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Definition of Auditing

Updated on November 11, 2013

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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    • profile image

      M yasir 6 years ago

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

    • profile image

      Expert 6 years ago

      well done

    • profile image

      Expert 6 years ago

      well done

    • profile image

      MBag 6 years ago

      very informative

    • billrobinson profile image

      billrobinson 6 years ago from CA, USA

      Thanks for the information.

    • profile image

      M.Basit 6 years ago

      well done

    • profile image

      wasim 6 years ago

      i need it

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      Makunda Mirdha, Sambalpur, Odisha, India 6 years ago

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

    • Iamsam profile image
      Author

      Iamsam 6 years ago

      Thanks all for your kind visits and comment.

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

      Thanks

    • profile image

      monty 6 years ago

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

    • webgain profile image

      webgain 6 years ago from Delhi, India

      lamsam good writing skill.. keep it up

    • profile image

      Francis 6 years ago

      It is quite educating i don't dislike it

    • profile image

      Aabera 6 years ago

      thanks to give definition

    • profile image

      Danish Haider 6 years ago

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

    • profile image

      shreya 5 years ago

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

    • profile image

      maryam 5 years ago

      thnxxx

    • profile image

      prashant 5 years ago

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

    • profile image

      manisha 5 years ago

      thaks for giving an actual defination of audting

    • profile image

      TARSAME 5 years ago

      thanks aton man it was damn helpful

    • profile image

      Arif 5 years ago

      It is very help full to us...

    • profile image

      M.Akram 5 years ago

      I like this page. Thanks

    • profile image

      IMRAN HAMEED 5 years ago

      THANKX FOR EASY DEFINITION .

    • profile image

      IMRAN HAMEED 5 years ago

      THANKX FOR EASY DEFINITION .

    • profile image

      baloch 5 years ago

      suprb v wel don

    • profile image

      ajay 5 years ago

      excellent there is a clearity in each of your subject knowledge

    • profile image

      SRI 5 years ago

      Thnx fr the definition.....

    • profile image

      m.shahbaz kz 5 years ago

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

    • profile image

      MOHAMMED ABDIKADIR 5 years ago

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

    • profile image

      vikas mishra 5 years ago

      thnx

    • profile image

      tichman 5 years ago

      you defintion its clear

    • profile image

      marwa mohabat 5 years ago

      thanhs for ur useful definition

    • IJR112 profile image

      IJR112 5 years ago

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

    • profile image

      kavi 5 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.

    • profile image

      Tania 5 years ago

      i dont like this............

    • profile image

      mukesh tutu 5 years ago

      thanks ..it is very helpful

    • profile image

      madiha 5 years ago

      thanks for giving accurate definition

    • profile image

      Macauly L. 5 years ago

      Thanks 4 ur good work.God will give the GRACE 2 more.thanksssss

    • profile image

      AMINU 5 years ago

      UDUS

    • profile image

      maryann 5 years ago

      thanks i love your way. Abia poly

    • profile image

      oligo paul 5 years ago

      that is amazing and encouraging,thank u for the definition

    • profile image

      khyat 5 years ago

      thanks " feel good "

    • profile image

      hilowle 5 years ago

      thanks for the definition i like it really

    • profile image

      manu bhardwaj 5 years ago

      its really nice page

    • profile image

      Benjamin 5 years ago

      Thank you so much for such a precise definition.

    • profile image

      tariku 5 years ago

      this difination very nice appreciat you i need ssume thing for nex day.

    • profile image

      Fatima Ishaq 5 years ago

      Thank you.

    • profile image

      diwakar 5 years ago

      it was useful 2 us.......thank u so much......

    • profile image

      Chahat 5 years ago

      It was very helpul...

      thnx......

    • profile image

      geoffrey dereva 5 years ago

      ncing.thanks a lot

    • profile image

      saihou 5 years ago

      I am studying auditing and the definition is very good

    • profile image

      Nwachukwu lawrence chika 5 years ago

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

    • profile image

      SUMANTA KUNMAR LENKA 5 years ago

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

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      i'm realy satisfied....

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      saira amin 5 years ago

      realy interesting...............

    • profile image

      sandeep 5 years ago

      thanks,,,,,,,,,,,,,

    • profile image

      jahanzeb hussain lighari 5 years ago

      very excellent defination i like it....

    • profile image

      ANNA SEHLAPELO 5 years ago

      Really like this page because you sis even literature review

    • profile image

      Manoj Vaishy 5 years ago

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

    • profile image

      Ranjth Marakala 5 years ago

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

    • profile image

      Ranjith Marakala Nadoor Udupi dist. 5 years ago

      it is really nice.....

    • profile image

      Av Nyako. fed poly bauchi 5 years ago

      waw! guys a nice deff thanks very helpful

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      Ayatullahi 5 years ago

      thnks i am sure it will helps many of us

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      Bala Joseph B/kebbi 5 years ago

      nice work, I realy found it very usefuf. Thanxxxx

    • profile image

      noori 5 years ago

      that is so significant to share fruitful information i really very like it

      noori

    • profile image

      mohammed 4 years ago

      thanks for give definition...

    • profile image

      satish 4 years ago

      thanksss for give definition

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      I.B.A 4 years ago

      Please i accept with you defined take very mouhs

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      feroz alam masud 4 years ago

      thanks for excellent defination.

    • profile image

      DATTA PATIL 4 years ago

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

    • profile image

      tanuja 4 years ago

      its a proper pack of audit

    • profile image

      suraj 4 years ago

      thanks... really helpful..

    • profile image

      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,

    • profile image

      amina malik 3 years ago

      Thanks for definition but i want more

    • profile image

      kultaran 3 years ago

      nice definition

    • profile image

      3 years ago

      what are the steps of modern day auditing?

      Can anyone help

    • profile image

      sangam 3 years ago

      Thnks

    • profile image

      prem 2 years ago

      thanku

    • profile image

      prem 2 years ago

      thanku

    • profile image

      raghu 2 years ago

      good information

    • profile image

      Ashiya khan 2 years ago

      Thanks & nice definition

    • profile image

      Santanu 2 years ago

      thanks its a nice definition

    • profile image

      govardhan royal 23 months ago

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

    • profile image

      karo 9 months ago

      An excellent piece.

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