MEANING AND DEFINITIONS OF AUDITING :

It is a bit difficult to give a precise definition of word audit in a word or two, originally its meaning and use was confined merely to cash audit and the auditor had to ascertain whether the person responsible for the maintenance of accounts had properly accounted for all the cash receipts the payment on behalf of this principle. But the word, audit, had a wide usage and it now means a thorough scrutiny of the books of accounts and its ultimate aim is to verify the financial position disclosed by the balance sheet and the profit and loss account of a company. The following are some of the definitions of audit given by some writers

Lawrence R. Dicksee – “An audit is an examination of accounting records undertaken with a view to establishing whether they correctly and completely reflect the transactions to which they purport to relate.”

Taylor and Perry – “Audit is defined as an investigation of some statements of figures involving examination of certain evidence, so as to enable an auditor to make a report on the statement.

F.R.M. De Paula – “An audit denotes the examination of Balance Sheet and Profit and Loss Account prepared by others together with the books of accounts and vouchers relating there to in such a manner that the auditor may be able to satisfy himself and honestly report that, in his opinion, such Balance Sheet is properly drawn up so as to exhibit a true and correct view of the state of affairs of the particular concern according to the information and explanations given to him and as shown by the books”.

Prof. Montgomery – “Auditing is a systematic examination of the books and records of business or other organization, in order to ascertain or verify and to report upon the facts regarding its financial operations and the result thereof.”

Spicer & Pegler – “Audit such an examination of the books of accounts and vouchers of a business, as will enable the auditor to satisfy himself that the Balance Sheet is properly drawn up, so as to give a true and fair view of the state affairs of the business, and whether the profit and loss account gives a true and fair view of the profit or loss for the financial period according to the best of his information and explanations given to him and as shown by the books, and if not, in what respect he is not satisfied.”

Institute of Chartered Accountants of India (ICAI) defines Auditing as – “Auditing is defined as a systematic and independent examination of data, statements, records, operations and performance of an enterprise for a stated purpose. In any auditing situation, the auditor perceives and recognizes the propositions before him for examination, collect evidences, evaluates the same and on this basis formulates his judgement which is communicated through his audit report.”

In the close scrutiny of the different definitions we found that there are different ways of expressing the concept of auditing but having lot of similarity therein.

The meaning of an Audit contains

(i) An intelligent and critical examination of the books of accounts of business.

(ii) It is done by an independent qualified person.

(iii) It is done with the help of vouchers, documents, information and explanations received from the clients.

(iv) The auditor satisfies himself with the authenticity of the financial accounts prepared for a particular period.