Objective and Scope of Auditing
dObjective of an Audit:
The objective of Audit of financial statements is to allow the auditor
to express and opinion on the financial statements presented before
him. Auditing allows the auditor to express his opinion at to the true
and fair view of the financial positions and the health of the
enterprise. The user must not take it for granted that
auditing assurances by an auditor are guarantees of the future
viability of the enterprise under audit and auditor only expresses his
opinion on what has happened and not on what is going to happen.
Responsibility for the
Financial Statements: The responsibility of the Auditor is
limited to only expression of opinion on the financial statements
presented to him and nothing more. The responsibility of preparation of
the financial statements if on the management and the audit does not
absolve the management of its responsibilities.
Scope of Audit:
The scope of auditing is governed by the terms of engagement of the
auditor, requirements of law and pronouncement by the Auditors
governing body. The terms of employments can in now way restrict the
scope of work which is prescribed by the governing law or the governing
body of the auditors.
Materiality:
Auditing should be done keeping in mid the concept of materiality in
mind. The auditing team should ensure that all items which
are material in nature individually or as a group are attended to
during the course of audit.
The Auditor is not expected to do the works which are outside the scope
of his expertise. The professional skill of an auditor does not make
him competent to judge the physical condition of a machine or certain
assets of which he is not an expert.
Any constraints on the auditors scope of auditing of financial
statements that impair his ability to express an unqualified opinion on
such financial statements should be clearly stated out in the audit
report and an appropriate disclaimer are inserted in tAny constraints
on the auditors scope of auditing of financial statements that impair
his ability to express an unqualified opinion on such financial
statements should be clearly stated out in the audit report and an
appropriate disclaimer are inserted in the report.