auditing


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Related to auditing: Auditing Standards, Auditing Procedures, Internal auditing

auditing,

examination and statement of accounts and of other documents connected with accounts by persons who have had no part in their preparation. Systems of financial inspection have long been used, especially in connection with public accounts. In Italy the elaboration of commerce considerably increased the duties of an auditor in the late Middle Ages, but the auditing of business accounts did not become common until the 19th cent., when there were an increasing number of businesses continually growing in size and complexity. Corporate charters usually came to be granted only on condition that licensed experts conduct annual audits. Such audits are particularly useful to the owners (partners or stockholders); executives (managers, officers, and directors); creditors or prospective creditors (investors, note brokers, and commercial and investment bankers); and receivers, trustees, and creditors' committees of a business. Audits are also useful to the vendors of a firm's merchandise, the owners of patents and other recipients of profit shares or royalties, governmental regulatory bodies, and prospective donors to institutions. An audit settles certain categories of questions. It must determine whether all assets and liabilities shown are actual, and that they are properly incurred, valued, and recorded. A check must be made of the surplus, income, and capital-stock accounts, verified by the examination of the authorizations for stock issues and by comparing the amounts issued with the amounts authorized. Finally, auditing constitutes an independent check on the tendency to overstate assets and understate liabilities. The duties of auditors have even expanded into a comprehensive survey and analysis of the entire conduct of the financial and accounting branches of an enterprise. Thus the auditor needs, in addition to his knowledge of accountingaccounting,
classification, analysis, and interpretation of the financial, or bookkeeping, records of an enterprise. The professional who supplies such services is known as an accountant. Auditing is an important branch of accounting.
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, a broad understanding of business and finance. The accountant records the facts of a business; the auditor must determine whether or not such recording has been done accurately and honestly and then interpret and judge the facts, perhaps adding to his report recommendations for the future conduct of the business. In many countries, auditors are now established as a separate profession, requiring government licensing. In the United States, private audits are usually performed by certified public accountants; auditing of the federal government's accounts is conducted by Congress's Government Accountability Office (GAO). Formerly the General Accounting Office, it was established in 1921. The Internal Revenue Service periodically audits individual and corporate tax returns. The Public Company Accounting Oversight Board (established 2002) registers and regulates accountants and accounting firms that act as auditors.

Bibliography

See H. F. Stettler, Auditing Principles (3d ed. 1970); A. W. Holmes, Auditing (7th ed. 1971); V. B. Bavishi, International Accounting and Auditing Trends (1989); T. A. Lee, ed., The Evolution of Audit Thought and Practice (1989).

References in periodicals archive ?
For example, in accordance with government auditing standards we share the peer review reports with our oversight committee.
The PCAOB will set requirements for (1) the retention of audit workpapers and related information (seven years); (2) quality control standards; (3) a firm's monitoring of professional ethics and independence from issuers on behalf of which the firm issues audit reports; (3) consultation within such firm, on accounting and auditing questions; (4) supervision of audit work; (5) hiring, professional development and advancement of personnel; (6) acceptance and continuation of engagements; (7) internal inspection; and (8) such other requirements as the PCAOB specifies.
Second, he realizes that since the Parmalat disaster, Europe is under even heavier pressure from the public and the markets to quickly strengthen its own corporate governance structures and improve oversight, transparency, and quality of accounting and auditing standards.
Auditing & Other Assurance Engagements, 1st Canadian Ed.
This book examines eight components of implementing auditing changes that will give shape and direction to a law enforcement agency's vision and culture.
SAS 104 appears to have conformed to the PCAOB's Auditing Statement No.
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This monitoring or auditing is "continuous" in relatively few cases--and, in those rare instances, usually involves repetition of both automated and manual audit procedures.
This article discusses crucial changes that the standard introduces and explains how they will affect auditing practice.
Acting as the profession's voice on auditing standards related to audits of nonissuers and when commenting on the proposed standards of other auditing standard setters, such as the International Auditing and Assurance Standards Board (IAASB).
In 2002, CalCPA assembled an independent committee to recommend changes that could be made in California to improve financial reports and the process involved in preparing and auditing those reports.