Auditing starts when accounting ends???
“Auditing starts when accounting ends” is a question rather than a statement. All the leading books and publications often carry this notion and this is just another statement, which requires a RE-CONSIDERATION in the context of the current auditing practices and the commercial situation prevailing in this modern era.
In relation to auditing it is often said and boasted off that auditing starts when accounting ends. Atleast in connection with the statutory audits this SHOULD be true.
BUT what is found in practice and pursued consistently is not what should be. The audits are being done even when the accounts are not updated and completed. In fact, it is not an unusual situation where you are reviewing the general ledger and the accountant sitting near by in another networked system is updating the accounts.
Today’s accounts are no longer inked; they are in the accounting application’s database. The best practice before commencing the audit is to take out a hard copy of the trial balance. But such practice is of no use and relevance, because it is done just because it is written in your 1990’s audit programme. While the printout you took had lost relevance on the very same day, when the updations were going on, you still hold it as precious audit evidence!!!
You should not have got astonished by seeing the financial results, rather AUDITED financial results released on dot during the first week of April in the news papers or elsewhere, because, while the accounts were being written and updated during March, the statutory audits would have already started. Hence, one should not wonder if the audit report of a concern is out in just 7 days after the close of the financial year.
There is no question of right or wrong or good or bad about the practice of starting an audit before accounting ends. The only caution, which requires a mention, is that the appropriate audit evidences should be in your possession and satisfactory procedures undertaken so as to enable the expression of opinion on the truth and fairness of the financial statements.
------------- Sanjay Kadel, Chartered Accountant
In relation to auditing it is often said and boasted off that auditing starts when accounting ends. Atleast in connection with the statutory audits this SHOULD be true.
BUT what is found in practice and pursued consistently is not what should be. The audits are being done even when the accounts are not updated and completed. In fact, it is not an unusual situation where you are reviewing the general ledger and the accountant sitting near by in another networked system is updating the accounts.
Today’s accounts are no longer inked; they are in the accounting application’s database. The best practice before commencing the audit is to take out a hard copy of the trial balance. But such practice is of no use and relevance, because it is done just because it is written in your 1990’s audit programme. While the printout you took had lost relevance on the very same day, when the updations were going on, you still hold it as precious audit evidence!!!
You should not have got astonished by seeing the financial results, rather AUDITED financial results released on dot during the first week of April in the news papers or elsewhere, because, while the accounts were being written and updated during March, the statutory audits would have already started. Hence, one should not wonder if the audit report of a concern is out in just 7 days after the close of the financial year.
There is no question of right or wrong or good or bad about the practice of starting an audit before accounting ends. The only caution, which requires a mention, is that the appropriate audit evidences should be in your possession and satisfactory procedures undertaken so as to enable the expression of opinion on the truth and fairness of the financial statements.
------------- Sanjay Kadel, Chartered Accountant
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