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INTRODUCTION
In today’s society the exercise of an auditor’s to the economic and ethicalleadership sets the bounding standard or in other words equips an auditorin such a way that recognizes him as a reliable body. With the growingconscious recognition of the importance of financial data in the ordering of everyday business and economic life, the need of basic economic facts isproviding a constantly enlarging opportunity for the accountingprofession. The auditors' reports have an especial capacity to fulfill theneed for reliable and authoritative financial material not only because of the reputation or prestige of the certified statements, but also because of the significance generally attached by the business man to the functionsof the auditor and his reports. These functions, and the scope of thesereports, have in the past been definitely related to the character of andchanges in business activity.Audits and reviews are basically procedures performed on the financialstatements of a company, for the purpose of determining whether thefinancial statements include any material misstatements. Misstatementsare essentially wrong numbers due to numerical errors, fraud, or errors ininterpreting the accounting rules. Misstatements are material if they arelarge enough to make a difference to a user of the financial statements,such as a bank or investor. And the person who involved in auditing isknown as auditor. It also provides the techniques necessary to examinethe internal control system of a company and perform operational orcompliance audits by internal or external auditors. The early conceptions of the functions of the auditor were such as toconfine him to the duties of a mere checker and verifier of debits andcredits. As business became more complex in its interrelationships therehas been a compensating broadening demand for the acceptance of newand formerly unrecognized responsibilities by the auditor. This has
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progressed so far that the highest type of auditor is looked upon today asa financial expert. The premises upon which most audits are predicated,however, are still largely those of the checker-verifier. Recent economictrends have accentuated the new conceptions and demands upon theauditor. The control of business enterprises within and among themselveshas emphasized the importance of the budgetary and managerial aspectsof the accountants' reports in enabling business units to coordinate theirinternal and external activities in the scheme of the economic plan. Thus the word “audit” is derived from the Latin word ‘audire” whichmeans “to hear”. In olden times, whenever the owners of a businesssuspected fraud, they appointed certain persons to check the accounts.Such persons sent for the accountants and “heard” whatever they had tosay connection with the accounts. It was an Italian, Luca Paciaio, who firstpublished his treatise on double entry system of book-keeping for the firsttime in 1494. He mentioned and described the duties and responsibilitiesof an auditor, since then; there have been lot of changes in the scope anddefinition of audit and the duties and responsibilities of an auditor.Spicer and Pegler , have defined Audit as “such as examination of thebooks, accounts and vouchers of a business, as will enable the auditor tosatisfy himself that the balance sheet is properly drawn up, so as to give atrue and fair view of the state of the affairs of the business, and whetherthe profit and Loss account gives a true and fair view of profit or loss forthe financial period, according to the best of his information and theexplanations given to him and as shown by the books and if not, in whatrespect he is not satisfied.”F.R.M. De Paula, an English authority on auditing literature, describesauditing as “ the examination of a balance sheet and Profit and Lossaccount prepared by others, together with the books, accounts, andvouchers relating thereto in such a manner that manner that auditor maybe able to satisfy himself and honestly report that, in his opinion, suchbalance sheet properly drawn up so as to exhibit a true and correct view
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of the state of affairs to the particular concern according to theinformation and explanations given to him, and as shown by the books”.He further continues that an “audit of a balance sheet involves theverification of the profit and loss account, as the balance of that accountmust be included in some form or other in the former”.
HISTORY OF AUDITING
The complicated evolution of auditing has been changing throughout thehistorical changes. Thus the practice of auditing have always had adramatic shift of change to cope with the needs of everyday businessenvironment. Auditing has been around since the beginning of humancivilization, focusing mainly, at first, on finding fraud. As the United Statesgrew, the business world grew, and auditing began to play moreimportant roles. In the late 1800’s and early 1900’s, people began toinvest money into large corporations. The Stock Market crash of 1929 andvarious scandals made auditors realize that their roles in society werevery important. Scandals and stock market crashes made auditors awareof deficiencies in auditing, and the auditing community was always quickto fix those deficiencies. The auditors’ job became more difficult as theaccounting principles changed, and became easier with the use of internalcontrols. These controls introduced the need for testing; not an in-depthdetailed audit. Auditing jobs would have to change to meet the changingbusiness world. The invention of computers impacted the auditors’ worldby making their job at times easier and at times making their job moredifficult. The practice of auditing has been in the human society since itsbeginning. Auditing was used mostly for the detection of fraud and was
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The Late 1800’s to Early 1900’s for Auditing in Bangladesh
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i want to know about listed CA firms of bangladesh bank