Principle of Planning, Honesty, Secrecy, Audit Evidence, Internal Control System, Skill and Competence, Work Done by Others, Working Papers, Legal Framework, and Audit Report
Explanation:
Principle of planning
An Auditor should plan his work to complete his work efficiently and well within time. To plan work accordingly, an Auditor handles the following
Accounting system and policies.
The Internal control system of organization.
Determination of audit procedures and coordinating audit work.
Principle of Honesty
An Auditor must have an impartial attitude and should be free from any interest. He should be honest and sincere to his work and he should do his work without any bias and prejudice.
Principle of Secrecy
An Auditor should keep confidential all the information acquired by him during his audit. He should not share the information with anyone without the permission of the client and that too the information can be shared with the client’s permission only when it is bound to be so.
Principle of Audit Evidence
An Auditor should adhere to substantive and compliance procedures for collecting audit evidence before conducting an audit. Through substantive procedures, an Auditor may collect evidence regarding accuracy, completeness, and validity of data; and through compliance procedure, he may collect evidence regarding the internal control system as used in the client’s organization.
Principle of Internal Control System
It is the primary responsibility of a company to keep an adequate internal control system in his organization. Based on the internal control system, an Auditor can determine the nature, timing, and audit procedure to be applied to conduct his audit.
Principle of Skill and Competence
An audit should be done by trained, experienced, and competent people and audit staff should be updated with all the developments in accounting, auditing, and legal rules and regulations as amended from time to time.
Principle of Work Done by Others
An Auditor is permitted to rely on work done by others but he should exercise due diligence when referring to it. He should mention the source of reference thereof in his report.
Principle of Working Papers
An Auditor should prepare and preserve all the necessary documents as obtained during his audit. These documents can be used by him as audit evidence.
Principle of Legal Framework
All business activities should be run adhering to the rules and regulations stipulated in the legal framework. This is to safeguard the interests and rights of the interested parties.
Principle of Audit Report
Based on the review and assessment of the audit evidence, Auditor should express his opinion regarding financial statements of an organization −
Financial statements are prepared using acceptable accounting principles.
Financial statements comply with all relevant statutory requirements.
All material matters are disclosed and proper presentation of financial statements is done subject to statutory requirements.
