AUDITING
UNIT -1
MEANING OF AUDIT:-
An audit is an "independent examination of financial information of any entity, whether profit oriented
or not, irrespective of its size or legal form when such an examination is conducted with a view to
express an opinion thereon."[1] In a narrower sense, an audit refers specifically to the verification of
financial statements, primarily assessing their authenticity, legality, and fairness.[2] In a broader sense,
an audit encompasses not only financial auditing but also operational, compliance, management,
environmental, and other specialized areas. Its purpose extends beyond verifying financial data to
ensuring the efficiency, compliance, and risk management of a business's overall operations.
, OBJECTIVES OF AUDIT:-
The objectives of auditing are changing with the advancement of
business techniques. Earlier it was only to check the correctness of
receipts and payments.
The objectives of the auditing have been classified under two
heads:
1) Main objective
2) Subsidiary objectives
Main Objective: The main objective of the auditing is to find
reliability of financial position and profit and loss statements.
∙ The objective is to ensure that the accounts reveal a true
and fair view of the business and its transactions.
∙ The objective is to verify and establish that at a given date
balance sheet presents true and fair view of financial position
of the business and the profit and loss account gives the true
and fair view of profit or loss for the accounting period. It is
to be
established that accounting statements satisfy certain
degree of reliability.
❖ Thus the main objective of auditing is to form an independent
judgement and opinion about the reliability of accounts
and truth and fairness of financial state of affairs and
UNIT -1
MEANING OF AUDIT:-
An audit is an "independent examination of financial information of any entity, whether profit oriented
or not, irrespective of its size or legal form when such an examination is conducted with a view to
express an opinion thereon."[1] In a narrower sense, an audit refers specifically to the verification of
financial statements, primarily assessing their authenticity, legality, and fairness.[2] In a broader sense,
an audit encompasses not only financial auditing but also operational, compliance, management,
environmental, and other specialized areas. Its purpose extends beyond verifying financial data to
ensuring the efficiency, compliance, and risk management of a business's overall operations.
, OBJECTIVES OF AUDIT:-
The objectives of auditing are changing with the advancement of
business techniques. Earlier it was only to check the correctness of
receipts and payments.
The objectives of the auditing have been classified under two
heads:
1) Main objective
2) Subsidiary objectives
Main Objective: The main objective of the auditing is to find
reliability of financial position and profit and loss statements.
∙ The objective is to ensure that the accounts reveal a true
and fair view of the business and its transactions.
∙ The objective is to verify and establish that at a given date
balance sheet presents true and fair view of financial position
of the business and the profit and loss account gives the true
and fair view of profit or loss for the accounting period. It is
to be
established that accounting statements satisfy certain
degree of reliability.
❖ Thus the main objective of auditing is to form an independent
judgement and opinion about the reliability of accounts
and truth and fairness of financial state of affairs and
