A REPORT

ON

‘ The Evolution of the Roles and Responsibilities of Auditors’

AUDITING ASSIGNMENT

INTERNAL COMPONENT-I

Bachelor of Business Administration

From

SYMBIOSIS CENTRE FOR MANAGEMENT STUDIES PUNE

Batch 2021–24

Submitted by

NAME PRN Roll No.

K Sasi Samhitha 21020621190 3060

 ACKNOWLEDGEMENT

First of all, I thank Symbiosis Center for Management Studies, Pune for giving us the
opportunity to broaden our knowledge and skills through this Project-based experiential learning.
This project gave me the opportunity to explore the effect of auditing on a company’s social
image. I thank Professor Soma Kulshrestha for her continuous support and guidance throughout
the study period. Her support in overcoming the study barriers and taking the study to the
concluding stage has been great. I thank all the people who directly or indirectly helped me in
completing this project.

1
 INDEX

S.No Topic Page no

1. Introduction 3

2. Objectives 4

3. Literature Review 5-6

4. Research Methodology 7

5. Discussion and findings 8-10

6. Analysis 11-12

7. Conclusion 13

8. References 14

2
 INTRODUCTION

The function of auditors has changed dramatically over time as a result of shifting stakeholder
expectations, dynamic regulatory environments, and technology improvements. Examining
financial accounts and expressing a judgment on their accuracy and adherence to pertinent
accounting standards have traditionally been the responsibility of auditors. However, in recent
years, their work has grown to incorporate more aspects of risk management, corporate
governance, and ethical behavior in addition to merely financial reporting.

The shifting responsibilities of auditors are a reflection of the complexity and interconnection of
contemporary corporate settings. The identification and management of risks that might have an
influence on a company's long-term viability, reputation, and financial stability is increasingly
believed to be a key responsibility of auditors. In the business environment, they are seen as
defenders of accountability, openness, and integrity.

The increased need for assurance services outside of financial statements, the quick development
of technology, and the growth in financial crises and corporate scandals are the main forces
driving the evolution of the job of auditors.

Auditors have begun to broaden their services as a result of an examination of their roles and
duties. Companies today require a tax and compliance expert to handle the necessary processes
in a hassle-free manner due to the expansion of government tax and compliance requirements.
Auditors have started to offer tax and financial consulting services to better meet the demands of
businesses.
This study examines how the function of auditors has evolved over time to meet changing
societal and client demands. Additionally, it describes the modern roles that auditors are
assuming.

3
 OBJECTIVES

The main objectives to undertake this report are as follows:

1. To analyze the evolution of the roles and responsibilities of auditors to accommodate the
change in technology and increase in fraudulent activities.
2. To analyze the change in methods adopted by auditors to perform their duties

4
 LITERATURE REVIEW

S.No Title of paper Name/s of Geography/ Framework adopted and major

author Region of findings
study

1. Auditing for M. Adil Khan India The evolution of auditing processes

Social Change in and Esther in developing and developed
the Context of the Stern countries. The report also analyzes
Millennium how India’s auditing process is
Development different from that of developed
Goals countries and how technological
and social developments have
affected the regulations imposed by
the government.

2. The evolution of Lee Teck All countries This paper aims to analyze the
auditing: An -Heang and development of auditing from the
analysis of the Azham Md. 1800s to present. It emphasizes on
historical Ali the nature and objectives of
development auditing, the responsibilities of
auditors and the audit techniques
used while analyzing how auditing
has evolved as a discipline.

3. Evolving role of Rajeev Oberoi India This paper analyzes how the role of
general counsel as general counsel of companies has
the torchbearer of changed in the last few decades to
ethical practices: reduce the fraudulent practices in
An Indian the country. It sees how general
experience counsel is playing an important role
in aiding the Indian government in
reducing fraudulent activities in
companies.

4. The Emerging The Institute of India The main objective of this paper
Role of Auditors Chartered was to see how the role of auditors
Accountants of and CFOs have changed to address
and CFOs in India the risks posed by Indian corporate
addressing Risk companies and the challenges faced
Management: A by them. It sees how they are
New Perspective adopting new risk management
systems to detect risks and frauds

5
 better.

5. How the auditing Dilek Çilingir All countries This research article analyzes how
profession is Kostem(EY) the working of auditors have
changed after COVID-19 to
transforming to accommodate the pandemic
meet future conditions. It also talks about the
challenges technology they are using to make
the process easier during the tiring
times. It also sees how auditors are
using these technologies after the
pandemic to make the auditing
process easier.

6
 RESEARCH METHODOLOGY

In this report, I have adopted two research techniques to address both objectives. To analyze the
evolution of roles and responsibilities of auditors, I have conducted secondary research. For this,
I have studied various papers published on the topic to understand how the roles have changed
across history. This research also sees how the economic climate and increase in fraudulent
activities have induced the evolution of auditors’ roles and responsibilities.

To analyze the changes undertaken taken by auditors to adjust to the change in roles and
responsibilities, I have chosen the methods of interview and observation. I have interviewed
chartered accountants and CA intermediate students to understand this As an auditing intern, I
have observed why the change has taken place and how auditors were implementing them.

7
 DISCUSSION AND FINDINGS

1. Evolution of Roles and Responsibilities of Auditors

As corporate practices, legal frameworks, and societal expectations have changed throughout the
years, so have the tasks and responsibilities of auditors. The following significant phases of the
evolution can be identified:

(i) Origins and Early Developments (Medieval Times - 19th Century): The practice of
auditing dates back to the earliest civilizations, when officials were employed by monarchs to
confirm the veracity of financial records. Auditor positions known as "auditors of the
Exchequer" were created in medieval Europe to look over financial records. Their main priorities
were identifying fraud and guaranteeing the transparency of public funds. As commercial firms
grew throughout the industrial revolution, auditors started to appear as independent outside
experts who offered reviews of financial data.

(ii) The Emergence of Statutory Audit (20th Century): The development of statutory audit
requirements during the 20th century was motivated by the desire to safeguard public investors
and boost trust in financial reporting. Governments enacted laws requiring businesses to hire
outside auditors to review their financial statements. The major duties of auditors were to
provide an assessment of the fairness of financial accounts and the observance of accounting
principles.

(iii) Expansion of Audit Scope (Late 20th Century): Auditors' responsibilities went beyond
financial statement audits as organizations became more complicated. They began to think about
risk management, corporate governance, and internal controls. Auditors started making
suggestions for enhancing internal control mechanisms and pinpointing inefficiencies in
operational processes. The emphasis switched to helping managers gain insightful information
and improving the general effectiveness of companies.

(iv) Evolution of Assurance Services (Late 20th Century - Present): The development of
non-financial assurance services occurred in the late 20th century. Auditors began offering
assurance on non-financial facts as sustainability concerns, corporate social responsibility, and
the call for greater transparency grew. This includes reviews of social responsibility reports, data
security protocols, and environmental sustainability standards.

8
(v)Technological Advancements and Data Analytics (Present): Technology developments
have changed the auditing industry. Auditors may now more effectively evaluate massive
volumes of financial and non-financial data thanks to modern technologies and data analytics
approaches. This helps with risk evaluation, fraud detection, and the detection of new threats.
Technology-driven audit processes are becoming more and more important to auditors as a way
to improve the efficacy and efficiency of their job.

(vi)Expanded Responsibilities and Ethical Considerations: Auditor requests to take on more

duties have increased in recent years. These include evaluating the veracity and integrity of
management's claims about matters like cybersecurity, data privacy, and sustainability reporting
that go beyond financial statements. To guarantee ethical behaviour and corporate governance,
auditors are supposed to display professional scepticism, uphold independence, and work for the
public good.

Auditors have evolved throughout the years to meet social demands as well as changes in
company operations, laws, and regulations. Their function has expanded from the
straightforward verification of financial records to include risk management, assurance of
non-financial information, and giving stakeholders insights. The constantly changing functions
and responsibilities of auditors reflect their crucial role in upholding public confidence,
supporting good financial procedures, and fostering accountability and openness in the corporate
sector.

2. New methods adopted by auditors

To improve the efficacy and efficiency of their job, auditors have adopted a number of innovative
methodologies and procedures. To manage new risks and satisfy changing stakeholder
requirements, these techniques make use of technical breakthroughs, data analytics, and creative
strategies. Among the modern techniques used by auditors are:

(i)Data Analytics and Advanced Technologies: Auditors are using cutting-edge technologies
and data analytics tools to examine vast amounts of financial and non-financial data. One of
them is the AI released by the income tax department. This AI tracks all the transactions made by
a company using the bank accountants registered under its PAN.

(ii)Continuous Auditing and Monitoring: Audits have typically been carried out annually.
However, auditors are now using procedures called continuous auditing and monitoring, which

9
involve continuing evaluations of operational and financial data. Real-time data feeds and
automated processes are used in continuous auditing to quickly detect and mitigate hazards.

(iii)Integrated Auditing: In order to evaluate the interconnected risks and controls within an
organization, financial auditors and other speciality auditors (such as IT auditors or sustainability
auditors) work together in integrated auditing. This strategy guarantees a thorough assessment of
the financial, operational, and regulatory aspects, giving a comprehensive picture of the risk
landscape for the firm. One type of company in which this method is especially useful is the
audit of environment monitoring companies which tend to take bribes and publish fake reports.
The collaboration ensures that companies are taking care of all compliance procedures, financial
and otherwise. This also prevents oversight on the part of the external auditors.

(iv)Remote Auditing: The use of remote auditing techniques has increased as a result of the
COVID-19 epidemic. Technology is being used by auditors to conduct virtual audits, reducing
face-to-face interactions and preserving corporate operations. In order to execute audit processes
and communicate with customers, remote auditing uses video conferencing, secure file-sharing
platforms, and remote access to systems and data. Along with ease of the , auditors have the
assurance that companies do not tamper with the financial data as every entry made will be
recorded and shown in the history.

10
 ANALYSIS

1. In recent years, there has been an increase in fraudulent activities. To provide more
accurate reporting, auditors have started to undertake more roles and responsibilities. The
depth of audits conducted was increased. Auditors began to cross-verify every single
entry in the financial statements of companies to ensure that companies were following
maximum compliance and financial regulations.

2. The audit evidence collected has increased over decades. Initially, auditors only collected
the basic information required. Now, they are collecting sales and purchase invoices,
property deeds, bills of purchased equipment, inventory history and movement proofs,
etc.

3. Auditors are adopting new technology like data analysis tools to verify financial data, AI,
etc. for real-time surveillance of financial data. This technique makes it simpler for
auditors to regularly look for anomalies in the companies' books of accounts during
audits. In order to ensure greater accuracy and caution during final audits, this strategy
assists auditors in avoiding random test sampling.

4. New statutory regulations and guidelines were released to ensure that the procedure
followed by all auditors is the same. This ensured that all the audit reports were issued in
a pre-fixed manner, making it easy for stakeholders to understand.

5. With the release of new accounting standards and tax regulations, auditors had to expand
their audit to check compliance with the same. During the audits, auditors started to
check if all the financial statements were in compliance with International Accounting
Standards and if all taxes(like GST, TDS) were calculated accurately. This decreased the
chance of tax fraud by companies.

6. Environment destruction is taking place fastly due to the misuse of resources by

companies. When auditors expanded their responsibilities to include the verification of
environmental compliance, many companies that were using wrong practices were
exposed. For this, auditors are taking the help of speciality auditors.

11
7. Auditors have now even started to look into ethical compliance. This has helped the
government to expose many wrong-doers and punish them accordingly.

8. With the evolving role of auditors, the government has also provided them with the
required assistance. Some examples are the AI tool created by The Income Tax
Department to track all transactions of an organisation in real-time, the provision of 3A
and 2B forms of GST to check the accuracy of input and output GST, the release of forms
by the Ministry of Corporate Affairs that keep track of all changes in internal control, etc.

12
 CONCLUSION

Over the years, as corporate practices, legal frameworks, and societal expectations have changed,
so have the roles and responsibilities of auditors. Auditors have changed from their beginnings as
financial record examiners to becoming respected experts, reflecting the complexity of
contemporary company situations.

The evolution of auditors' jobs has been significantly shaped by technological advancements.
Audit methods have changed as a result of the use of data analytics, artificial intelligence, and
automation systems. Auditors may now evaluate enormous volumes of data more quickly, find
trends, spot anomalies, and offer deeper insights.

In conclusion, the development of auditor duties and responsibilities emphasizes their crucial
role in upholding public confidence, assisting solid financial practices, and fostering
accountability and openness in the corporate sector. By embracing technology innovations,
broadening their areas of competence, and continually improving their capacity to offer
customers and stakeholders relevant assurance services, auditors have adapted to the needs and
difficulties of the current period. The development of auditors' responsibilities highlights their
crucial role in promoting public trust in financial reporting and preserving the honesty of the
commercial world.

13
 REFERENCES

1. https://publicadministration.un.org/publications/content/PDFs/E-Library%20Archives/20
05%20Auditing%20for%20Social%20Change_A%20Strategy%20for%20Citizen%20En
gagement%20in%20Public%20Sector%20Accountability.pdf#page=22
2. https://www.researchgate.net/profile/Azham-Md-Ali/publication/339251518_The_evoluti
on_of_auditing_An_analysis_of_the_historical_development/links/5e45ec9f458515072d
9a7bfb/The-evolution-of-auditing-An-analysis-of-the-historical-development.pdf
3. https://studycafe.in/wp-content/uploads/2022/07/Emerging-role-of-Auditors-and-CFOs-i
n-addressing-Risk-Management-A-New-Perspective.pdf
4. https://www.ey.com/en_gl/assurance/how-the-auditing-profession-is-transforming-to-mee
t-future-challenges
5. https://heinonline.org/HOL/LandingPage?handle=hein.journals/iihcj7&div=53&id=&pag
e=

14