“Auditing is a systematic examination of financial statements through collection of sufficient and appropriate evidence with an intention of expressing an opinion whether the financial statement give true and fair picture or not”.
Due to strong intention of humans to mis-state information, auditing and due diligence have become a legal requirement in most countries.
All audits are not the same. They are different based on to whom it is to be reported and on which area it is to be reported. For e.g. Statutory audit is conducted by government authority and it is them to whom it is to be reported.
There are different types of audit some of them are as follows:-
Due diligence can be sub classified as follows:-
-> Financial due diligence
-> Tax due diligence
-> Information systems due diligence
-> Legal due diligence
-> Environmental due diligence
->Personal due diligence
-> Operational due diligence involves an evaluation from commercial, strategic or operational perspective. For e.g. Whether proposed merger will create operational synergies or not. On the other hand financial due diligence is performed on the books of accounts and other information directly related to financial matters to obtain information about the financial health of the organization. In addition legal due diligence may be required where legal aspects of functioning of the entities are reviewed. For e.g. legal aspects of property owned by the entity or compliances with various statutory requirements under various laws. Environmental and personal due diligence are also carried out in order to establish whether various propositions with regards to environment and personnel of the enterprises under review are appropriate.
Let us examine a little more about Audit & Assurance Services
Error and mistake is a part of human life. We as a human are bound to make mistakes as it shapes us for future. But sometimes these mistakes are intentional. These intentional mistakes known as fraud are done with an intention to gain advantage over others. Economic gain is the most important driving force for committing fraud. As economy developed money became the most important thing for a human and with an intention to earn more and more money people started to follow malpractices prejudicial to the interest of others. The impact of these malpractices had severe effects. To mitigate such activities and protect the interest of all a systematic examination is conducted. This process is called auditing. Auditing is not only for detection of fraud and errors. The main purpose of auditing is to check whether financial information represented by the financial statement is true and fair or not. Auditing does not assure that all the information is correct and accurate.