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Introduction

1492 Lucas Pacioli Double Entry System


1844 Companies Act of England Preparation of Balance Sheet and its auditing got
legal.
1880 Institute of Chartered Accountants was found in England.
From 1914 to 1932 obligatory on the part of every company incorporated under it to
have the accounts audited at least once every year.
1977 International Fedaration of Accountants (IFAC) International Auditing
Practices Committee (IAPC).
Institiute of Chartered Accountants of India (ICAI) is member of IFAC, it set up on it
own an auditing practicing committee (APC) in 1982 developed Satandard Auditing
Practices (SAPs) now renamed as Auditing and Assurance Standards (AAS) AAS 1
to AAS 35.
Financial Statements;
Profit / Loss A/c- Which indicates Profit earned or loss incurred during the particular
financial year.
Balance Sheet : Which shows postions of assests & liabilities at a particular date
CashFlow & Fund Flow statement : Which show movement of cash/fund during
particular financial year.

Owner: For evaluating performance & profitablitiy of business.


Mgmt For evaluating their own performance
For making decision
For judging tax liablilities
For estimating expected future outcomes.
Lender& Creditor For judging creditworthiness of the entity
For Judging recoverability of their dues.
Customer For determing general consisitency of the business
Govt For calculating direct tax, exciss duty, VAT etc

Empolyee Creat demand of bonus, For determining reasonableness of wages &


salaries etc
Research For trends, for judging investment opportunities in the end
Book-keeping , Accountancy and Auditing
According to Kohler,The process of analyzing, classifying and recording transaction in
accordance with a preconceived plan is called book-keeping.
Accounting of business transactions in the books of original entry such as
purchase book, sales book, sales return, purchase return, cash book, bills receivable,
bill payable etc
To post in the ledger from the books of original entry.

Accountancy
Accounting is the recording, classifying and summarizing of economic events, for the
purpose of providing financial information used in decision making.
Accountancy mainly consist of the following activities
Preparing trial balance from book-keeping
Doing adjustments at end of the accounting year
Preparing final accounts
Auditing
Audit form Greece word audire means to hear.
Auditing is systematic and independent examination of accountancy and other
underlying data and information to give an opinion in the audit report.
AUDITOR
A Accounting & other
U Underlying
D Data and
I Information
T To give an
O Opinion in
R the audit report
Systematic carry the audit as per laid down procedure and guidelines.

Independent Auditior should act unbiased.


Auditing is determining whether recorded information properly reflect the economic
events that occurred during the accounting period.
Auditing is a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between the assertions and established criteria and communicating
the results to interested users.
AAS 1
Audit is an independent examination of financial information of any entity whether
profit making or not, irrespective of its size & legal structure when such an
examination is conducted with view to express an opinion thereon.
CAG of india
Audit an instrument of financial contrl. It acts as a safeguard on behalf off the
proprietor (whether an individual or group of persons) against extravagance,
carelessness or fraud on the parts of the propertiors agent or servants in the
realization and utilization of the money or other assets and its ensures on the
proprietors behalf that the accounts maintained truly represent facts and that the
expenditure has been incurred with due regularity and propriety. The agency employed
for this purpose is called an auditor.