Introduction to Auditing

base
base on
on AA handbook
handbook of
of practical
practical Auditing
Auditing

Author – B.N TANDON

GROUP NAME: INFINITY

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GROUP MEMBERS NAME

NAME ID

Ramiz Uddin 15102290

Shakil Ahmed Sumon 18102065

Nafis Sadique Sifat 18102135

Hanifa chowdury 15102373

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 Definition of Audit
• “Audit” is derived from Latin word “audire”
which means “to hear”.
• Auditing is a systematic examination of the
books and records of a business or
organization.
• “Audit” is an instrument of financial control.

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 Difference between Book-keeping,
Accountancy and Auditing
• Book-keeping is an art of recording the business
transactions in the books of original entry and
ledgers.
• Accountancy means the compilation of accounts
to know the state of affairs of business..
• Auditing means the verification of book entries
and accounts to find out their accuracy.

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 Auditing and Investigation
• Audit is conducted to find out whether the
balance sheet is properly drawn up or not.
• Investigation covers several years.
• Investigation maybe carried out on behalf of
outside.

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 OBJECTS OF AUDIT:
Its can be categorized into -

1. Main Objective
2. Secondary Objective

3. Specific Objective

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 Main Objective:
Expression of expert opinion
The Auditor expresses his opinion about the quality of
Financial Statement concerning proper discloser of
facts in the Financial Statement And the truth and
fairness of the financial position.

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 Secondary Objective

Prevention of Error

Errors of Compensating Errors of

Principle Errors Duplication

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Errors of principle: Errors in contravention of Accounting Principle.
Example: Treating Capital Item as a Revenue Item

Compensating Errors: One Error Balance Another Error. These errors of

debit and credit A/C is nil.

Errors of Duplication: Recording the same Transacation Twice in the

original Book of entry and also Posting it to ledgers.

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 Prevention of
Clerical Errors
Errors

Errors of Errors of
Omission commission

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 Clerical Error: These errors are committed in posting, totaling and
balancing.
it have two subdivides –

Errors of Omission: Absolutely no entry was made. A Transaction is

completely left out or omitted from the company.
Example: A payment for cash account purchases has not been entered in
the cash book .

Errors of commission : Figure posted on the wrong side or with wrong

Amount.
Example: A sales invoice for customer A is debited to customer B account
in the sales ledger.
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 Detection & Prevention of Fraud

Fraud is a false representation.

Can be categorized among 3 types:

 Embezzlement of cash
 Misappropriation of goods &
 Fraudulent manipulation of Accounts.

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 Continue…
 Embezzlement of cash:

Pocketing few sums of money from cash register.

Can be identified by checking wage sheet,
vouchers, cash book etc.

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 Continue…
 Misappropriation of goods:

 Much difficult
 Usually stole goods
 Personal use of the organization’s asset
 Fictitious expenditures
 Ghost employees
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 Continue…
 Fraudulent manipulation of accounts:

 Showing less profit

 Showing more profit
 Window dressing

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 THANK YOU

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