Practical Auditing 2e
Author(s): Dr. K. Sundar, K. Paari
Subject(s): Commerce
ISBN 9789393665621
 Published Date
  Pages 638

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Description

This book Practical Auditing presents concepts in a simple fashion and is structured to help students understand the subject with ease. Designed to address the syllabi requirements of all Universities, it broadly covers the fundamentals and advanced concepts in Auditing.

Features

- Comprehensive coverage

- Simple and easy-to-understand text

- Includes coverage of emerging areas of Auditing, Auditing of Public Companies, Special Institutions and EDP Auditing

- Pedagogy rich: Chapter objectives, tabular presentations, snapshot of content, end-of-chapter review questions, MCQs and other objective type questions

Highlights of second edition

- A new chapter titled Audit and Accounting Standards has been added to address the syllabi requirements in full measure

- An elaborate write-up on Appointment of Auditors has been included

- Necessary changes and provisions as per the latest rules and regulations of Companies Act, 2013 have been incorporated throughout the text

Cover
Halftitle Page
Title Page
Copyright Page
CONTENTS
Preface
CHAPTER 1 INTRODUCTION TO AUDITING
Introduction
Definitions of Auditing
The Features of Auditing
Distinction between Accounting and Auditing
Distinction between Auditing and Investigation
Objectives of Auditing
Detection and Prevention of Errors
Detection and Prevention of Frauds
Essential Features of Auditing
Basic Principles of an Audit
Advantages of Auditing
Shortcomings of Auditing
Materiality in Auditing
Efficiency Audit
Propriety Audit
Standards of Auditing
Professional Pronouncement in India
Review Questions
CHAPTER 2 CLASSIFICATION OF AUDIT
Introduction
Organisation-based Classification
Statute-Mandated Audit
Function-based Classification
Method-based Classification
Special Types of Audits (Dimension-based Audits)
Classification of Audit Branch-wise
Review Questions
CHAPTER 3 TECHNIQUES AND PROCEDURE OF AUDITING
Introduction
Techniques of Auditing
Distinction between Audit Principles and Techniques of Auditing
Auditing Procedures
Review Questions
CHAPTER 4 AUDIT EVIDENCE
Introduction
Gathering Audit Evidence
Principles of Audit Evidence
Reliability of Audit Evidence
Significance of Audit Evidence
Criteria for Selection of Audit Evidence
Classification of Evidence on the Basis of Materiality
Process of Gathering Audit Evidence
Precautions to be Observed on Gathering Audit Evidence
Evaluation of Evidence
Review Questions
CHAPTER 5 PREPARATION FOR AUDIT
Introduction
Preliminary Preparation
Audit Programme
Audit Notebook
Audit Working Papers
Audit Planning
Audit Manual
Audit Memorandum
Review Questions
CHAPTER 6 AUDIT ENGAGEMENT
Introduction
Engagement of an Auditor for Audit Work
Engagement of an Auditor for Compilation of Financial Information
Engagement of an Auditor for Performance of Agreed upon Procedure
Considerations at the Commencement of New Audit
Review Questions
CHAPTER 7 INTERNAL CONTROL
Definitions of Internal Control
Components or Features of Internal Control
Objectives of Internal Control
Forms of Internal Control
Principles or Prerequisites of Internal Control System
Process of Implementing Accounting Control
Advantages of Internal Control System
Shortcomings of Internal Control System
Auditor and Internal Control System
Method of Reviewing the Internal Control System
Internal Control and Corporate Governance
Internal Control in Computerised Information Environment
Sample Internal Control System for Cash Sales and Cash Collection
Internal Control for Sales/Debtors
Review Questions
CHAPTER 8 INTERNAL CHECK
Definition of Internal Check
Features of Internal Check
Factors Causing Errors and Frauds
Objectives of Internal Check
Essentials/Prerequisites of Good Internal Check System
Principles or Features of Internal Check System
Merits of Internal Check System
Shortcomings of Internal Check system
Auditor and Internal Check System
Execution of Operation of Internal Check for Certain Transactions
Review Questions
CHAPTER 9 INTERNAL AUDIT
Definition of Internal Audit
Features of Internal Audit
Role of Internal Audit
Objectives of Internal Audit
Functions of Internal Audit
Advantages of Internal Audit
Possible Shortcomings of Internal Audit
Scope of Internal Audit
Interface between Internal Auditor and Statutory Auditor
Evaluation of Internal Audit Function
Distinction between Internal Check, Internal Control and Internal Audit
Operational Audit
Review Questions
CHAPTER 10 VOUCHING OF CASH TRANSACTIONS
Introduction
Definitions of Vouching
Features of Vouching
Objectives of Vouching
Vouchers
Vouching and Routine Checking
‘Teeming and Lading’
Vouching of Cash Transactions
Sources of Evidence
Vouching Receipts Side
Review Questions
CHAPTER 11 VOUCHING OF TRADING TRANSACTIONS
Introduction
Various Aspects to be Covered in Vouching of Trading Transactions
Vouching of Purchase Book
Vouching of Purchase Returns
Vouching of Sales Book
Vouching of Sales Returns
Vouching of Journal Proper
Vouching of Bills Receivable Book
Vouching of Bills Payable Book
Vouching of Consignment Sales
Vouching of Goods Sent on Sale or Return Document
Vouching of Purchase ledger
Vouching of Sales Ledger
Review Questions
CHAPTER 12 VOUCHING IMPERSONAL LEDGER
Introduction
General Considerations while Vouching Impersonal Ledger
Current Assets and Current/Outstanding Liabilities
Contingent Liabilities
Capital and Revenue Expenditure
Review Questions
CHAPTER 13 VERIFICATION AND VALUATION OF ASSETS
Definitions
Meaning of Valuation
The Process of Valuation
Objects of Verification
Principles of Verification
Valuation of Assets
Classification of Assets
Verification and Valuation of Specific Assets
Stock
Market Price: Meaning
Verification and Valuation of Fictitious Asset
Verification and Valuation of Current Assets
Review Questions
CHAPTER 14 VERIFICATION OF LIABILITIES
Introduction
Meaning
Verification of Share Capital
Debentures
Secured Long-term Loans
Verification of Current Liabilities Sundry Creditors
Bills Payable
Bank Overdraft/Loans
Outstanding Liabilities for Expenses
Provision for Taxation
Proposed Dividend
Income Received in Advance
Employees Deposit
Contingent Liabilities
Bills Discounted but Not Matured
Uncalled Capital
Guarantee
Law Suit
Arrears of Cumulative Dividend
Review Questions
CHAPTER 15 AUDITORS OF A COMPANY
Introduction
Appointment of Auditors
Ceiling on Number of Audits
Removal of Auditor
Auditor’s Remuneration
Qualification of Auditor
Disqualifications
Auditor’s Resignation
Review Questions
CHAPTER 16 RIGHTS (POWERS), DUTIES AND LIABILITIES OF AUDITOR
Introduction
Rights/Powers of an Auditor
Duties/Responsibilities of an Auditor
Status of an Auditor
Liabilities of an Auditor
An Auditor is a Watch Dog but Not a Blood Hound – A Discussion
Review Questions
CHAPTER 17 PROFESSIONAL ETHICS AND MISCONDUCT
Introduction
National Federation of Association
The Chartered Accountants Act 1949 (ICAI)
Review Questions
CHAPTER 18 DEPRECIATION
Introduction
Definition
Auditing: Principles and Practice
Characteristics of Depreciation
Explanation to Certain ‘Terms’
Causes of Depreciation
Factors Influencing the Determination of Depreciation
Different Methods of Charging Depreciation
Duties of an Auditor in Connection with Depreciation
Review Questions
CHAPTER 19 RESERVES AND PROVISIONS
Introduction
Definitions: ‘Reserves’
Features of Reserves
Classification of Reserves
Review Questions
CHAPTER 20 SPECIAL CONSIDERATIONS IN A COMPANY AUDIT
Introduction
Preliminaries before Commencing the Audit of a Company or Special Considerations in a Company Audit
Inspection of Company Documents
Inspection of Books and Registers
Inspection of Minutes of Meeting Sec. 193
Inspection of Contracts
Scrutiny of Previous Year’s Financial Statement
Other Information
Review Questions
CHAPTER 21 COMPANY AUDIT
Introduction
Classifications of Capital
Forms of Capital
Audit of Share Capital
Verification of Share Capital
Audit of Share Capital Received
Audit of Calls in Arrears
Audit of Calls in Advance
Forfeiture of Shares
Reissue of Forfeited Shares
Issue and Redemption of Preference Shares
Redemption of Preference Shares
Alteration of Capital
Capital Reduction
Share Transfer
Transmission of Shares
Share Warrant
Buying Back of Own Shares
Review Questions
CHAPTER 22 AUDIT OF DEBENTURES AND DIVIDENDS
Introduction
Audit of Debentures
Audit of Investments
Audit of Preliminary Expenses
Audit of Underwriting Commission and Brokerage
Audit of Contracts with Director
Audit of Managerial Remuneration
Audit of Dividends
Payment of ‘Interest Out of Capital’
Payment of Dividend Out of Capital
Payment of Dividend Out of Capital Profit
Review Questions
CHAPTER 23 CONTINGENCIES AND EVENTS AFTER BALANCE SHEET DATE
Contingencies - Introduction
Meaning
Sources of Estimate
Accounting Treatment of ‘Contingent Loss’
Contingent Gains
Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies (AS5)
Changes in the Accounting Policies
Review Questions
CHAPTER 24 PRESENTATION OF FINANCIAL STATEMENTS
Introduction
Legal Provisions Pertaining to Final Account
Details of Items Shown as Liabilities
Details of Items Shown as Assets
Note to Accounts
Details of Foreign Exchange Earnings
Review Questions
CHAPTER 25 AUDIT REPORT
Introduction
Definition of the Term Report
Definition of Audit Report
Need and Importance of Audit Report
Auditor’s Duty regarding Audit Report
Requisites of Good Audit Report
Distinction between Audit Report and Audit Certificate
Elements of an Audit Report
Contents of the Report under Companies Act
Matters to be included in the Auditor’s Report
Signing of Audit Report
Types of Report
Statutory Report
Review Questions
CHAPTER 26 INVESTIGATION
Introduction
Characteristics of Investigation
Duties of Investigator/Principle of Investigation
Purpose of Investigation
Process of Conducting Investigation by Central Government
Contents of the Report
Types of Investigation
Review Questions
CHAPTER 27 AUDIT OF SPECIAL INSTITUTIONS
Introduction
Audit of Educational Institutions: Colleges, Universities and Schools
Audit of Charitable Institutions
Audit of Clubs
Audit of Hospitals
Audit of Hotels
Audit of Cinema Theatres
Audit of Insurance Companies
Audit of Banks
Audit Procedure for Verification of Assets and Liabilities
Verification of Liabilities
Review Questions
CHAPTER 28 EMERGING AREAS OF AUDITING
Introduction
Cost Audit
Management Audit
Human Resources (HR) Audit
Social Audit
Environmental Audit
Operational Audit
Tax Audit
Energy Audit
Marketing Audit
Forensic Audit
Proprietary Audit
Intangible Audit
Review Questions
CHAPTER 29 AUDITING OF PUBLIC (GOVERNMENT) ACCOUNTS
Introduction
Government Audit
The Position and Functions of the Comptroller and Auditor General of India
Duties of Accountant General
Review Questions
CHAPTER 30 AUDIT IN COMPUTERISED ENVIRONMENT
Introduction
Aspects to be Considered in Computerised Information System (CIS) Environment
Approaches to EDP Auditing
Characteristics of Auditing through the Computer
Effect of EDP on Auditing Scenario
Audit Trail
Internal Control System in the Computerised Accounting Environment
Benefits of Computerised Accounting
Deficiencies in Computerised Accounting System
Role of Auditor under EDP Environment
The Role of Auditor in Computerised Audit Environment
Service Bureau
Review Questions
CHAPTER 31 LEGAL DECISIONS RELATING TO AUDITING
CHAPTER 32 AUDIT AND ACCOUNTING STANDARDS
Secretarial Audit
Standards of Audit on Internal Audit
Accounting Standards
Auditing Standards
Role of National Financial Reporting Authority (NFRA)
Concurrent Audit
Stock Audit
CAG - Audit
Review Questions
Glossary
Index

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