Contemporary Auditing – Types Of Audit

Auditing

An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law.

Social Audit

Social Audit


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Routine Checking – Merits and Demerits

We have already discussed about purpose and objectives of Routine Checking. In this article we will go through some merits and demerits of Routine Checking.

Purpose of Routine Checking

  1. Making totals and sub-totals of primary books of accounts, carrying them forward to the next page, and calculating the balances and their checking.
  2. Checking of the ledger postings derived from the primary books and journal, and to see whether they are properly done or not.
  3. To see the totals of debits and-credits of different accounts and their balances.
  4. To check whether balances of various accounts are properly taken to the Trial Balance, or not.

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Routine Checking – Purpose and Objectives

Routine Checking

Whether a business is big or small, the record of its daily transactions is kept in the books of accounts. The daily checking of these books of accounts under audit is called Routine Checking. Usually this work is done by the junior staff of the auditor.

Merits and Demerits of Routine Checking are also discussed in later articles.

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Internal Check

Meaning Of Internal Check

Internal check system is a part of the internal control system of the business. This is also called Internal Block. Each trader wants that he should be able to control the internal activities of his business, in such a manner that he can get maximum profits and the. chances of mistakes, fraud, etc., are could be minimum. The system of internal check is one such arrangement, in which the activities of employees are divided in such a manner that the work of one employee is independently checked by the other employee. Unless all employees of the organisation are become united, the chances of fraud etc., is not there.

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Social Audit

Social Audit

The evaluation of the social responsibilities of an industry, company or firm is defined as Social Audit. In practice it can be called the appraisal of the activities of the social responsibilities of an organisation. Every industry runs in the society, for the society, thus the aim of any industry is not only to earn maximum profits, but it has some responsibilities towards the society in which it exists. Through this type of audit, the auditor examines as to what extent the industry is carrying out its responsibilities.

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Verification Parameters

Verification Of Assets

For verification of any assets the auditor has to mainly check some general points, which are almost similar for all kinds of assets, still according to the name of the asset, the auditor verifies them in the following manner

The main parameters to verify the value of an asset are

  • Debtors
  • Goodwill
  • Trade Mark
  • Land and Buildings

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Verification Of Assets

Meaning Of Verification

It is the duty of the auditor that he specifically writes in his report whether the financial position of the organisation represented in the Balance Sheet is proper or not. He must make sure that all the assets shown in the Balance Sheet are actually present with the organisation or not, the organisation has valued them properly or not, they are free from all kinds of mortgages etc. or not. Similarly he has ‘to make sure about all liabilities also. In this way the auditor evaluates the assets and liabilities of the organisation and verifies them, and this work of the auditor is called Verification.

Read about Verification Parameters

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