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Proposed definitions will be considered for inclusion in the Economictimes.com Definition: Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organisation. Description: Audit can be done internally by employees or heads of a particular department and externally by an outside firm or an independent auditor. The idea is to check and verify the accounts by an independent authority to ensure that all books of accounts are done in a fair manner and there is no misrepresentation or fraud that is being conducted. All the public listed firms have to get their accounts audited by an independent auditor before they declare their results for any quarter. Who can perform an audit? In India, chartered accountants from ICAI or The Institute of Chartered Accountants of India can do independent audits of any organisation. CPA or Certified Public Accountant conducts audits in USA. There are four main steps in the auditing process. The first one is to define the auditor’s role and the terms of engagement which is usually in the form of a letter which is duly signed by the client. The second step is to plan the audit which would include details of deadlines and the departments the auditor would cover. Is it a single department or whole organisation which the auditor would be covering. The audit could last a day or even a week depending upon the nature of the audit. The next important step is compiling the information from the audit. When an auditor audits the accounts or inspects key financial statements of a company, the findings are usually put out in a report or compiled in a systematic manner. The last and most important element of an audit is reporting the result. The results are documented in the auditor’s report.
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Which branch of accounting means examination of financial statements by a CPA for the purpose of expressing an opinion as to the fairness of the statements?Auditing
External auditing refers to the examination of financial statements by an independent party with the purpose of expressing an opinion as to fairness of presentation and compliance with GAAP.
Which branch of accounting means examination of financial statement?Auditing accounting is an objective examination and evaluation of a company's financial statements done internally or by a government entity, such as the Internal Revenue Service.
Is the accounting branch which is used by the external users of financial statement?The field of accounting that serves external users of financial statements in decision making process is known as financial accounting.
What branch of accounting focuses on the preparation of financial reports used by managers?Managerial accounting involves the presentation of financial information for internal purposes to be used by management in making key business decisions.
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