Audit note book is maintained by the audit assistant ti note down to all those unclear matter which he may come across in the course of audit and on which he requires further clarification and explanation. It contains day to day work performed by the audit staff on any particular day. Notes about all types of errors, difficulties and uncleared point, etc. are recorded in audit notebook.
Audit notebook is a diary on which auditor scribble down all important inquiries to avoid the possibility of unquestioned material facts.
Importance of Audit Note Book
Justice William throws light on the importance of audit notebook in the following words:
The audit notebook that contained detailed information proved to be very helpful to the auditor in every critical moment. For preparing the audit report it is very useful for that auditor.
In case of negligence charge against the auditor, but note book good evidence can be presented. It may be also used for future guidance and reference. It also enables to auditor to know that what work his assistant at each audit has done.
Objectives of Audit Note Book:
1. To know about the nature of business.
Detection and prevention of frauds and errors effectively.
2. To make the future audit work easier.
3. To know the facts where clarification and explanation are essential.
4. To check the list of debtors and creditors.
5. To present as a proof by the auditor to clearance over the cases.
Contents of Audit Note Book:
1. A copy of audit program.
2. The nature of business and important documents relating to the business.
3. The name of the clients and audit year.
4. A list of books of accounts.
5. Name of principal officers, their duties and responsibilities.
6. Accounting and financial policies followed by the business.
Advantages of Audit Note Book
1. Audit Report
The audit notebook is helpful to prepare audit report. The auditor can record the weakness of accounting records. The queries not properly answered are started in the audit report when the auditor is satisfied he can submit a clear report.
2. Staff Honesty
The audit notebook is used to determine the integrity and honesty of audit clerks. The moral and ethical value can be examined through audit work. When a person completes his work in time. Time period auditor can appreciate him. If there is pending work after the expiry of time period, he can be held responsible for it. The audit staff must be honest in his work.
3. Helpful For Memory
The audit notebook is help to keep things fresh in memory. The auditor can read the book on daily basis. He can note the weakness on fingertips. The auditor can retain the data in his memory for a longer period of time. He can ask the management to clear the doubtful points before preparing audit report.
4. Reference
The audit notebook is useful for reference. In future it can provide information to the audit staff. The past data gives an insight into business matters. The auditor can note the changes. He can form an opinion about the changes in the nature and size of the business.
5. New Auditor
The audit notebook is useful for new auditor. They can see the weakness of previous years. The old weak points may not be repeated this year.
6. Court Cases
The audit notebook is helpful to defend an auditor in court cases. The people can go to court of law in order to fix liability for negligence of duty. The audit notebook is a written proof of work performed by an auditor.