In this tutorial, we will learn about auditing the process of examining an organization’s financial records to determine if they are accurate and by any applicable rules, regulations, and laws.

Principles Of Auditing:

Fundamental principles governing an audit describe the basic law which governs the auditor’s professional responsibilities and complies with wherever an inspection is carried. They are as given below:-

Integrity Objectivity And Independence: 

Any professional should be straightforward, honest, and sincere in his approach. An auditor should be fair, truthful, impartial, and have access to the organization’s entire financial records. He is also entrusted with funds of other persons for audit. They should be a man of high integrity and objective.


The auditor should respect the privacy of information acquired during his work and not disclose the information without the client’s prior permission unless there is a legal duty to disclose certain information, he may do so with specific authority. The auditor should not use the information for his gains or the advantage of the third party.

Skill And Competence: 

The auditor must acquire competent, skillful, and keep himself abreast of the latest developments, including pronouncements of ICAI on accounting and auditing matters. As the professionally qualified persons act as auditors, their specialized knowledge, skills, and competence acquired through study and formal courses help them perform flawlessly. The skill and expertise gained by the auditor should be applied with due care.

Work Performed By Others: 

The auditor delegates some work to others and use the work performed by others, including that an expert, he continues to be responsible for forming and expressing his opinion on the financial information. An auditor may have to rely on the work and report of another auditor. Then he should ensure the adequacy of the nature and purpose of the work.


The auditor should document matters essential in providing evidence to ensure that the audit is carried out following basic principles.


The auditor should plan his work to enable him to conduct the audit in an effective, efficient, and timely manner. He should acquire knowledge of the client’s accounting system—the extent of reliance that could be placed on internal control, and coordinate the work.

Audit Evidence: 

The auditor should obtain sufficient appropriate shreds of evidence through the performance of compliance and other substantive procedures to enable him to draw reasonable conclusions from an opinion on the financial information.

Accounting System And Internal Control:

The management is responsible for maintaining an adequate accounting system incorporating various internal controls appropriate to the size and nature of business. The auditor should assure himself that the accounting system is sufficient and all the information should record. The internal control system contributes to such assurance.

Audit Conclusions And Reporting:

Based on the audit evidence, he should review and assess the audit conclusions. He should ascertain:

  • As for whether accounting policies have consistently applied.
  • Whether financial information complies with regulations and statutory requirements.
  • There is adequate material of disclosure of material matters relevant to the presentation of financial information subject to regulatory requirements.

The auditor’s report should contain a clear written opinion on the financial information. A clean audit report indicates the auditor’s satisfaction in all respects. When a qualified, adverse, or disclaimer of view or reservation of advice on any matter is to made, the audit report should state the reasons.