Introduction to Auditing and Window Dressing
Introduction
To AuditING and Window Dressing
INDEX Sr.no | Topic | 1. | Introduction | 2. | Origin , Definition | 3. | Objectives | 4. | Principles | 5. | Errors and Frauds | 6. | Window Dressing | 7. | Case Study | 8. | Conclusion |
OBJECTIVES OF AUDITING
The main object of the audit is to find out whether the accounts of a particular concern show a true and fair view of the earnings and financial state of affairs.This is possible only when all the accounts are properly verified. Auditor has to discover errors and frauds while performing his duty.
The objects of auditing include: 1) Primary objects 2) Secondary objects
PRIMARY OBJECTS:
Primary objects is to report to the shareholders of a company:
i) Whether the profit and loss account and the balance sheet are properly drawn up according to the Companies Act ,1956. ii) Whether the company shows true and fair views of the state of affairs of the concern as on that date. iii) Whether the profit and loss account show a true and fair view of the profit earned or loss suffered by the company during the year.
SECONDARY OBECTS: A) Detection and prevention of errors :
An error maybe defined as any unintentional mis-statement in the books of account of records. Errors are generally innocent and unintentional and are due to either carelessness or ignorance on the part of the clerks. An auditor should be very careful in finding out the cause of any error.Following are the various types of errors:
1)Clerical errors, which includes:
a)Errors of omission
b)Errors of commission
c)Compensating errors
d)Errors of duplication
2)Error of Principal
ERRORS OF OMISSION:
It arises when a transaction is not recorded in the books of account either wholly or partially.
It includes the following 2 types:
Total Omission : * It takes place when a transaction is not at all recorded in the books of accounts. * Both debit and credit aspects are omitted, for
To AuditING and Window Dressing
INDEX Sr.no | Topic | 1. | Introduction | 2. | Origin , Definition | 3. | Objectives | 4. | Principles | 5. | Errors and Frauds | 6. | Window Dressing | 7. | Case Study | 8. | Conclusion |
OBJECTIVES OF AUDITING
The main object of the audit is to find out whether the accounts of a particular concern show a true and fair view of the earnings and financial state of affairs.This is possible only when all the accounts are properly verified. Auditor has to discover errors and frauds while performing his duty.
The objects of auditing include: 1) Primary objects 2) Secondary objects
PRIMARY OBJECTS:
Primary objects is to report to the shareholders of a company:
i) Whether the profit and loss account and the balance sheet are properly drawn up according to the Companies Act ,1956. ii) Whether the company shows true and fair views of the state of affairs of the concern as on that date. iii) Whether the profit and loss account show a true and fair view of the profit earned or loss suffered by the company during the year.
SECONDARY OBECTS: A) Detection and prevention of errors :
An error maybe defined as any unintentional mis-statement in the books of account of records. Errors are generally innocent and unintentional and are due to either carelessness or ignorance on the part of the clerks. An auditor should be very careful in finding out the cause of any error.Following are the various types of errors:
1)Clerical errors, which includes:
a)Errors of omission
b)Errors of commission
c)Compensating errors
d)Errors of duplication
2)Error of Principal
ERRORS OF OMISSION:
It arises when a transaction is not recorded in the books of account either wholly or partially.
It includes the following 2 types:
Total Omission : * It takes place when a transaction is not at all recorded in the books of accounts. * Both debit and credit aspects are omitted, for