SCOPE OF AUDIT

SCOPE OF AUDIT

The following points merit consideration in regard to scope of audit :

1. The audit should be organized to cover adequately all aspects of the enterprise relevant to the financial statements being audited.

2. To form an opinion on the financial statements, the auditor should be reasonably satisfied as to whether the information contained in the underlying accounting records and other source data is reliable and sufficient as the basis for the preparation of the financial statements.

3. In forming his opinion, the auditor should also decide whether the relevant information is properly disclosed in the financial statements subject to statutory requirements, where applicable. 

4. The auditor assesses the reliability and sufficiency of the information contained in the underlying accounting records and other source data by: 

    (a) making a study and evaluation of accounting systems and internal controls and

   (b) carrying out such other tests, enquiries and other verification procedures of accounting                        transactions and account balances as he considers appropriate in the particular circumstances. 

5. The auditor determines whether the relevant information is properly disclosed in the financial statements by:

  (a) comparing the financial statements with the underlying accounting records and other source data        to see whether they properly summarize the transactions and events recorded therein; and

  (b) considering the judgments that management has made in preparing the financial statements                 accordingly, the auditor assess the selection and consistent application of accounting policies,             the manner in which the information has been classified, and the adequacy of disclosure.

6. The auditor is not expected to perform duties which fall outside the scope of his competence. For example, the professional skill required of an auditor does not include that of a technical expert for determining physical condition of certain assets.

7. Constraints on the scope of the audit of financial statements that impair the auditor’s ability to express an unqualified opinion on such financial statement should be set out in his report, and a qualified opinion or disclaimer of opinion should be expressed as appropriate.

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