has with a client to perform an audit of the client’s accounting records and financial statements. The term usually applies to the contractual arrangement between the two parties, rather than the full set of auditing tasks that the auditor will perform.
Audit documentation
Audit documentation includes records of the planning and performance of the work, the procedures performed, evidence obtained, and conclusions reached by the auditor. Audit documentation also may be referred to as work papers or working papers.
Internal control questionnaire
This is a comprehensive series of questions concerning internal control. This is the most widely used form for collecting information about the existence, operation and efficiency of internal control in an organisation.
Internal audit
“An independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity’s strategic risk management and internal control system”.
Company auditor
Company Auditor is an individual appointed for preparing an independent audit report of the company. They can be either appointed by the company’s Board of Directors, Shareholders, Central Government or Comptroller and Auditor General of India (C&AG) accordingly.
Audit report
Audit report is the final stage of audit process. The results of the audit are communicated through audit report. Audit report is the written opinion of an auditor regarding company’s financial statements. Audit report is a document prepared by an auditor to certify the financial position and accounting records of a firm.
Qualified report
In qualified report the auditor believes that overall financial statements are not fairly stated such as The books of accounts, Profit and Loss Account and the Balance Sheet do not represent the true and fair view of the state of affairs and results of the operations, due to lack of conformity with the accounting principles and statutory requirements,
Non statistical sampling
Under this approach, the sample size and its composition are determined on the basis of the personal experience and knowledge ofthe auditor. This approach has been in common application for many years because of its simplicity in operation.
Disclaimer of opinion
The auditor may disclaim or refuse opinion on the accounts, Profit and Loss Account and the Balance Sheet, when he does not have sufficient information to base his opinion. In the scope and opinion paragraph, the auditor should give disclaimer information.
