In simple terms, we say that auditing expresses an opinion on the financial statement. The auditor verifies the financial statements and books of accounting to check the truth and fairness of the financial position and operating results of the business. The objectives of auditing can thus be studied under two heads namely Primary and Secondary Objectives.
The primary or main objective of auditing is as follows:
1. Examining the Accuracy of the Books of Accounts
An auditor has to examine the accuracy of the books of accounts, vouchers and other records to certify that Profit and Loss Account discloses a true and fair view of profit or loss during the given period. An auditor verifies if the Balance Sheet is prepared as per the standards and shows a true and fair view.
2. Expressing Opinion on Financial Statements
Once verification is done and everything is found good, the auditor has to make an opinion on the financial statement as to if the financial statement provides a true and fair view of the affairs of the business.
1. Detection And Prevention of Errors
An error in accounting means “an unintentional mistake in the books of accounts.” An error should locate the errors in the books
2. Detection and Prevention of Frauds
Detection and prevention of fraud is an important duty of an auditor. Fraud is the intentional misrepresentation in the books of accounts with an intention to deceive.
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