Today's Topic - Qualities of an Auditor

[Revision Series for IPCC audit]

Dear IPCC Student,

 

Exams are approaching.

Time to revise is reducing.

Are you worrying about How to revise the whole syllabus in last 15 days?

 

We have a Solution-

You concentrate on the subjects which you consider vast to revise, & we’ll provide you the revision for Audit.

For these last 15 days, we’ll provide you one topic every day to revise & the manner in which you are required to write the answer.

If you want the discussion on any specific topic, you can mail us & we’ll provide you the tips for the same to revise & remember it fast.

 

For last hour revision of other topics & To revise the whole syllabus in just 5-6 hours, refer to the Book “Revision Series for IPCC - Audit, by CA Gunja Maheshwari”.

About the Book –

·        Covers all points mentioned in the Syllabus as prescribed by ICAI

·        Judicious use of Flowcharts for explaining the concept

·        Easy language to understand, revise & remember the topic fast.

·        Require only 5-6 hours to revise the whole Syllabus of Audit.

 

Today’s Topic –

 

Qualities of an Auditor

(if the Q asks for fundamental principles or pre-requisites or requirements to be possessed by the Auditor, it refers to Qualities of an Auditor.)

 

If the Q is for 2 marks, just explain the following qualities in one line-

Integrity - Auditor should be fair & follow moral ethics in conducting Audit.

Objectivity – Auditor should not be biased while preparing his report.

Independence – Auditor should not get influenced by his surroundings & should act independently.

Personal Qualities – Include honesty, firmness, cautious behaviour, good temper, patience, discretion, etc.

(usually for 1 mark, give two points)

 

 

If the Q is for 4 marks, first explain who is an Auditor in one line & than explain the above qualities in two lines –

Auditor submits a report to his appointing authority for the records examined by him and presents his opinion on authenticity & correctness of Books of Accounts.

Qualities of an Auditor to conduct the audit are -

1.      Integrity – it refers to that Auditor should be fair & follow strict moral ethics in conducting Audit and is required to evaluate the documents & records in entirety or completely.

2.      Objectivity – Auditor should not be biased while preparing his report. He should be fair in his decisions.

3.      Independence – Auditor should not get influenced by his surroundings & should act independently. Independent working will help in maintaining the confidentiality of the information.

4.       Personal Qualities – qualities to be possessed by an individual to act as an Auditor includes –

a.       Honesty – giving the true information according the facts.

b.      Firmness – maintaining the decision & not get influenced by surroundings.

c.       Cautious – being careful in conducting audit & presenting reports.

d.      Good temper – ability to manage the different areas independently & not get influenced by another situation.

e.       Patience – ability to act firmly & do not over-react in nay hard situation & thus handling different situations professionally.

f.       Discretion – ability to decide or take independent decision.

 

If the Q is for 8 marks, first explain who is an Auditor & than explain the above qualities in detail –

Auditor is Only a Chartered Accountant, who is professionally qualified to conduct audit, to make a report to the Appointing Entity, to examine Entity’s records, and form opinion on Authenticity & correctness of Books of Accounts.

Auditor is required to posses the following -

1.      Integrity – it refers to that Auditor should be fair & follow strict moral ethics in conducting Audit and is required to evaluate the documents & records in entirety or completely. Auditor is required to be straight forward in taking his decisions. He is required to manage the different situations simultaneously.

(Firstly explain what is integrity & its requirement for an Auditor.)

2.      Objectivity – Auditor should not be biased while preparing his report. He should be fair in his decisions. His decision should not get affected by the management influences or any other influencing factor in the Entity. He should ensure that the business is being conducted to achieve the Entity’s objectives & is not diverted from its objectives.

(firstly explain the meaning of objectivity & its need to conduct an audit.)

3.      Independence – Auditor should not get influenced by his surroundings & should act independently. Independent working will help in maintaining the confidentiality of the information. If the Auditor does not work independently, than the reports will not provide true & fair view of the financial statements of the Entity, which will state that the accounting principles, standards & procedures have not been followed by the Entity.

(explain the need of working independently, as the basic requirement to present true 7 fair view.)

4.       Personal Qualities – qualities to be possessed by an individual to act as an Auditor includes –

a.       Honesty – Auditor is required to present the true & fair information according the facts made available to him. Even if he is provided with negative information, he should report the same.

b.      Firmness – Auditor is required to maintain his decision & not get influenced by his surroundings. He should not get deviated from his decision & thus should give only true information.

c.       Cautious – Auditor should be careful in conducting audit & presenting reports, so that no material information remains unstated in the report.

d.      Good temper – Auditor should be able to manage the different areas independently & not get influenced by another situation. He is required to act confidentially in every situation without affecting a situation by another.

e.       Patience – Auditor should be able to act firmly & do not over-react in nay hard situation & thus should handle different situations professionally & patiently.

f.       Discretion – Auditor should decide or take independent decision, in different situations.

5.      Auditor is also required to posses the practical & theoretical knowledge of the following –

a.       Accounting principles & techniques applicable to the Entity.

b.      Financial Accounting principles & methods to be followed.

c.       Management Accounting as applicable.

d.      Knowledge of the Laws governing the Entity’s business.

e.       Rates of various Taxes to be imposed on the Entity.

f.       Latest trends in information system which can be used in the different areas of Audit.

g.      Economic environment in which the Entity is dealing & its impact on the Entity.

 

Besides the above qualities, before conducting an audit, an Auditor should get an insight of the Business Procedure and any peculiar area of the Business.

 

 

Best Wishes,

‘Revision Series for IPCC’ Team

[Revision Series for IPCC audit]

[Revision Series for IPCC audit]

[Revision Series for IPCC audit]

Dear IPCC Student,

 

Exams are approaching.

Time to revise is reducing.

Are you worrying about How to revise the whole syllabus in last 15 days?

 

We have a Solution-

You concentrate on the subjects which you consider vast to revise, & we’ll provide you the revision for Audit.

For these last 15 days, we’ll provide you few topics to revise & the manner in which you are required to write the answer.