Audit - Indian Laws - General

Audit Shorter Oxford English Dictionary , third edition revised with addenda page 122 Audit . ... 2. Official examination of accounts with verification by reference to witnesses and voucheRs. Audit : 1. To make an official systematic examination of (accounts)... Audit: 1. (a) a formal or official examination and verification of books of account (as for reporting on the financial condition of a business at given date or on the results of its operations for a given period), (b) methodical examination and review of a situation or condition (as within business enterprise) concluding with a detailed report of findings : rendering and settling of accounts. 2 . the final report following a formal examination of books of account : an account as adjusted by auditors: final statement of account. 3 . archaic: a judicial examination (as in a court) 4. Auditale. 5. a check of publishers records to verify claims as to the extent of publication s circulation. Webster s Third New International Dictionary -Unabridged, Vol. 1, (A-G) p. 143 ). Audit: 1 . to examine and verify (as the books of account of a company or a treasurer s accounts) Jowitt s Dictionary of English Law, II Edition, Vol. I (A-K) Audit, an examining of accounts. An audit may be either detailed or administrative, and is usually both. A detailed audit is a comparison of vouchers with entries of payment, in order that the party whose accounts are audited may not debit his employer with payments not in fact made. An administrative audit is a comparison of payments with authorities to pay, in order that the party whose accounts are audited may not debit his employer with payments not authorised. Exchequer and Audit Departments Act, 1866, as amended) Black s Law Dictionary -fifth edn., . Audit : Inspection and verification by I.R.S. of a taxpayer s return or other transactions possessing tax consequences. Systematic inspection of accounting records involving analysis, tests and confirmations. The hearing and investigation had before an auditor. An audience; hearing ; an examination in general. A formal or official examination and authentication of accounts, with witnesses, vouchers, etc. Green-Boots Const. Co. v. State Highway Commission, 165 Okl. 288, 25 P. 2d 783. (vide On audit, the Encyclopaedia Britannica (Vol. I-Micropaedia) states thus : Audit, examination of the activities, records, and reports of an enterprise by accounting specialists who are not the same accountants responsible for their preparation. Public auditing by independent accountants has acquired professional status and become increasingly common with the rise of large business units and the separation of ownership from control. The public accountant performs tests to determine whether the management s statements fairly present the firm s financial position and operating results; such independent evaluations of management reports are of interest to actual and prospective shareholders, bankers, suppliers, lessors and government agencies. In English speaking countries, public auditors are usually certified, and high standards are encouraged by professional societies. Most European and former British Commonwealth nations follow the example of Great Britain, where Government-chartered organizations of accountants have developed their own admission standards. Other countries follow the pattern in the United States where the States have set legal requirements for licensing. Most countries have specific agencies or departments charged with the auditing of their public accounts (e.g. the General Accounting Office in the United States and the cour des comptes in France). Internal auditing is relatively new, designed primarily to meet the needs of management. Internal auditors try to determine whether the requirements of the accounting system are being met effectively and also whether the system itself is adequate for management needs. Perhaps the most familiar type of auditing is the administrative audit, or pre-audit, in which individual vouchers, invoices or other documents are investigated for accuracy and proper authorisation before they are paid or entered in the books... An auditor is one who audits or is engaged in audit. What is true of an It auditor is also true of audit . In a number of cases, English and Indian courts had occasion to deal with the true role of an auditor either under their respective Companies Act or under the Acts regulating the profession of Chartered Accountants. Every one of those rulings that very aptly describe the role of an auditor or audit is relevant. TS. NATARAJ - 1985 (4) TMI 49 - KARNATAKA HIGH COURT