Tayyaba Tufail 06 Mohsin 04

Sana Rafique 33 Hammad Saleem 18

Ali Raza 23
The origin of auditing can be traced to Italy.
Around the year 1494, Luca Paciolo
introduced the double entry system of
bookkeeping and described the duties and
responsibilities of an Auditor.
Auditing in India has been described in
different ways −
“Auditing is a systematic and independent examination of
data, statements, records, operations and performances
(financial or otherwise) of an enterprise for a stated
purpose. In any auditing situation, the Auditor perceives
and recognizes the propositions before him for
examination, collects evidence, evaluates the same and
on this basis, formulates his judgment which is
communicated through his audit report.”
Following are the common techniques of auditing −

 Checking of posting and casting.

 Physical verification of assets.

 Verification and examination of transactions with available evidences.

 Scrutiny of the books of accounts,

 Checking of various calculations.

 Checking of carried forward balances in next year.

 Checking of Bank reconciliation statements.

 Auditor can get information from inside and outside sources of organizatn
In general, an audit is an investigation of an existing system,
report, or entity. There are a number of types of audits that can
be conducted, including the following:

 Compliance Audit
 Construction Audit
 Financial Audit
 Informational system Audit
 Investigative Audit
 Operational Audit
 Tax Audit

Compliance audits Assure the government that a

business is following the rules and regulations of a specific
agreement. For example, let's say a corporation is
required to report to the government the wages of every
employee or contractor. An audit can be requested to
have the employees assessed as well as their pay to
make sure that taxes are being paid properly and
everything is above board.
Construction Audit:
A construction audit is a review of various aspects of a
project to ensure they are performing appropriately and in
keeping with the contract. Since construction projects
typically involve several entities performing a number of
concurrent tasks, a construction audit is a crucial tool for
keeping everything on track and under budget.
Financial Audit
A financial audit is conducted to provide an opinion whether "financial
statements" (the information being verified) are stated in accordance with
specified criteria. Normally, the criteria are international accounting
standards, although auditors may conduct audits of financial statements
prepared using the cash basis or some other basis of accounting
appropriate for the organization. In providing an opinion whether financial
statements are fairly stated in accordance with accounting standards, the
auditor gathers evidence to determine whether the statements contain
material errors or other misstatements.
Investigative Audit
An investigative audit is the same as a forensic
audit. In forensic auditing, accountants with
specialized knowledge of both accounting and
investigation seek to uncover fraud, missing money,
negligence and/or malfeasance. When fraud or theft
is uncovered, the investigative auditor compiles
evidence and is often asked to testify if the individual
responsible for the theft is eventually prosecuted.
Operational Audit
Operational audit is types of audit services that the
review is mainly focus on the key processes,
procedures, system, as well as internal control which
main objective is to improve the productivity, as well
as efficiency and effectiveness of operation.
Operation audit is also targeted the leak of key
control and processes that cause waste of resources
and then recommend for improvement
Tax Audit
Tax audit. This is an analysis of the tax returns
submitted by an individual or business entity, to
see if the tax information and any resulting
income tax payment is valid. These audits are
usually targeted at returns that result in
excessively low tax payments, to see if an
additional assessment can be made
The goal of an audit is to form and express an opinion on
financial statements. The audit is performed to get
reasonable assurance on whether the financial
statements are free of material misstatement. An audit
also includes assessing the accounting principles used
and the significant estimates made by the management.
Audit conclusions and reporting are one of the principles
governing an audit. Reporting is the last procedure of the
process of an audit.