AUDITING PROJECT 08/CM/04

Acknowledgement
The satisfaction that accompanies the successful completion of any task would be incomplete without mentioning the names of people who made it possible, whose constant guidance and encouragement crowns all efforts with success. First I would like to acknowledge my sincere thanks to Dr.Sr.Jasintha Quadras, Principal, Stella Maris College, for her invaluable blessings. I wish to express my gratitude to Dr.Agnes Rozario, Head of the commerce department for her enthusiastic encouragement. I would like to thank Ms.Jesintha Preethi Francena, lecturer, commerce department and teacher incharge for auditing, with deep sense of gratitude for her enormous support and guidance throughout the project.

Declaration

when such an examination is conducted with a view to expressing an opinion thereon." . system. Definitions for Auditing The Definition for Auditing and Assurance Standard (AAS) 1 by ICAI "Auditing is the independent examination of financial information of any entity. “VOUCHING AND VALUATION OF ASSETS”. and irrespective of its size or legal form. whether profit oriented or not. Auditing is a process by which a competent. organization. and energy conservation. The term most commonly refers to audits in accounting. project or product. enterprise. has been conducted by me in person. quality management. judging them against the back drop of established criteria.This is to declare that the project titled. This is neither a reproduction of any of the studies previously conducted nor copied from any other source of information. process. Introduction The general definition of an audit is an evaluation of a person. conforming to the quality parameters of generally accepted auditing practices. but similar concepts also exist in project management. Essentially auditing is a process. independent person accumulates and evaluates evidence about various assertions contained in financial statements of an entity for the purpose of determining and reporting the quality of disclosure of financial information. a professional exercise.

also to provide an assessment of a system's internal control. Audits in accounting Audits are performed to ascertain the validity and reliability of information. Due to practical constraints. an audit seeks to provide only reasonable assurance that the statements are free from material error.According to the Institute of Cost and Management Accountants of Pakistan. information systems performance. recent auditing has begun to include non-financial subject areas. information systems audits. labour or other items of cost. there has been an increasing need for performance audits. As a result. and checking for adherence to the cost accounting objectives. under evaluation based on work done on a test basis. security. a cost audit is "an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at. Traditionally. Auditing is a vital part of accounting. However. examining their success in satisfying mission objectives. With nonprofit organizations and government agencies. statistical sampling is often adopted in audits. In simple words the term.) in question. The goal of an audit is to express an opinion on the person / organization / system (etc.a concept influenced by both quantitative (numerical) and qualitative factors. on the basis of accounts measuring the use of material. In cost accounting. cost audit." An audit must adhere to generally accepted standards established by governing bodies. in accordance with principles of cost accounting. and environmental audits. a set of financial statements are said to be true and fair when they are free of material misstatements . . it is a process for verifying the cost of manufacturing or producing of any article. In the case of financial audits. such as safety. there are now audit professionals who specialize in security audits. audits were mainly associated with gaining information about financial systems and the financial records of a company or a business (financial audit). Hence. and environmental concerns. or other subjects on which the auditor expresses an opinion. means a systematic and accurate verification of the cost accounts and records. These standards assure third parties or external users that they can rely upon the auditor's opinion on the fairness of financial statements.

According to Arthur W Holmes. To examine the authenticity of the transactions recorded in the books of account. To examine the adequacy and reliability of documentary evidence. have been properly authorized and are correctly recorded in the books. also confirming that the amount mentioned in the voucher has been posted to an appropriate account which would disclose the nature of the transaction on its inclusion in the final statements of account. but includes the examination of the transactions of a business together with documentary and other evidence of sufficient validity to satisfy an auditor that such transactions are in order. It essentially consists of verifying a transaction recorded in the books of account with the relevant documentary evidence and the authority on the basis of which the entry has been made. existence and accuracy. ownership. Vouching is the examination of the underlying evidence which is in support of the accuracy of the transaction.Vouching The act of examining vouchers is referred to as vouching. with the objective of establishing the authenticity of the transactions recorded in the primary books of account. The process of vouching is intended to substantiate an entry by providing authority. Vouching does not mean merely the inspection of receipts with the cash book. Objectives of Vouching The main objectives of vouching are: • • • To examine the accounting entries recorded in the books of accounts with reference to documentary evidence known as vouchers. It is the practice followed in an audit. Definition of Vouching Ronald A. Significance of Vouching . According to F R M De Paula. Irish has defined vouching as a technical term which refers to the inspection by the auditor of documentary evidence supporting and substantiating a transaction.

Unless he tries to establish the accuracy and authenticity of all the transactions recorded in the books of account. The exercise of establishing and verifying the accuracy and authenticity of the accounting entries passed in the book of account with reliable evidences are technically called 'vouching'. etc 4. audit planning. Auditor is required to certify the financial statements prepared by the accountant as the statement shows the true and fair view of the results of operations and the state of affairs of the business. THEORY – INTRODUCTION TO AUDITING. It may relate to cash as well as trading transactions. audit preparations etc. This process of checking the evidence of the entries called is vouching.. auditing working papers. In this step the auditor has to check the entries with its supporting documents to determine the accuracy and authenticity of the entries passed by verifying the vouchers. CONCLUSION 7. It means vouching is the testing the truth of all the entries made in the book of accounts. PROJECT REPORT 6. the next step is to proceed with the examination of accounting entries passed in the books of account during the period under review. bills and other supporting documents. CONTENTS 1. COMPANY’S PROFILE 5. auditor will be falling from discharging his duty. ANNEXURES .After preparing Audit note book. LIMITATIONS TO THE PROJECT 3. OBJECTIVE OF THE PROJECT 2. BIBLIOGRAPHY 8.

To rectify the identified errors. To identify errors if any. To implement our theoretical knowledge on different topics of auditing.OBJECTIVE OF THE PROJECT The main object for this project is to provide us. LIMITATIONS TO THE PROJECT . basic knowledge about. business organizations. To practically view how vouching and valuation of assets are done in an audit firm. how vouching and valuation of assets are carried in an audit firm. religious organizations etc. government institutions. Other objectives: To be familiar with auditing practices and procedures. charitable institutions. the students of auditing. To view how audit is done for various types of organizations such as hospitals. service organizations.