Meaning of Auditing
The term "audit" comes from the Latin word "audire," which means "to hear." The purpose of auditing is to confirm the financial status as stated in the financial statements. It reviews financial statements to see if they present an accurate and fair picture of its financial position and profit or loss.
Meaning of Audit
An audit is when an auditor examines or inspects various books of accounts, followed by a physical inventory check, to ensure that all departments follow a prescribed procedure of recording transactions. It is done to ensure that the financial statements presented by the organization are accurate.
Meaning of Auditor
An auditor is a specialist who gathers and assesses information to report on the extent to which a company's claims that they follow a set of procedures or standards are valid. While working as an auditor necessitates a highly skilled accountant, there are various auditors with varying objectives. Apart from having a professional qualification, an effective auditor must possess specific characteristics. He must complete the audit in a timely and effective manner.
Initially, its meaning and use were limited to cash audits. The auditor had to determine whether the person in charge of account management had adequately accounted for all cash receipts and payments made on behalf of his principal. However, the term audit has come to denote a thorough examination of a company's books of accounts, with the ultimate goal of verifying the financial condition indicated by the balance sheet and profit and loss account.
Employees or department heads can do internal auditing, and a firm or an independent auditor can do external auditing. The goal is for an independent body to audit and verify the accounts to ensure that the books of accounts are completed fairly and that no misrepresentation or fraud is taking place.
Before releasing their quarterly results, all publicly traded companies must have their accounts examined by an independent auditor.
Who has the authority to conduct an Audit?
Chartered accountants from the Institute of Chartered Accountants of India (ICAI) can conduct independent audits on any company in India. In the United States, audits are performed by CPAs (Certified Public Accountants).