PPT-AUDITING-QUALIFICATION,RIGHTS AND DUTIES.pptx

1. AUDITING
Dr. A.HELDA MARY

2. CONTENTS
 Qualification
 Qualities
 Responsibilities
 Duties

3. AUDITOR:
Definition: An auditor is a body who organizes an audit process.
He is the one who creates an audit report after due examination of
accounting records and accounting statements of the company
forming his impression/assumption regarding financial
statements fairness and reliability.

4. Qualification of an Auditor
According to law, no specific qualification is
recommended for the auditor in case of the
proprietary concern, but in the case of the
companies, the following qualification is must:

5.  According to the Companies Act, 2013, a
chartered accountant having a certificate of
practice from the Institute of Chartered
Accountants of India can be a qualified auditor of
a company.
As per “Part B” of the State Law Act, 1953 a
person holding a certificate stating that he is
designated to act as an auditor.

6. QUALITIES OF AN AUDITOR:
Some relevant qualities that an auditor
should possess are as follows:

7. 1.Sovereignty:
The auditor should not make his decisions to the
will of his clients or any other person and should
keep himself free from any sympathy allegedly and
prepare financial statement of the management in
an impartial way.

8. 2.Honesty:
The auditor should always maintain sincerity while
operating his duties.
3.Conversation Skills:
In the course of managing a process of audit, the auditor
has to collaborate with numerous officers and parties;
thus, he should have excellent conversation skill.

9. 4.Maintain Confidentiality: The auditor should maintain the
privacy of the books of accounts unless authorized by the client
or enforced by the law.
5.Expertise: The auditor must have an awareness about the
client’s business and the current economic conditions, and a
consciousness about the laws such as taxation laws, companies
act and partnership act.

11. 1.Examination: Cross-examination of the
company’s accounting system and internal control
system is necessary to safeguard the record’s
appropriateness.
2.Checking of Books: The books of accounts
should be checked thoroughly by an auditor to
ensure its arithmetical accuracy.

12. 3.Documentation: Proper documentation of the records
should be maintained by the auditor after investigating
documentary pieces of evidence. It helps him in gathering
the appropriate information about the transactions of the
business.
4.Full Incorporation: An auditor should properly analyze
whether all entries have been recorded in the books of
accounts or not while preparing the financial statement.

13. 5.Conventionality: Examining that the books of
accounts or financial statement should not contain
any fraudulent or faulty entry.
6.Authentication of Assets and
Liabilities: Verification of assets and liabilities for
checking their existence, valuation, completeness
and disclosure in financial statements.

14. 7.Statutory Consent: In case of audit of general
insurance companies and banks, the auditor
secures the compliance of financial statements
with the compatible decree.
8.Disclosure: Auditor examines whether the data
in the financial statement acknowledged
adequately or not. He discloses his point of view
by way of the audit report after the completion of
the audit process.

15. 9.Facts and Integrity: Auditor ensures financial
statement as a whole and serves an accurate and
fair view of profit/loss, assets and liabilities of a
company in the appropriate forms.

17. 1.Duty to Produce an Audit Report:
Description to members: An auditor must generate
a statement to the members, yet he is not enforced
to send a report to every member.
Review of the auditor’s report: The report prepared
by the auditor intends to read in the general meeting
of the company. The report shall be open to any
member for inspection.

18. Capacity of audit report: The audit report should reveal
the accounts maintained by the auditor, i.e. profit and loss
statement, balance sheet of the company and the
chronicles annexed with these accounts.

19. 2.Duty to Produce Competent Disclosures in an Audit
Report:
Report on Appropriate and Impartial View: The auditor
shall state whether in his impression and to best of his
knowledge and bestow to the description given to him, the
balance sheet and profit and loss account give:
The instruction prescribed by the law; and
An authentic and fair view of the state of affairs of the
company.

20. Report on Principal Allegation: The audit report should
state:
Whether he has gathered all the material and justification.
Whether from his point of view, appropriate books of
accounts have been conserved.
Whether in his view, all accounting standards have
assembled.
Whether any director who has disqualified from being
appointed as a director.

21. Report on Precise Inquisition: This report describes:
Whether loans and advances built by the company in
support of security have been perfectly captured, and the
circumstances on which they have been formed are not
biased to the concern of the company or the members of
the company.
It states whether the book of entries is unfavourable to the
interests of the company.

22. Report on specific inquiries should state whether the
retail price of the shares, debentures, and other
guarantees held by the company is below its
purchase price.

23. 3. Duty to Give a Sense for Accomplishment
The aspect in which competence is made in the auditor’s report should be
as such that no allowance for doubt in the public minds. A qualification
should deliver the full description and not simply create grounds for the
impression of enquiry.
The auditor should appraise, wherever possible, the enact of the financial
statement’s capabilities, if the same is material.
It states whether it is not achievable to accurately quantify the
consequence of the qualifications he may use the authority estimates or
indicate the sense for not appraising the requirement’s effect.

24. 4. Duty to Endorse the Audit Report
The audit report or any other chronicle mandatory to be
signed or validated by the auditor may be endorsed by:
A person selected as an auditor of the company.
A firm selected as an auditor or by a partner of the firm
exercising in India.

25. THANK YOU