Various Types of Audit, Auditing Notes B.Com 6th Sem CBCS Pattern

Various Types of Audit
Auditing Notes B.Com 6th Sem CBCS Pattern
Auditing Important Topics

Various types of Audit

a. Statutory Audit: any audit carried on as per the requirement of law is called as a statutory audit. e.g.: all companies have to get their accounts audited as per the provision of the company’s Act of 2013.

b. Periodical/ Annual Audit: it is a kind of audit where the auditor verifies the account at the end of the financial year. He starts the audit work after the closure of financial year. This is a common audit and is mostly used by small organizations.

c. Interim audit: It is an audit conducted in the middle of the accounting year before the accounts are closed. In other words any audit conducted between two financial audits is known s interim audit. The objective is to get periodical results, to declare interim dividend.

d. Partial Audit: when an auditor is asked to audit only a part of the account system. It is called partial audit. E.g.: he may be asked to audit only the payment side of cash book.

e. Balance sheet audit: it’s a kind of partial audit and is concerned with the verification of only those items appearing in the Balance Sheet. It is more popular in the USA. Infact while verifying BS items the auditor verifies/ checks all related items/accounts.

f. Cost audit: cost audit is defined as the verification of cost accounting records. Data and techniques for its accuracy and authenticity. It gets as effective managerial tool for the detection of errors and frauds in cost accounting records. The companies act implies the central government to order cost audit incase of specifies companies.

g. Management audit: Management audit may be defined as a comprehensive examination of an organizational structure of a company, institution/government and its plans and objectives it means of operations and use of human and physical facilities. The main objective of mgt audit is to see how far the objectives of mgt are fulfilled. It aims to ascertain whether sound mgt prevails throughout the organisation and evaluates its efficiency in the system of its operation.

h. Social Audit: Social audit is a process in which people work with the government to monitor the planning and implementation of the policies which are intended for the people. It is also defined as an in-depth scrutiny and analysis of any public utility vis-à-vis its social relevance. It examine the impact of specific government activities on certain sections of the society. 2012

i. Continuous audit(CA): A continuous audit is one in which the auditor visits his client’s office at regular intervals throughout the year to verify the account. The objective of CA may be:

i. To get final account audited immediately after the closure of accounting year.

ii. When the business is very large.

iii. When interval control system is into effective.

iv. When regular final accounts are required.

j. Periodical Audit: Periodical audit is one which is taken up at the close of the financial or trading period when all the accounts have been balanced and Trading and Profit and Loss Accounts and the Balance Sheet have been prepared. It may also commence before the final accounts are prepared and continue till the audit is completed even after the close of the financial or trading period. The only thing is that the audit is completed in one continuous session. At this period, the auditor holds the books and checks the accounts. Auditor is in possession of the full facts relating to accounts for the year under review. In the case of such an audit, the auditor visits the client only once a year and goes to the accounts units audit work for that whole of the period is completed.