Auditing

Contents . . .

1. Evolution of auditing — major influences of auditing ; nature and scope of auditing ; basic concepts of auditing ; role of evidence in auditing ; auditing techniques and practices – generally accepted auditing standards ; the concept of materiality in auditing.
2. Verification of assets and liabilities — fixed assets, investments, inventories, debtors, loans and advances, cash and bank balances, debentures and creditors, provisions for taxation, proposed dividend and gratuity – other items in the balance sheet ; verification of items in the profit and loss account ; contingent liabilities; disclosure of accounting policies, practice ; expenditure during the period of construction ; adjustments for previous year – provisions of the Companies Act, 1956 regarding accounts.
   Nature of internal control, evaluation and audit of internal control – internal control questionnaires; flow chart ; systems audit, internal control.
   Audit-in-depth — statistical sampling in auditing. Use of ratios and percentages for comparison and analysis trends – inter – firm and intra – firm comparison.
3. Appointment of statutory auditors — auditors’ remuneration, removal, rights of statutory auditors, duties of statutory auditors, joint auditors, branch audits. Audit report – report versus certificate, contents of the reports, qualifications in the report. Divisible profits – relevant provisions of the Companies Act, 1956 and the Income – Tax Act, 1961. Interface between statutory auditor and internal auditor.
4. Nature and Scope of Internal Auditing — financial versus operational audit; concepts of efficiency audit, propriety audit, voucher audit, compliance audit, pre and post audits. Impact of the Manufacturing and Other Companies (Auditors’ Report) Order, 1988 on the internal auditing functions. Organisation of the internal auditing function selection and training of staff – assignment of audit projects, organizational status of the internal auditing functions; scope for audit committees.
   Planning the internal audit project: familiarization; preparing checklist, internal control questionnaires, audit programs.
5. Verification of evidence — detailed checking versus sampling plans, statistical sampling as used in internal auditing ; flow chart techniques
   Internal control — nature and scope, internal auditor and internal controls
   Field work — collecting evidences, interviews ; memoranda. Audit notes and working papers.
   Audit reports — techniques of effective reporting; follow up of audit report. Summary reports of top management. communications in internal auditing – improving auditor – auditee relationship
6. Auditing the operations functions of an enterprise — accounting and finance, inventory control, procurement, production, marketing, maintenance, personnel, branches ad depots; research and development. Information systems audit, internal auditor and the investigation of frauds. Auditing the internal auditing function.
7. Audit of accounts prepared as per USGAAP
8. Secretarial Audit — checklist, contents of memorandum of Association and articles of association, Issue of shares, Right issue, Registers maintained.

Recommended Books

• Tata – Mc Graw Hill
  1. Contemporary Auditing
     • Kamal Gupta
• Allied publishers
  1. Spicer & Peglar’s Practical Auditing
     • S. V. Ghatalia
• S.Chand
  1. A Handbook of practical Auditing
     • B. N. Tandon
  2. Internal Auditing
     • R. S. Waldron
  3. Auditing Standards and Guidelines
     • ICAI
  4. Guidance Note on Secretarial Audit
     • ICSI

Other Relevant Books