The principal aspects to be covered in an audit concerning final statements of account are the following:

Aspects to be covered in audit

• An examination of the system of accounting and internal control to ascertain whether it is appropriate for the business and helps in properly recording all transactions.
  




• Reviewing the system and procedures to find out whether they are adequate and comprehensive and incidentally whether material inadequacies and weaknesses exist to allow frauds and errors going unnoticed.
  




• Checking of the arithmetical accuracy of the books of account by the verification of postings, balances etc.
  




• Verification of the authenticity and validity of transaction entered into by making an examination of the entries in the books of accounts with the relevant supporting documents.

• Ascertaining that a proper distinction has been made between items of capital and of revenue nature and that the amounts of various items of income and expenditure adjusted in the accounts corresponding to the accounting period.

• Comparison of the balance sheet and profit and loss account or other statements with the underlying record in order to see that they are in accordance therewith.

• Verification of the title, existence and value of the assets appearing in the balance sheet

Assertions about account balances

at the period

end:

(a) Existence - assets, liabilities, and equity interests exist.

(b) Rights and obligations - the entity holds or controls the rights to assets, and liabilities are the obligations of the entity.

(c) Completeness - all assets, liabilities and equity interests that should have been recorded.

(d) Valuation and allocation - assets, liabilities, and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.

(e) Verification of the liabilities stated in the balance sheet.

(f) Checking the result shown by the profit and loss and to see whether the results shown are true and fair.

(g) Where audit is of a corporate body, confirming that the statutory requirements have been compiled with.

(h)Reporting to the appropriate person/body whether the statements of account examined do reveal a true and fair view of the state of affairs and of the profit and loss of the organization.

Definition of Assertions : It refer to representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur.