The basic principles of auditing are confidentiality, integrity, objectivity, and independence, skills and competence, work performed by others, documentation, planning, audit evidence, accounting system and internal control, and audit reporting. It is a systematic procedure of examining the financial records of an organization. Its main objective is to find out any frauds or errors in the financial records. It is conducted either by the auditors who have in-depth knowledge of accounting procedures and legal formalities. It ensures the truth and fairness of the financial statements if it reflects the exact status of the state of affairs of the business. It also ensures that the statements follow the accounting standards. Though there are benefits of auditing, there are certain limitations too. An auditor has to rely on valuers and lawyers for estimation and valuation of fixed assets and estimation of contingent liabilities. An auditor cannot detect frauds like forgery, and non-recording of transactions.

Saket Kumar

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