Audit can be studied in detall areas.

its v a r i o u s runctional
effectively to improve
and
organization can utilize it AUDIT
MANAGEMENT
DIFFERENCE BETWEEN FINANCIAL AND
Financial Audit Management Audit
Basis Audit means
1. Meaning Financial Audit means verification | Management
of true and fair view of financial evaluation of managerial
statements. performance in establishing and
executing of proccdures, policies
and objectives.
2.Period Conducted generally for a year No time limit
3. Scope Examination of financial and related Evaluation of the
performance
records and reporting as it is. of management and
reporting
the defects and
suggestions for
improvement.
4.Compulsion It is compulsory for certain types of| No
such compulsion
organisations
|5. To whom
report Audit Report is submitted to owners
is submitted Report S
submitted to
(sharcho lders)
management
 can prove that a car 1S
purchased on a
particular date during the year Dut
they cannot prove
that the car was in existence and in the
possession of the client on the date of balance shee
with the given value. It may break, it
may lose, it may not have the same value, so on
and so
Torth. Existence of the car can be proved only by physical check up and verilying its value
Unless checking physical existence and values of assets and liabilties, an auditor cannot
certily that the balance sheet is showing true and fair view of its state of atfairs.

Meaning of Verification
Verification means to confirm or substantiate the truth or accuracy by
competlent
examination. An auditor satisfy himself by
documentary evidence or by physical check that
fne asset is in existence, it is in the
possession of the client and the value shown in the balance
sheet is proper. This work of auditor is called as verilication of assets.

Definitions
1) Splcer and Pegler The verification of assets implies and inquiry
-

into the
ownership and title, existence and possession, the presence of any chargc on lhe asset. value,
2) JR Botlibol "

In verification of assets the auditor satisfy himselr that they

-

must
really existed on the date of balance sheet and
free from any were charge and they have becn
properly valucd. In verifying the liabilities, he has to see that all liabilities have been inserted
at their proper
figures and that no liability has been omitted.
From the above discussion and definitions, we can say that verification involves the
tolowing considerations-
i. that cach asset or liability is clearly and properly discloscd and described.
ii. that the assets and liabilities were actually exist on the date of balance
sheet,
i . that the ownership and possession of the assets are of the busincss,

iv. that the assets are free from any chargc and i1 there is any charge it is
specificaily
mentioned
.that the assels and liabihtis corectly valued and recorded with proper
Objectives of Verificatlon
are
figures
1. To s e that assets and basis
liabilities are valucd on
principles and the principles are applicd consistently.
the of generally accepted accountine

2. To verify that all the business asscls and liabilities are shown in the balance s
sheet at
their right valuc.
3. To check that the assets and liabilities shown are actually exist
4. To check that the owneship and possession of the assets are with he company. 1f there
is any charge, it is shown clearly
 5. To verify that all the assets and liabilities are properly shown in the balance sheet
according to the provisions of the respective act, rules and requirements of the business
organizalion.
6. To verify that balance sheet shows true and fair view of the state of affairs of the
business.

Significance of Verification
1. It verifies physical existence of the asscts and genuineness of liabilities.
2. Any fraud or iregularity regarding assets or liabilities can be detected by verification.
3. Any mortgage, pledge, hypothecation or floating charge on any asset comes to light

by verification.
4. Share holders can know the true and fair value of assets and liabilities.
such creditors, financer, investors etc. can know the real worth of the
5. Third parties as

business.
in his report that the balance sheet shows true & fair
6. The auditor can state confidently
view of the state of affairs of the business.

Auditor's Position Regarding Verification

on in o n imnortant duty of an Auditor, When an auditor has to report whether