Page 26 - CA Inter Audit PARAM

CA Ravi Taori
whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor
to express an opinion.

Investigation
Investigation is a critical examination of the accounts with a special purpose. For example, if fraud is
suspected and it is specifically called upon to check the accounts whether fraud really exists, it takes
character of investigation.

In the above case appointment of CA for verification of books of accounts/financial records and
circumstances surrounding the loss is for a specific objective to determine genuineness of loss and any
issue affecting liability of insurance company. It is an investigation and not in nature of audit report.

QNO-- Audit and Accounts Old Course -- (N20R)
COA.08 Bhaskar CNO C1OC.020
Both accounting and auditing are closely related with each other. Explain
Answer Both accounting and auditing are closely related with each other as auditing reviews the financial
statements which are nothing but a result of the overall accounting process. It naturally calls on the part of
the auditor to have a thorough and sound knowledge of generally accepted principles of accounting before
he can review the financial statements. In fact, auditing as a discipline is also closely related with various
other disciplines as there is lot of linkages in the work which is done by an auditor in his day-to-day
activities. To begin with, it may be noted that the discipline of auditing itself is a logical construct and
everything done in auditing must be bound by the rules of logic. Ethical precepts are the basis on which the
foundation of the entire accounting profession rests. The knowledge of language is also considered
essential in the field of auditing as the auditor shall be required to communicate, both in writing as well as
orally, in day-to-daywork.

QNO-- Auditing and Law Old Course -- (N19M)
COA.09 Bhaskar CNO C1OC.020
The relationship between auditing and law is very close one.
Answer ➢ Validity
• The relationship between auditing and law is very close one. Auditing involves
examination of various transactions from the viewpoint of whether or not these have
been properly entered into.
➢ Business Laws
• The auditor should have a good knowledge of business laws affecting the entity.
• He should be familiar with the law of contracts, negotiable instruments, etc.
➢ Tax Laws
• The knowledge of taxation laws is also inevitable as entity is required to prepare their
financial statements taking into account various provisions affected by various tax laws.
• In analyzing the impact of various transactions particularly from the accounting aspect, an
auditor ought to have a good knowledge about the direct as well as indirect tax laws.

QNO-- Auditing and Behavioural Science. Old Course -- (P16M/N18R/M19M/N21R)
COA.15 Bhaskar CNO C1OC.020
The discipline of behavioural science is closely linked with the subject of auditing. Discuss.
Answer ➢ Financial auditor deals basically with the figures contained in the financial statements, but he shall
be required to interact with a lot of people in the organization.
➢ The internal auditor or a management auditor is expected to deal with human beings rather than
financial figures.
➢ One of the basic elements in designing the internal control system is personnel.
➢ The knowledge of human behaviour is indeed very essential for an auditor so as to effectively
discharge his duties.

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