1. AUDITOR IS WATCH DOG NOT A BLOOD HOUND :-"Auditor is watch dog and not a blood hound" is a phrase which is given by Justice Lopes. According to the above phrase it is explained that like a watch dog auditor should protect the interest of those who appointed. But he will assume the servants of the company honest and he will rely on their statements. Further he can take a reasonable care. He should perform his duties with normal skill. The attitude of watch dog will not reduce his responsibilities.
In doubtful cases he should investigate the matters thoroughly. But he is also not expected that he should become suspicious mind. Any how, an auditor is a watching dog but not a sleeping watching dog.
2. AUDIT NOTE BOOK DURING THE COURSE OF AUDIT :-
The auditor writes down the important notes on a book during the course of audit for his record. He notes down that he may not forget them. Some times he is not satisfied with some entries recorded in the books, so he makes inquires about them. So the audit note book is maintained by the auditor for particular business to make his job more easy.
Importance Of Audit Note Book :-
Justice William throws light on the importance of audit note book in the following words,
"The audit note book which contained detailed information proved to be very helpful to the auditor in every critical moment."
For preparing the audit report it is very useful for the auditor.
1. In case of negligence charge against the auditor, audit note book as a good evidence can be presented.
2. It may be also used for future guidance and reference.
3. It also enables to auditor to know that what work has been done by his assistant at each audit.
Contents Of The Book :-
Following are the important contents of this book :
1.All the important points which require further explanation.
2. A record of all the missing vouchers duplicates and invoices.
3. All mistakes and errors discovered.
4. Important balances of cash book.
5. Those queries which might be required at a subsequent audit.
6. All those points which have to be included in the audit report.
7. Those points which need discussion with client or seniors.
8. A record of exact work done on audit list of books of account and names of officers with their duties and powers.
9. Beginning and completion of audit dates.
3. AUDIT WORKING PAPERS :-
Important documents and papers regarding the business are collected which are needed by the auditor during the course of audit. These papers are called working papers.
These working papers contain essential facts about the accounts. So accounts can not be examined properly by the auditor without the working papers.
Audit working papers consists of schedules statements, analysis and other statements essential for the preparation of final accounts and find report of the auditor.
Note :- Audit working papers are prepared from the clients record but these are the property of the auditor.
Objects or Importance Of Working Papers :-
Importance of working papers can be judged by the following facts :
1. These papers are very useful in framing the opinion about the efficiency of the audit team.
2. These papers also throw light on the weak points of the client business.
3. Working papers are the permanent record of the data examined.
4. These are very useful for defending the auditor in case of negligence.
5. Working papers are also very helpful for the auditor in preparing the audit report.
6. Working paper are also very useful for the future audit.
7. Shifting of work from one clerk to another is also easy in the presence of working papers.
4. TEST CHECK or TEST CHECKING :-
Prof. Weigh defines, "Test checking means to select and examine a representative sampler from a large number of similar items".
In a big business there are a large numbers of transactions and auditor has not so much time to check each and every entry. In this so auditor draws some samples representing the number of entries of each class of transaction. In this way he saves his time. In the test checking auditor checks only samples instead of thorough checking.
Precautions Of Test Checking :-
1. Selected period for the test check should not be disclosed to the client by himself.
2. First and last month of the audit large number of entries should be checked.
3. Each entry of the cash book should be checked and test check should not be applied to the cash book.
4. Test check should be framed in such a way that each audit clerk work may be checked.
5. Entries of each class should be represented.
6. At each audit, entries and periods should be different.
7. Auditor should apply test check and some errors or frauds remains undetected auditor will be responsible.
5. ROUTINE CHECKING :-
It means the following checking :
Checking of totals subtotals, additions subtraction and other calculations in the books of original entry.
1. Checking of postings into ledgers.
2. Checking of complete ledger accounts.
3. The above work is too mechanical so auditor should perform his job very carefully.
Objects And Importance Of Routine Checking :-
Routine checking is very useful to verify the arithmetical accuracy of the entries.
1. Special ticks are employed to ensure that no figures are alternated after checking.
2. To verify that postings from the books original entries have been made to the correct accounts in the ledgers.
3. To verify that ledgers accounts have been correctly balanced.
6. AUDIT IN DEPTH :-
When the books of account are checked in detail about the particular item, it is called auditing in depth.
Such type of auditing is applied in large business concerns where all the entries detailed examination is not possible. This technique is based on test checking. Auditor selects some items on the basis of random sampling and then he makes the detailed checking of the record.
7. OVER ALL CHECKS :-
Overall checks means detailed checking of whole accounting records. All those activities which are useful for the auditor indicating the errors and frauds are included in over all checks. Those errors which can not be detected by routine checking these can be detected by over all checking. Account of books and information of employees are the base for over all checks. It is the duty of the auditor that he should examine the reliability such information's.
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