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1. Types of auditor: Achievement
An auditor is a person who reports on the accounts of an undertaking or enterprise.
Auditors can be classified under four headings. They are:
External Auditors: An external auditor perform independent third-party
reviews all the financial records of a company or corporation. He evaluates all
Accounting payroll and purchasing records, as well as any documents related to
investment, stock on loans.
Internal Auditors: An employee of a company changed with providing
Independent and objective evaluation of the company financial and operational
business activities. Including its corporate governance, partnership government
agencies.
Government Auditors: Auditors employed by the government are called
government auditors. They are employed by state and local agencies. Because they
internally.
Forensic Auditors: They are employed by the corporation, government
Agencies public accounting firms, and consulting and investigative services firms.
They are trained in detecting, investigating, and deterring fraud and white-collar
crime.
Generally accepted Auditing Practice:
Auditing is a process by which a competent independent person accumulates and
evaluates evidence about various assertions contained in financial statement of an entity
for the purpose of determining and reporting the e quality of disclosure of financial

2. information judging them against how it is found out Auditing is not sweaty search with
any foregone conclusion .Nor does it end abruptly with any accidental catch in the audit
mesh. Essentially auditing is a process, a Professional exercise, conforming to the quality
parameters of generally accepted auditing is a process a professional exercise conforming
to the quality parameters of generally accepted auditing Practices. What is “generally
accepted auditing standards” cannot be easily defined. Yet it is important one must have
understanding of what the term may connote. It implies, among other things the
following:
Only knowledgeable and independent person carries out the audit.
In performing audit the works is well planned and supervise.
Sufficient and appropriate audit evidence are gathered and tested before an
opinion is farmed.
Proper judgment is made of financial statements under audit in the light of
professional knowledge of auditor concerning generally accepted
accounting practices, special enactments affecting the financial statement,
pronouncements of professional bodies having bearing on them.
Audit Evidence:
An auditor must gather sufficient and appropriate audits evidenced and test them to make
judgment of opinion. In this, there have two issues:
 What evidence will be relevant to assess with greater reliability?
 How much evidence is to be obtained?
To obtain sufficient appropriate evidence the auditors have to perform two things:
1. Compliance procedures.
2. Substantive procedures.

3. Compliance procedures:
In big organization, transactions may be voluminous and repetitive .if those transactions
occur systematically within in built checks and balances, it would be unnecessary to
verify all the transactions to assess what theses transactions signify. Quite a few
transactions, if checked would tell what all transactions of the type seek to signify.
Compliance procedures seek to test, those are given bellow:
 The Internal control exists.
 The internal control is effective.
 The internal control has so operated throughout the period of audit with
continuity.
An auditor carries out compliance observation of the system , eliciting responses to his
enquiry form clients, making critical look of the fact against the back drop of control
criteria.
Substantive procedures:
By performing compliance procedures, the auditor finds out the efficiency of internal
control system. If for instance, the internal control system is found to be effective, can
auditor take that all assertions given by the financial statements are true and fair? While
existence of good internal control system adds reliability to audit evidence, in can not
dispense with checking evidence to substantiate data generated within the system .

4. In these transactions communicate one or more of the following assertions in financial
statements viz.
 Existence: That an assets/ liability exists.
 Rights and obligations: That the enterprise has right over the asset or has
obligation over the liability.
 Completeness: That all transactions / asset / liability find place in financial
statements without omission.
 Valuation: The monetary values attached to asset or liability is correct or fair.
 Measurement: that a transaction is recorded in proper amount. For e.g. freight
paid to bringing machinery is included in transaction pertaining to installation.
Revenue or expense is properly allocated to the period e.g.: per- paid expenses
accrued income.
 Disclosure: Data is disclosed according accounting convention statutory
requirement.
Those seven assertions of financial data may be correct or not. A financial statement may
depict a leasehold right as a freehold right. The auditor has to check to get assurance that
these assertions are fairly represented in the financial statements. To do this, performance
substantive procedure.
Test Check:
In big business houses where the number of transaction to be checked is very large and
time at the deposal of the auditor is little, a few transactions may be checked at random.
such a cheek is called test check. All the transaction need not be checked. The method of
checking the accounts will minimize the work of the auditor.
Professor Meig defines:

5. “Testing and test checking means to select and examine a representative sample from a
larger number of similar items”
For example while vouching the credit sales a few transaction say for a week per month
may be checked or the transaction for a few months selected at random may be checked.
Again the auditor may check all the transaction for any month may be checked. If the
transactions so checked are all correct and there is no doubt of any error or fraud.
Therefore the auditor should be very careful in relying upon the test Check. He should
apply these checks if he is fully satisfied that the internal check system prevalent is
efficient and no suspicion arises in his mind.
Precaution to be taken while applying Test Checks:
 Entries of every description should be checked.
 Selection of entries to be checked should be at random.
 Periods and entries selected for the test check should be different at
each audit.
For Example:
The credit sales for the months of July and December were checked during the year
1994. Credit sales for other months except July and December should be checked
for the year 1995.
 A large number of entries of the first and the last month of the audit
period should be checked.
 The test check should be so arranged that the work done by every
clerk is checked.

6.  Test check should be applied to cash book where every transaction
should be checked.