what are the basic principal of Auditing ? Explain them briefly Related: Basic Accounting Concepts and Conventions - Accountancy and Financial Management?

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what are the basic principal of Auditing ? Explain them briefly Relate...

1] Integrity, Independence and Objectivity

The auditor has to be honest while auditing, he cannot be favoring the organization. He must remain objective throughout the whole process, his integrity must not allow any malpractice.

Another important principle is independence. So the auditor cannot have any interest in the organization he is auditing, which allows him to be independent and impartial at all times.

2] Confidentiality

The auditor has access to a lot of sensitive financial information of the organization. It is important that he respect the confidential nature of such information and documents.

He cannot disclose any sensitive information to any third party unless it is a requirement by law. And he must also be very careful with documents, certificates etc. that the organization entrusts to him.

3] Skill & Competence

The auditor must be experienced and trained in the procedures of auditing, i.e. must be qualified as an auditor. And as a professional, he must be up to date on recent changes, announcements, rules etc.

If necessary he can undergo training and workshops to stay up to date with the recent auditing and accounting procedures. For example, after GST was introduced, auditors had to update their knowledge.

4] Work Performed by Others

The scope of audit at times can be very vast. So an auditor has employees, delegates and other people who work under him.

However, the auditor will continue to be fully responsible for the work done by these people working for him. So the auditor must carefully supervise and review such work and be reasonably sure of the accuracy of such work.

5] Documentation

In most cases the auditor maintains an audit notebook, an audit plan and auditing file. It is important the auditor keeps a record of important documents with respect to his audit work, as it is evidence of the work the auditor has done. And the client is inclined to these documents and files if he wishes to inspect the work.

6] Planning

An audit plan allows the auditor t plan out his work and enables him to be more efficient and timely. Every audit plan is different as it has to be customized according to the type of organization, the kind of business they conduct, the scope of the audit, the efficiency of the internal controls etc.

7] Audit Evidence

The auditor must collect enough evidence to support his final opinion. This collection of such evidence is done by compliance and substantive procedures. There are two sources of this evidence – internal and external. Also, external sources of evidence are always more reliable.

8] Accounting Systems and Internal Controls

The auditor has to assure that the accounts of the organization are accurate and represent a true and fair picture of the financial status of the company. Also, the auditor must ensure that all material information has been recorded in the accounts. Testing the internal controls system is also important as it helps determine the same.

9] Audit Conclusions and Reporting

After the auditor collects all evidence he must now form his opinion on the basis of the following criteria,

- all relevant accounting standards were applied at all times

- financial statements are in compliance with all regulations and statutory requirements

- all material information has been disclosed