Definition of Auditing

The word  'Audit' is originated from the Latin word 'audire' which means 'to hear'.  In the earlier days, whenever there is suspected fraud in a business organization, the owner of the business would appoint a person to check the accounts and hear the explanations given by the person responsible for keeping the account and funds.  In those days, the audit is done to find out whether the payments and receipt are properly accounted or not. 

The objective of modern day accounting is not only for the verification of cash but to report the financial position of the undertaking as disclosed by its Balance sheet and Profit and Loss account.

Definition of Auditing


A precise definition of the term 'Auditing' is difficult to give. Some of the definitions given by different authors are as follows:

According to Montgomery, a well known author, "auditing is a systematic examination of the books and records of a business or the organization in order to ascertain or verify and to report upon the facts regarding the financial operation and the result thereof. "

Spicer and Pegler expanded the above definition as follows:

"An audit may be said to be such an examination of the books, accounts and vouchers of a business as well enable the auditor to satisfy that the Balance Sheet is properly drawn up, so as to give a true and fair view of the state of affairs of the business and whether the Profit or Loss for the financial period according to the best of his information and the explanations given to him and as shown by the books, and if not, in what respect he is not satisfied."

According to Lawrence R. Dicksee, "an audit is an examination of accounting records undertaken with a view to establishing whether they correctly and completely reflect the transactions to which they relate. In some instances, it may be necessary to ascertain whether the transactions themselves are supported by authority."

R. K. Mautz defines auditing as being "concerned with the verification of accounting data, with determining the accuracy and reliability accounting statement and reports."

It is clear from the above definitions that auditing is the systematic and scientific examination of the books of a accounts and records of a business so as to enable the auditor to satisfy himself that the Balance Sheet and the Profit and Loss Account are properly drawn up so as to exhibit a true and fair view of the financial state of affairs of the business and profit or loss for the financial period. The Auditor will have to go through various books and accounts and related evidence to satisfy himself about the accuracy and authenticity to report the financial health of the business.

Difference between Auditing and accounting.

  1. The role of accountancy is to record the transaction in the book of accounts, extraction of trial balance, preparation of Trading and profit and loss account and balance sheet etc.  On the other hand auditing is the examination of books of account and checking the financial statement for the purpose of finding out the true and fair position and results of operation of a concern.  Audit is concerned with detailed examination of the complete accounting records but it does not involve the preparation of accounts.
  2. If the auditor is asked to write the books of accounts, extract an agreed trial balance and profit and loss account and Balance sheet, he would be doing the work of an accountant and not the work of an auditor.  Preparation of account is not the part of auditing.  An auditor, using his appointing authority, needs to check thoroughly, whether the Profit and Loss account  and the Balance Sheet have been properly drawn up and revel the 'true and fair view' of the state of affairs and results of operation of the concern and report it to the parties interested.
  3. Auditing without the prior existence of accounts is not possible.  When the accountant finishes his work, the auditor starts his work.

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Comments 83 comments

M yasir 6 years ago

CONCERNED WITH THE VERIFICATION OF ACCOUNTING DATA DETERMINING THE ACCURACY AND RELIABILITY OF ACCOUNTS STATEMENT AND REPORTS.


Expert 6 years ago

well done


Expert 6 years ago

well done


MBag 6 years ago

very informative


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billrobinson 5 years ago from CA, USA

Thanks for the information.


M.Basit 5 years ago

well done


wasim 5 years ago

i need it


Makunda Mirdha, Sambalpur, Odisha, India 5 years ago

very good definition, I like it & it will helps many


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Iamsam 5 years ago Author

Thanks all for your kind visits and comment.

It is nice to know that you are benefited by the writeup.

Thanks


monty 5 years ago

thanks dud..........................


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webgain 5 years ago from Delhi, India

lamsam good writing skill.. keep it up


Francis 5 years ago

It is quite educating i don't dislike it


Aabera 5 years ago

thanks to give definition


Danish Haider 5 years ago

thanks!! for giving us the exact definition of Auditing..


shreya 5 years ago

i really like it it help me a lot........


maryam 5 years ago

thnxxx


prashant 5 years ago

thanks...............


manisha 5 years ago

thaks for giving an actual defination of audting


TARSAME 5 years ago

thanks aton man it was damn helpful


Arif 5 years ago

It is very help full to us...


M.Akram 5 years ago

I like this page. Thanks


IMRAN HAMEED 5 years ago

THANKX FOR EASY DEFINITION .


IMRAN HAMEED 5 years ago

THANKX FOR EASY DEFINITION .


baloch 5 years ago

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ajay 5 years ago

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SRI 5 years ago

Thnx fr the definition.....


m.shahbaz kz 5 years ago

thanks for give us deff and it is very easy to understand


MOHAMMED ABDIKADIR 5 years ago

I REALLY INJOY YOUR DEFINITION SO THANKS FOR YOUR WRITING GOOD CLEAR DEFINION


vikas mishra 5 years ago

thnx


tichman 5 years ago

you defintion its clear


marwa mohabat 5 years ago

thanhs for ur useful definition


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IJR112 4 years ago

I was an auditor for 4 years. This is a good overview of auditing. Thanks.


kavi 4 years ago

the definition is useful, thanks for that. Something which is missing, the year you publish that article, would be great if the year was present.


Tania 4 years ago

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mukesh tutu 4 years ago

thanks ..it is very helpful


madiha 4 years ago

thanks for giving accurate definition


Macauly L. 4 years ago

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AMINU 4 years ago

UDUS


maryann 4 years ago

thanks i love your way. Abia poly


oligo paul 4 years ago

that is amazing and encouraging,thank u for the definition


khyat 4 years ago

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hilowle 4 years ago

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manu bhardwaj 4 years ago

its really nice page


Benjamin 4 years ago

Thank you so much for such a precise definition.


tariku 4 years ago

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Fatima Ishaq 4 years ago

Thank you.


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Chahat 4 years ago

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geoffrey dereva 4 years ago

ncing.thanks a lot


saihou 4 years ago

I am studying auditing and the definition is very good


Nwachukwu lawrence chika 4 years ago

Thanks 4 accurate & authentc definitns, i luv it.abia poly


SUMANTA KUNMAR LENKA 4 years ago

i am more than happy for this page....


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very excellent defination i like it....


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Manoj Vaishy 4 years ago

It's Really Helpful to those who Belong to Accountant Profession


Ranjth Marakala 4 years ago

I'm student of B.Com, the following definition help me to get clear picture. Thanks a lot


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Ayatullahi 4 years ago

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mohammed 4 years ago

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I.B.A 4 years ago

Please i accept with you defined take very mouhs


feroz alam masud 4 years ago

thanks for excellent defination.


DATTA PATIL 4 years ago

It's Really Helpful to those who Belong to Accountant Profession


tanuja 3 years ago

its a proper pack of audit


suraj 3 years ago

thanks... really helpful..


Teslim from kwara,nigeria 3 years ago

Plz i just want to know why aditing is included as a course in accounting department in an institution,


amina malik 3 years ago

Thanks for definition but i want more


kultaran 2 years ago

nice definition


2 years ago

what are the steps of modern day auditing?

Can anyone help


sangam 2 years ago

Thnks


prem 2 years ago

thanku


prem 2 years ago

thanku


raghu 2 years ago

good information


Ashiya khan 22 months ago

Thanks & nice definition


Santanu 17 months ago

thanks its a nice definition


govardhan royal 16 months ago

thnx fr the infrmtn ...I'm rely satisfy


karo 2 months ago

An excellent piece.

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