1

2

AUDIT

TO HEAR OR LISTEN

AUDIO

3

INTIALLY WAS ASSUMED TO BE

TRUST WORTHY PERSON OF

OWNERS IRRESPECTIVE OF HIS

QUALIFICATION.EYES &EARS OF

THE OWNER.

4

SALES OF DATES 2000.00

1262.50

PURCHASE OF DATES

SALARY

MAZDOORI

OCTRIO

CLEANING OF DATES

PACKING

1000.00

200.00

10.00

0.50

2.00

50.00

CASH IN HAND WITH MUNSHI 737.50

KHATA (ACCOUNTS IN ANCIENT AGES

(1-10-1550)

5

ASSETS

CASH

1000

2000

3000

OPENING CASH

LOANS TAKEN

SALES

TOTAL RECEIPTS

500

500

5000

6000

LIABILITY

OWNERS MONEY

500

2500

3000

ASSETS PURCHASED

PURCHASES

EXPENSES

TRANSPORT

LABOR

PACKING

TOTAL PAYMENTS

CASH IN HAND

1000

2000

100

200

700

4000

2000

DEVELOPING DAYS IN ACCOUNTINGPROFESSION

6

BALANCE SHEET Rs. in Million

CAPITAL

RESERVES

PROFIT FOR THE YEAR

LONG TERM DEBITS

CURRENT LIABILITIES

ACCOUNTS PAYABLE

TAX PAYABLE

OTHERS

100,000

2000

1500

103,500

100,000

50,000

2,500

5,000

261,000

FIXED ASSETS

CURRENT ASSETS

ACCOUNTS RECOVERABLE

BILLS RECOVERABLE

100,000

100,000

61,000

261,000

PROFIT & LOSS Rs. in Million

SALES

PURCHASED

LABOR

MARKETING EXP

SELLING EXP

REPAIRS

FINANCIAL EXP

DEP

PROFIT BEFORE TAX

TAX

PROFIT AFTER TAX

100,000

50,000

2500

2500

7000

15000

20000

3000

1500

1500

200000

200,000

200000

7

8

(A) GLOBALIZATION IMPORTS EXPORTS

TRAVELLING

(B) COMPETITION QUALITY MACHINES

COMPUTERIZATION

QUALITY SERVICE

QUALIFIED STAFF.

9

ACCOUNTANTS - CHARTERED ACCOUNTANTS

(MUNSHI’S)

MARKETING - MBA MARKETING

PRODUCTION - MASTER – TEXTILE

- TEXTILE ENGINEERS

MANAGERS - IT EXPERTS

- TOP OF THE LINE

SALES BANKING IMPORTS/ QUALIFICATIONS

EXPORTS

10

THE CONCEPT OF EYES & EARS OF MANAGEMENT FAILED

QUALIFICATION LIMITATIONS CAME IN.

11

AS THE AUDITOR WAS CONSIDERED

ONLY TO CHECK FINANCIALS.

THE OWNER APPOINTED

•- EITHER A PERSON MORE QUALIFIED

THAN ACCOUNTANT OR

• EQUAL TO ACCOUNTANT’S

QUALIFICATION

12

PAYMENT - PRE AUDIT

DEBITS & CREDITS

ACCOUNTS - ARITHMATICAL

ACCURACY

HISTORICAL AUDITOR

LIQUIDITY & VIABILITY ISSUES

CHANGES IN INTERNAL CONTROL

UNUSUAL TRANSACTION

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS INVOLVING OFF BALANCE SHEET ITEMS

ADEQUACY OF DISCLOSURE

13

SPECIFIC FINANCIAL STATEMENTS RISKS

Long termed Assets goodwill and other tangible assets.

Impairment of inventory

Revenue Recognition

Accounting Estimates

Deferred taxes

Restructuring changes

Debt covenants

Other than temporary declining in value of

Marketable debt and equity securities.

Pension and other post retirement benefits

New issued standards.

14

15

BUSINESS PERSON

KNOWLEDGE OF INDUSTRY

KNOWLEDGE OF ECONOMY

KNWOLEDGE OF TECHNOLOGY

- BEST PRACTICES – BENCHMARKING

MARKET TRENDS

16

- VALUE ADDITION

- WOULD ONLY SEE HISTORICAL ACCOUNTING

ONLY AS IT RELEATES TO FUTURE DECISION

MAKING

- INVOLVED IN ORGANISATION PLANNING &

STRATEGY

- IDENTIFY BUSINESS RISKS & EXPOSURES

- IDENTIFY MISSED OPPORTUNITIES

- RISK MANAGEMENT FOR RISK TAKERS

17

- OWNER’S PRE-OCCUPATION DUE TO EXPANSION

OF BUSINESS

- FINANCIAL DISCIPLINE WAS REQUIRED

- PROCESSES GAINED COMPLEXITIES

- TECHNOLOGICAL ADVANCEMENTS

- CREATE CONTROL ENVIRONMENT

- USED AS A TOOL FOR CHECKS & BALANCES

- RISK MANAGEMENT

18

UNDERSTANDING RELATIONSHIP BETWEEN RISK

AND CONTROL.

RISK AS POTENTIAL FOR LOSS.

THREAT.

VULNERABILITY.

IMPACT.

PROBABILITY.

RISK OF INFORMATION SYSTEM (AVAILABILITY,

CONFIDENTIALITY INTEGRITY).