Social Benefits of Audit
Introduction:
Audit emerges because society needed. Auditing has been a regular feature of organized human activity from the earliest times. Indeed evidence suggests that formal audit procedures existed in the economic activities of the most of the early civilization. With the advancement of development, audit emerges as a separate discipline & contributes to the economic & social advancement. Audits serve a vital economic purpose and play an important role in serving the public interest to strengthen accountability and reinforce trust and confidence in financial reporting. As such, audits help enhance economic prosperity, expanding the variety, number and value of transactions that people are prepared to enter into. However, in recent years, and in the light of corporate scandals, we have witnessed ongoing global demands for improvements in audit quality. Changes have been taken place to promote greater transparency in the audit and accountability in auditors but there are continuing demands for further improvements to be made.
Definition of audit:
Audit is an independent examination of books of accounts, other documents, stores, assets etc relating to receipts and expenditure of an entity with a view to ensure ▪ that rules and orders framed by competent authority in regard to financial matters have been followed; ▪ that expenditure has been incurred with due regularity and propriety; ▪ that assets have been properly utilized and safeguarded; ▪ that resources have been used economically, efficiently and effectively; and ▪ that the accounts truly represent the fact.
“Auditing refers to a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.” -American Accounting Association (AAA)
Role of audit to the economic perspective:
One of
Audit emerges because society needed. Auditing has been a regular feature of organized human activity from the earliest times. Indeed evidence suggests that formal audit procedures existed in the economic activities of the most of the early civilization. With the advancement of development, audit emerges as a separate discipline & contributes to the economic & social advancement. Audits serve a vital economic purpose and play an important role in serving the public interest to strengthen accountability and reinforce trust and confidence in financial reporting. As such, audits help enhance economic prosperity, expanding the variety, number and value of transactions that people are prepared to enter into. However, in recent years, and in the light of corporate scandals, we have witnessed ongoing global demands for improvements in audit quality. Changes have been taken place to promote greater transparency in the audit and accountability in auditors but there are continuing demands for further improvements to be made.
Definition of audit:
Audit is an independent examination of books of accounts, other documents, stores, assets etc relating to receipts and expenditure of an entity with a view to ensure ▪ that rules and orders framed by competent authority in regard to financial matters have been followed; ▪ that expenditure has been incurred with due regularity and propriety; ▪ that assets have been properly utilized and safeguarded; ▪ that resources have been used economically, efficiently and effectively; and ▪ that the accounts truly represent the fact.
“Auditing refers to a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.” -American Accounting Association (AAA)
Role of audit to the economic perspective:
One of
References: 1. T. Mkandawire, ‘Targeting and Universalism in Poverty Reduction’, in J.A. Ocampo, Jomo K.S. and S. Khan (eds), Policy Matters: Economic and Social Policies to Sustain Equitable Development (London: Zed Books Ltd, 2007) 2. Social Audit: A Tool for Performance Improvement and Outcome Measurement. Centre for Good Governance, Hyderabad, 2005. 3. Social Auditing for Small Organisations: A Workbook for Trainers and Practitioners, John Pearce, Peter Raynard, and Simon Zadek New Economics Foundation, London (1996) 4. Social Audit and Accounting: John Pearce, Community Business Scotland (CBS) Network ( 2001)