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Meaning of Audit

The word Audit is derived from the Latin word, audire, which means to hear . Originally, it was customary for persons responsible for maintenance of account too go to some impartial and experienced persons, ordinarily judge, who used to hear these accounts and express their opinion about their correctness or otherwise. Such persons, were know as auditors .

Audit is a periodic, independent examination and verification of the assets and liabilities and financial transactions and controls of a company to determine the reliability of its accounting records. The objective is to enable the auditor to express an opinion on the financial information provided. Auditing is a branch of the accountancy profession, carried out by professionals qualified to form an independent opinion about the accuracy of a company's accounts. The audit aims to ensure that the company's financial statements provide relevant and reliable information, although it cannot be assumed that an auditor's opinion is an assurance about the future viability of the company or about the efficiency of management in running

Definitions of Audit
1. An examination and verification of a Company's financial and Accounting records and supporting documents by a professional, such as a Certified Public Accountant .

2. An audit is an IRS examination of an individual or corporation's tax return, to verify its accuracy. There are three types of audits: correspondence audits (the IRS mails a request for additional information), office audits (an interview is conducted at a local IRS office), and field audits (an interview is conducted at a taxpayer's place of business, for a corporate tax return). Since there is always the chance of an audit, experts recommend keeping good records to support all the information in a return. The reason detailed and accurate bookkeeping is so important is that the burden of proof is on the filer, not the IRS .


Origin of Auditing

The Origin of Auditing may be traced back to the 18th century when the practice of large scale production was developed as a results of industrial revolution.
The industrial revolution of England was another landmark in the history of trade and commerce. This led to great increase in the volume of trading operations which necessitated the use of more capital and the average trader was compelled to combine in partnership with others.

The Institute of Chartered accountants in England and wales was incorporated by Royal Charter on may 11, 1880 with the sole purpose of preparing auditors. Usually, auditors in India were aso prepared by this institute. In January 1923 , the British Association
of Accountants and auditors was established and a person after passing his examination from this association could be fully competent to work as professional auditors in India.

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