Auditing : Introduction

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If you are meticulous and have a flair for numbers, auditing could be a right career choice for you. Auditing, one of the main career options in the field of accounting has a vital role to play in each and every organisation, be it public or private sector. Auditing could be termed as the bread and butter work of accounting which involves checking ledgers and financial statements within an organisation.

Auditing is a systematic process of objectively obtaining and evaluating the accounts or financial records of a government undertaking, department, private business, or other entity based on an established criteria. In other words, Auditing involves the review, analysis and evaluation of processes, products, services, systems, organizations and employees. It is a specialized form of accounting for an organization's financial information, which includes systems, policies and records. While auditing focuses largely on financial information, the process also may involve examination of non financial documents that reveal information about a business's conduct.

Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business. According of ICAI Institute of Chartered Accountants of India - 'Auditing is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon. Auditing is done to know the true and fair view of an organisations financial position'.

An auditor is a person from the accounts department who is trained in auditing. The main job of an auditor is verification of a company's financial records. Auditor determines the efficiency, adequacy and effectiveness of the organization. They also review the reliability and integrity of management and ensures compliance with policies, procedures and laws. They are primarily responsible for maintaining accurate records and helping organizations operate efficiently. In addition to monitoring a companies finances, they often make recommendations for greater compliance and better management policies. Auditors may have many different roles within organizations, from tax law specialists to internal resources auditing professionals. Regardless of their respective areas, all auditors are vital to the financial health of organizations.

Major type of audits conducted by auditors include financial audit, operational or management audit and compliance audit. A financial statement audit (or attest audit) examines financial statements, records, and related operations to ascertain adherence to generally accepted accounting principles. An operational audit examines an organization's activities in order to assess performances and develop recommendations for improved use of business resources. A compliance audit has as its objective the determination of whether an organization is following established procedures or rules.