21/11/2018 Chapter-1 Nature, Objectives and Scope of Audit ( Lector NO. 2) 0 Nature, Objective and scope of Audit: (A) Meaning of Audit: Systematic, detailed and Independent Examination of financial information of any entity whether profit oriented or not irrespective of its size or legal form . 1 So as to express an opinion on true and fair view. Points to be ensured that financial statements do not misled anybody: Learn from page No. 1 (B) Objectives of Audit: - Objectives of Audit of financial statements which are prepared in compliance of Accounting Standards and applicable Accounting Policies - is to Express an opinion on financial Statements - Expression of opinion requires auditor to issue the audit report w.r.t. true and fair view of financial Statements. - Auditor's opinion cannot be considered as an assurance as to future viability of the entity of the efficiency of the effectiveness of business operations. Ex: Mr. A purchases shares of ABC Ltd. after Studing the audit report of ABC ltd which states that f.s. reflects truand fair view. After some days a fraud was noticed in the co. due to which share price declines by 70%. Whether auditory lan
/ (C) Scope of Audit: Scope of audit is determined by the auditor Considering the following: . (i) Pronouncements of ICAI (SA, Guidance Noter, Statements) (iii) Requirement of applicable laws and Regulations (Companies Act, 2013, etc.) . Points to be considered in determining scope of audit: Learn from book (Pg. No. 2) (i) Terms of audit engagement (as agreed with ( letter of engagement ) client) V.V. mp- (d) Aspects to be covered in Audit: (i) Examination of accounting system and Internal control: It helps the auditor in determining nature, timing and extent of substantive procedures /Procedures performed to examine the accounting data) (ii) Review of Systems and Procedures: followed in burines operations. for Ex: Procedure for purchases of Goods 1. Collection of trade receivables, etc. (iii) Vouching of the transactions: Auditor should vouch the transactions so as to determine, authorisation, validity, arithmetical accuracy and recording in the books of A/C. (iv) Verification of assets and liabilities: So as to ensure existence, valuation and appropriate disclosure of assets and liabilities. (1) Statutory compliance! to ensure that statutory provisions as applicable all complied with in case of statutory audit ...
1. 1 (i) Expression of opinion: on true and fair view of financial Statements. (vii) Reporting on Other Matters: as required under respective laws and regulations. For Ex: Reporting on fraud u/S 143(12) h 11 matters prescribed Under CARO. Sec. 143(11). Q.NO.1 Jo Q. NO.5 Types of Audit: 2 types - (a) Statutory (b) Voluntary. 1 V. grup- 3) Audit required - Audit not by law required under For Ex: Audit of companies law. Under Companies Act, - Audit down for 2013 Specific purpose - Audit of LLP- LLPACH, 2008 - Bank loan - 11 11 Banky - Banking Regulation - operational Act, 1949 efficiency - 1. Entities - u/s 44 AB of J.lax -