Preparation of an audit
Basic concepts for Preparation of an audit:
- Formulating audit plan for Preparation of an audit and laying down broad framework for conducting the work and method to ensure control over the quality of work.
- For Preparation of an audit, examination and evaluation of the nature, extent and efficiency of the system of internal control is required.
- Ascertaining the arithmetical accuracy of the books of accounts for Preparation of an audit.
- Examining the documentary evidence and the authority in support of the transaction.
- Ensuring that there is adequate disclosure of transactions for Preparation of an audit.
- Verification of existence, ownership, title, and value of the assets and determination of the extent and nature of the liabilities for Preparation of an audit.
- Scrutiny of the accounts to establish reasonableness, consistency and compliance with the legal requirements.
- Application of various overall checks in order to test the overall reliability of the accounting records and the statements and to see whether the results of overall checks corroborate the findings already made.
- Determination of significant accounting ratios and subjecting the ratios to ratio analysis to locate the areas showing departures from the expected state of affairs.
Audit techniques for Preparation of an audit:-
For collection and accumulation of audit evidence required for Preparation of an audit, certain methods and means are available and these methods are known as auditing techniques. Some of the techniques commonly adopted by the auditors are:-
- Posting checking.
- Physical examination and count.
- Casting checking.
- Year end scrutiny.
- Re computation.
- Banmk reconciliation.
- Tracing in subsequent period.
An audit programme consists of a series of verification procedures to be applied to the financial statements and accounts of a given company for the purpose of obtaining sufficient evidence to enable the auditor to express an informed opinion on such statements.
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