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Audit is a systematic and scientific examination of books of accounts of a business. Audit is undertaken by an independent person or body of persons who are duly qualified for the job. It is a verification of the results shown by the statement of comprehensive income and the state of affairs as shown by the statement of financial position. In short it is a critical review of the system of accounting and internal control.
The word ‘auditing’ has been derived from Latin word “audire” which means “to hear”. In fact, such an expression conveyed the manner in which the auditing was conducted during ancient time. Traditionally auditing can be understood as an examination of accounting records undertaken with a view to establishing whether they completely reflect the transactions correctly for the related purpose.
However, over a period of time, the manner of conducting audit has undergone revolutionary change. Now a day it is defined as “An audit is independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon”.
The another elaborated definition of audit is “Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing situation, the auditor perceives and recognises the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report”.
