Bb0021 Assignment Notebook

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Description: 8.25" x 10.75"; Six Subjects: Reading, English/Language Arts, Spelling, Math, Science, and Social StudiesSemester Long with 96 Days; 112 Pages

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MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

MF0004 Q.1 Discuss Is Auditing is a luxury. (10Marks)

Answer:
Audit is a word we often associate with financial statements which have already discussed in the previous section. Audited financial statements usually mean that such statements have been verified by a person called ‘auditor’ and which are assumed to be free from any kind or errors or frauds.
Is it so? What is the meaning of the word ‘Audit’? Let us explore.

How did the word ‘audit’ originate?
The word ‘audit’ is derived from Latin word Audire which means ‘to hear”. In olden days, auditors appointed by Kings used to verify the financial affairs of the Kingdom to find out whether any arithmetical discrepancy or error or fraud in the book-keeping existed. They used to present a report on their findings before the King, which the latter used to ‘hear’. Thus King was being assured by auditor that the financial affairs of his Kingdom were errorfree and fraud- free.


The essential features in an audit:
Verifiable information
As in the olden days, now also the financial statements prepared by the management are verified by auditors with reference to books of account and other records of a firm.
Thus there can be no audit if there are no financial statements or books of account or any such verifiable information.
Verifiable information is any information that can be verified by means of evidences or proofs as to its existence, genuineness and many other qualities or assertions.
E.g. Financial statement of an organization is a verifiable information because it is supported by books of account which again are evidenced by vouchers, bills etc. as a proof of the transactions undertaken by any organization.
E.g. Internal control is a verifiable information because, as we have studied in Unit 2, it can be evaluated through techniques like ICQs, Flow charts or by a simple observation.
E.g. A Project Report need not be verifiable information because it need not be supported by any books of account, vouchers, bills etc. It is mostly an estimate, guess or prediction based on so many assumptions. Thus you cannot expect an auditor to ‘audit’ information for which there is no evidence since he cannot provide assurance without such evidence. Opinion of auditor
The auditor appointed by a company or any organization assures the stakeholders of that company or organization that the financial statements are ‘true and fair’, thus assuring stakeholders that everything is okay.
Hence in an audit opinion of auditor is most important. Hence in any audit there should be a report by the auditor through which auditor provides his opinion about the financial statements.

Independence of auditor
The assurance or opinion is more valued when provided by a person who is not pressurized by, influenced by or dependant upon the organization the books of accounts of which are being audited.
This also means that if any verification is done by any person who is not independent from the organization then such verification will not amount to audit.
Therefore the auditor should be an independent person.
It is possible that sometimes the auditor like internal auditor is appointed by management only. Even in such cases the quality of independence should exist in auditor in the sense that he should not have undertaken any executive operation of the matters he is auditing.

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