The purpose or objective of an audit is to convey a judgment on the behalf of financial statements of an organization to make sure that the records are accurate representation of the businesses they claim to represent. It can be done internally by employees of the organization, or externally by an outside auditingfirms.You can go here to find out more regarding auditing and assurance.
Division of objectives of auditing
Objectives are further divided into two main categories which are:
Key objectives of auditing
The main objectives due to which auditing is prepared are given as
Secondary objectives of auditing
Those objectives which are made to achieve primary or key objectives are known as secondary objectives. These objectives are given below
Mistakes are those errors that are happened because of negligence, deficient in knowledge, carelessness and lack of interest. Mistakes must be taken seriously and should be thoroughly checked. Mistakes can be of several types whereas few of them include principle errors, omission errors, payment errors and compensating errors.
Scams are those frauds that are committed intentionally through some absolute interest on the course of top level management. Frauds are carried out by management in order to betray tax, to prove the value of management, headed towards more commission, selling shares in market and it might includesthe maintenance of shares according to the market price. The most important task of an auditor is exposing the fraud or scam. The different kinds of frauds are categorized as cash misuse, cheating in goods, accounts handling or accounts misrepresentation without any fraud.
Generally these frauds are attached to the company’s top level executives. Hence the justification that will be given to the auditor will also remains false and due to such circumstances, an auditor must identify such frauds by using knowledge, skills and facts.
An additional objective of auditing isto present information to income tax authority, to assure the terms regarding Company Act and to have proper consequences.
Classification of auditing
Auditing is categorized into two main groups that are:
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