Basics of Auditing Part-1

  1. An auditor is a watchdog and not a blood haund.
  2. Audire means to hear.
  3. Main objective of audit is dependent on type of audit.
  4. Concealment of shortage by delaying the recording of cash receipt is misappropriation.
  5. Lapping is Teeming and Lading.
  6. auditing is only related to detection and not prevention.
  7. Sale to Mr. A recorded as Sale to Mr. to B is error of commission.
  8. As per AAS4, if an auditor detects a fraud then he should communicate the management if it is material and ensure that the financial statements are adjusted for detected errors.
  9. Concurrent audit is continuous audit and is a part of internal audit.
  10. Balance sheet audit is synonyms to annual audit.
  11. ICAI was established in 1949.
  12. Internal check is carried on by member of the staff.
  13. Error of Commission is technical error.
  14. Test checking means checking a selected number of transaction randomly.
  15. Materiality means recording only those transaction are important and have impact. it is a relative concept. Both qualitative and quantitative concept. it is also affected by the auditors influence.
  16. Lower the audit risk, higher the materiality and lower the audit effort.
  17. Unqualified opinion by auditor means that auditor is saying that the companies financial statements are fair.
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