Objective of audit
Primary Objective of audit:
Audit is conducted to express an opinion on financial statements.The primary Objective of audit is reporting.
The Objective of audit of financial statements is to enable the auditor to express an opinion on such financial statements.The auditor reports whether financial statements represent a true and fair view.
Secondary Objective of audit:
The Objective of audit is that an auditor cannot frame an opinion of misstatement on true and fair view on financial statements as above if he is not able to confirm the possibility of existence of fraud and error in such financial statements.Thus secondary Objective of audit is detection of misstatements and error in financial statements.
As per SA-240:
According to SA-240 on Objective of audit,
- Primary responsibility of prevention, detection and correction of misstatement is that of management.
- However,if there are doubtful situation that some material misstatements may exist,auditor should extend his procedure to confirm the doubt.
- Audit may not reveal all the misstatements(due to inherent limitations of audit).
- If auditor performs his work in accordance with basic principles governing an audit,he cannot be held liable for non-detection of misstatement in financial statements of client.
- However, if he notices any material misstatements resulting from fraud, he should communicate the same to appropriate levels of management.
- If misstatements are found, he should ensure their appropriate disclosure either in financial statements by the management or in his audit report.
As per Companies Act, 2013:
If an auditor has reason to believe that an offence involving fraud has been committed or is being committed against the company by the officers or employees of the company, the auditor is required to report such fraud to C.G.
Objective of audit as per Kingston cotton mills company:
Unless doubtful situations are there, the auditor is totally justified and he is relying upon the management and employees of the client for information.
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