Primary function of independent audit is to lend credibility to the financial
statements(fs) of an entity Auditor’s opinion enhances the value and usefulness of the fs An audit is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users. (American Accounting Association) TYPES OF AUDIT: A. FINANCIAL STATEMENT AUDIT - to determine whether the financial statements of an entity are fairly presented in accordance with the applicable financial reporting framework B. COMPLIANCE AUDIT - review of an organization’s procedures to determine whether the organization has adhered to specific procedures, rules or regulations C. OPERATIONAL AUDIT - is a study of specific unit of an organization for the purpose of measuring its performance COMPARISON AMONG THE DIFFERENT TYPES OF AUDIT: FINANCIAL AUDIT COMPLIANCE OPERATIONAL AUDIT AUDIT ASSERTIONS MADE BY Financial The organization The organization’s THE AUDITEE statement are has complied activities are fairly presented with laws, conducted effectively regulations or and efficiently contracts ESTABLISHED CRITERIA Financial reporting Laws, regulations Objective set by the standards or other and contracts board of directors financial reporting framework CONTENT OF THE An opinion about Reports on the Recommendations or AUDITORS REPORT whether the degree of suggestions on how financial compliance with to improve statements are applicable laws, operations fairly presented regulations and inconformity with contracts the applicable financial reporting framework AUDITORS WHO External auditors Government Internal auditors GENERALLY PERFORM auditors BASIS FOR ACCOUNTING AUDITING COMPARISON
Meaning Accounting means systematically Auditing means inspection of the
keeping the records of the books of account and financial accounts of an organization and statements of an organization. preparation of financial statements at the end of the financial year.
Governed By Accounting Standards Standards on Auditing
Work performed by Accountant Auditor
Purpose To show the performance, To reveal the fact, that to which
profitability and financial position extent financial statement of an of an organization. organization gives true and fair view.
Start Accounting starts where Auditing starts where accounting
bookkeeping ends. ends.
Period Accounting is a continuous Auditing is a periodic process.
process, i.e. day to day recording of transactions are done.