Auditing

  Audit  is
a systematic and independent
examination of books, accounts,
statutory records, documents and
vouchers of an organization to ascertain
how far the financial statements as well
as non-financial disclosures present a
true and fair view of the concern.
The Basic Objectives Of Auditing

Verification of accounts and

statements.

Detection of errors or frauds.

Prevention of errors or frauds.

 Two Types of Auditing

Internal Auditing
INTERNAL AUDITING

- Examination, monitoring and

analysis of activities that
related to company’s operation.
External Auditing
EXTERNAL AUDITING

Independent body which resides

outside of the organization which
it is auditing.
 4 Reasons: Why Audit Is
Important
Business Objectives
Risk of Misstatement
Fraud Prevention
Cost of Capital
 Business Objectives

To fulfil To prevent and

To facilitate
business detect irregular For monitoring
supervision
objectives transaction
 Risk of Misstatement

 Able to create reliable

Financial Report
for Internal and External
AUDIT purposes

helps company  Able to tell status

of Assets and Liabilities
 Fraud Prevention

Fraud is a wrongful or criminal

act intended to get financial
or personal gain
 Cost of Capital (Investment)
A strong audit system can reduce

Risk of Fraud and Risk of

Misappropriation Information Risk Suboptimal
of assets Management
ANNUAL BUDGET
Process of Auditing

School
COA

Purchase/L
iquidation

ADAS

School
District
 Advantages of Auditing
1. It detects errors and frauds with suggestions
for their prevention.

2. To avoid such mistakes being committed the

accounts are kept up-to-date.

3. The parties feel confident of the audit report

because it was done an independent person or
body.
4. Accounts as audited stand authentic.

5. The auditors are competent persons in the field

of accounts and financial laws so can render advice
to management.

6. In case of joint stock companies the director has

no chance of taking undue advantages.

7. Auditing accounts facilitates settlement among

partners.
 “ Leaders must be close enough
“Le” ad
to relate to others, but far enough
ahead to motivate them.”

- John C. Maxwell