Internal Auditing Functions
Auditing is a branch of Accounting. An auditor is an accountant but not all accountants are auditors. Audit is the examination of various books of accounts by an auditor (either internal or external) followed by physical verification of inventory to ensure that all transactions in various departments are duly recorded or documented. Audit is done to determine the degree of accuracy of financial statements presented by an organisation.
Audit functions can be performed internally by employees who are auditors or heads of a particular department and externally by an independent auditor who is not an employee of the company. The idea of audit is to check and verify the accounts by an independent entity to ensure that all books of accounts are prepared in a fair manner and there is no fraud being conducted by staffs of the company.
Audit functions can be performed internally by employees who are auditors or heads of a particular department and externally by an independent auditor who is not an employee of the company. The idea of audit is to check and verify the accounts by an independent entity to ensure that all books of accounts are prepared in a fair manner and there is no fraud being conducted by staffs of the company.
Auditing also means the following:
- A study of organization and its structure.
- Analysis and review of systems of accounting and internal control.
- Testing arithmetical accuracy of records and collection and evaluation of evidence in support of transactions.
- Verification of state of affairs disclosed by the balance sheet and profit or loss disclosed by profit and loss account.
FUNCTIONS OF AUDITING
Some important functions of auditing can be analysed as follows:
1. Reviewing the systems and procedures of business.
2. Examining documentary evidence so as to ascertain the accuracy of recorded financial transaction.
3. Auditing helps to review the system of accounting and internal control.
4. To verify the existence and value of assets.
5. To examine the degree of mathematical accuracy of accounting statements.
6. To see whether the statutory requirements have been complied with.
7. Reporting as to what extent, accounts exhibit truth and fairness.
8. To make recommendations on areas to improve in internal control and accounting system.
9. To verify the differences between capital and revenue items.
