3. Importance of Auditing. Of late, internal audit often involves the critical review of the non-financial and operational aspects or activities of the organization, for example, management audit, performance audit, IT audit, etc. Internal Audit is not compulsory by nature. Auditing is performing by auditors. The auditor and the organization decide if the auditor’s expertise is a good fit. Auditing is conducting every year. No fraudulent employee or employer can thrive in any organization where regular audits are made compulsory and complied with. financial institutions. 100, by –– (i) a person contemplated in paragraph (a); or (ii) a person who is qualified to be appointed as an accounting officer of a close corporation in The auditor reviews the financial report of the organization, as per the auditing standard set by the government body. 10 11. There are many different types of auditing used these days for the evaluation of the accounting activities. The external audit is compulsory by law. On the contrary, external audit is obligatory for every organization or every separate legal entity. This can definitely enhance the credibility of your commercial organization. A good auditor is not only able to clear your issues quickly, but also helps you improve your company. As a matter of fact, auditing is a legal requirement for organizations that have the power to exploit financial information for personal gains e.g. Audit or Auditing in India is a system of independently reviewing the records/activities and expressing an opinion thereon. An environmental audit is a type of evaluation intended to identify environmental compliance and management system implementation gaps, along with related corrective actions. Auditing is compulsory for a) Small scale business b) Partnership firms c) Joint stock Companies d) Proprietary Concerns 5. Companies Act 1913 for the first time made it compulsory for ... is an appraisal activity within an organization for the review of the accounting, financial and 10. Auditing is compulsory for every company. External Audit: External audit, also known as financial audit and statutory audit, involves the examination of the truth and fairness of the financial statements of an entity by an external auditor who is independent of the organization in accordance with a reporting framework. 2.0 Definition Of Auditing 2.1 Objective Of Auditing 2.2 Types Of Auditing ... some organization are reaping the good fruit of auditing as a result of enhancing accountability I their organizations while others are wallowing in the doldrums. Part A (i) • firstly the internal audit is not compulsory by nature and external audit is in the cases of public limited companies. PARTICULARS OF ORGANISATION NAMES OF AUDITORS 17 Concord Associates Pte Ltd 8, Boon Lay Way, #03-08, 8 @ TradeHub 21, Singapore 609964 Telephone No: 65155247/65155248 Contact person: Mr Bryan Sio An annual audit is compulsory for any organization that processes more than six million credit card transactions per year. The purpose of the statutory audit is the same as the purpose of other audits. For service organizations, this is a widely recognized internal control auditing standard. AUDITING MCQs. In addition, the article explains what internal and external audits are and how they differ and the reasons why organizations are required by regulators to perform audits. AUDITING AND TAXATION TY BCOM – AUDITING AND TAXATION – MCQ – QUESTION BANK - COMPILED BY MANOJ VORA. In this way they perform an analogous (similar) function to financial audits.There are generally two different types of environmental audits: compliance audits and management systems audits. Auditing is carried out after the final preparation of the financial statements and accounts. Auditing has two main categories viz. Importance of Auditing: 6 Reasons Why You Should Audit Your Financial Statements. •Internal audit refers to the management of performance within the organization from a separate department whereas the external audit is done outside the organization by the help of a different department. Internal audit is not compulsory, but a company can conduct it to review the operational activities of the firm or an organization. Auditing refers to the careful examination of the financial records of a business organization. It is carried out almost continuously. Find the full details of SAC accredited auditing organization (SAC-AO) at the SAC website. Chartered accountant who is professionally qualified is required for the audit of accounts of companies. Chief importance of auditing is as follows: In this type of auditing, the entity’s management determines the work area. Auditing is compulsory for listed companies and it is done by the external auditor. In this chapter, we will understand the concept of Internal Audit in Auditing. 11 12. In other words, irrespective of the fact whether audit is compulsory, statutory or voluntary. It is needed when the organization has a good internal control system d) It is expensive 23.Internal check is carried on by a) Staff specially appointed for the purpose Types Social audit. Definition Auditing refers to a systematic examination of books, accounts, documents and vouchers of an organization to ascertain how far the financial statements present a true and fair view of the concern. It is compulsory for all separate legal entities. Auditing is continually changing and developing to meet the needs of the business environment it serves. In the tax, world audit is referred to the review of a taxpayer’s tax return for accuracy. B) A person of unsound mind. It can be done internally (by employees of the organization) or externally (by an outside firm). Auditing is compulsory for a) Small scale business b) Partnership firms c) Joint stock Companies d) Proprietary Concerns 5. Auditing Professions Act (SAICA is the only body so accredited at the moment); or (b) in the case of a company whose public interest score for the particular financial year was less than . Auditing, on the other end of the spectrum, refers to a detailed inspection of financial records or reports of a business or an institute.It is mandatory for all distinct legal bodies. internal audit and external audit. companies 6. e 2 a) Internal b) Voluntary c) Statutory Answer : c) Statutory Audit 5.----- Auditor is the employee of the organization and appointed by the management. The role of auditing towards organizational success have attracted comment on the front pages of national newspapers, rather than in just the financial pages have even led on occasion to question and statement in parliament. A statutory audit is a legal requirement. Propriety audit refers to a) Verification of accounts b) Examination accounts of propriety concerns c) Enquiry against justification and necessity of expresses d) Audit of Govt. A) A partner or a director of the company. The result of this was the release of Auditing & EDP. In order to facilitate understanding of the scope and authority of the pronouncements of the Auditing and Assurance Standards Board ('AASB'), the ICAI has issued revised preface viz., Preface to Standards on Quality Control for Auditing, Review, Other Assurance and Related Services, which has come into effect from 1st April, 2008. Auditing can be best understood as an inspection of the company to validate the authenticity of a company’s claims.. A lot of the basic procedures of both accounting and auditing are analogous. The audit of the accounts of a concern has many advantages and in case of a joint stock company it has been compulsory by law. Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. Status of auditor: An internal auditor is an employee of the company. It is obligatory for all separate legal entities. Auditing is carried out after the final preparation of the financial statements and accounts. Types of Audit; Audit Program; Kinds of Audit: There are difference kinds of Audit, these are discussed below. A team of experts reviews the procedures and operations of an organization and reports it to the management in cases such as non-compliance, lack of control and inefficiency, especially in big organizations where thousands of employees work and the business operations take place from various locations. A) True B) False. However, recently auditing has begun to include non-financial subject areas such as safety, security, information system performance and environmental concerns. Auditors predict the future of an organization by analyzing the past accounting period. a) External b) Interim c) Internal Answer: c) Internal Auditor 6. are determined by the law, which can be increased by an agreement between the employer of the organization and the auditor, but cannot be decreased in any situation. Auditing is compulsory for a) Small scale business enterprises b) All partnership firms c) All joint stock companies d) All proprietary concerns 5. 70. Hence it is always a good idea to make use of auditing services even when they are not compulsory for the organization. Auditing-B.com 3rd Year Unit I Introduction to Auditing ... is compulsory. Statutory audit is a compulsory audit. However some companies also undertake internal audit which implies that company appoints some professional internal auditors to conduct audit of accounts as well as company’s systems and policies. Definition of Auditing: Auditing refers to the critical examination of the financial records or statements of a business or an organization. Recall the meaning of Internal Check. Legally internal audit is not compulsory. And from this came the Statement on Auditing Standards (SAS) No. 11. Who among the following can be appointed as auditor of a company? This article is a primer on what auditing is, the purposes, the types, and the objectives of audits. Internal control, as defined in accounting and auditing, is a process for assuring achievement of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. It has advantage for every type of organization. Social audit is a process of reviewing official records and determining whether state reported expenditures reflect the actual monies spent on the ground. Conversely, the investigation is playing by experts. The book included how to document EDP audits and examples of how to process internal control reviews. Statutory audit provides true and fair view of financial position to shareholders and members of an organization. The auditing firm sends a proposal either to the company or to the attorney for instances where compliance audits should invoke client-attorney privilege. Auditing is a standard inspection, whereas investigation is precarious. ANS: B. 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