electonic audit

Modern age is the age of information technology. Nowadays all organization whether big or small have started to use computer based accounting system. Electronic date processing machine is used to get the quick accurate and reliable result by processing information and facts supporting the amount increased in the financial statements.
 With the help of data processing machine the complex problems shown in account can be solved quickly. So, electronic audit auditing becomes quick, economic and transparent. Auditor has the opportunity to perform auditing by using the company's computer or any other computer. While performing electronic audit, different files in the computer of the institution by using audit software in the computer machine are checked. Statistics is processed on the basis of necessary information by the program given in the computer. By processing various information and statistic's precise result can be received supporting the financial statements by computer technology.
             Nowadays, sort of organizations whether big or small have been using computer based accounting system. An auditor has to audit in the computer base. In auditing so, " audit software" assisted audit techniques is used. For this, computer should be used for processing to check the content of the files in the test data computer program and content of the files of the audit software computer yet. Most of the auditor may decide to select the manual audit even in the place where computer based auditing is in existence. Auditor should have knowledge of various computer parts to operate auditing effectively by the help of computer, which can be presented as follows:
    
  Input devices: Panch card, paper tepa, keyboard, mouse, microphone, scanner, digital camera, etc 
   help to reach the various statistics in the computer.

 Processing devices: Processing device is factor to process centerly the various information and
  statistics. It is also called computer brain.
     i) Control unit
     ii) Memory unit
     iii) Arithmetic and logical unit

What is performance audit and it's objectives

Performance audit is an emerging concept. It may be important in the field of public administration. It is used to give information to the management regarding efficiency economy and return on investment. It gives information that how much benefit is provided o the public. Performance audit increase the responsibility of decision makers, increases the quality of report prepared by supreme institute of audit which helps to recommend fort he improvement of weakness as well as to increase level of awareness of public providing such information. Performance audit also provides information for the preparation of proper plans and for the improvement of quality of public administration.

Objectives of performance audit:

 To evaluate the effectiveness and efficiency of the lower and higher level management.
 To analysis the efficiency on the basis of investment.
 To evaluate the positive and negative impact of the program.
 To check and evaluate the receipt and issue of resources.
 To prepare and present report with necessary suggestions.

Discuss the auditor's liability to third parties for fraud and negligence

We have been considering the liability of an auditor to the company, the accounts of which he has audited the question arises, whether an auditor can be held liable for damages to third parties, if they have suffered any loss by relying on any balance sheet or any financial statement signed by him. It is a controversial legal questions. It is generally argued that an auditor does not owe any duty to the third party since he has not been appointed by them. There is no privacy of contract between the auditor and third party and therefore he has nothing to do with such party. It has been held in various cases that in the absence of a contractual relationship, a plaintiff cannot hold a suit against the auditor. It was decided in England in the case of candled vs. crane christmas and company 1951 that the auditor owes no duty of care to anybody but this client, and he cannot be held responsible for any loss suffered by third parties who relied on accounts which have been audited by him even though negligence may be proved. In this case, the auditor knew that the accounts certified by him would be used by the third parties and relying on the statements of accounts, the plaintiff did invest money in the company and it was lost. The majority judgement did not hold him responsible for negligence on the ground that there was no fraud though statements of accounts in question had been prepared negligently.

Merits and Demerits of routine checking

Merits of routine checking
   The following are the merits of routine checking:
    1. In this checking, original entry and books of accounts can be checked throughly and errors and
        frauds can be deleted quickly and easily.
    2.  Routine checking is a simple work, which can be performed easily and quickly by a person
          having ordinary knowledge of accountancy.
    3. Routine checking carried on with due care and precaution, it helps in the verification of the

Demerits of routine checking
  The following are the demerits of routine checking:
  1. Routine checking is incompetent to cover complex errors it can discover simple clerical errors
        and ordinary funds.
  2. Routine checking is expensive, it is not economical, it takes more time and consumes higher cost.
  3. It tends to be quite boring because of its mechanical and monotonous nature.

Audit note book

Audit note book means a book which contains difficulties arisen in course of auditing, uncleared quarries or points to be discussed with the auditor and the points which are to be incorporated in the report. It is also called audit memoranda. It is the record of things which are asked, received, answers and unclear quarries etc. For an auditor audit note book is indispensable. It helps the auditor more to prepare the auditing report. If the great value to the auditor subsequently in case a suit is filed against him for negligence. Audit note book is the important document of auditor. It makes the auditor clear about the past things which he has forgotten at present. Furthermore, it provides as guideline for an auditor if he has to audit in the same company next year.

Contents of audit note books
  The following points are the contents of the audit note books:
    - Audit program
    - A List of the books of account
    - Names of the principal officers, their duties and responsibilities
    - Technical subjects used by the business
    -  Points to be discussed later

Advatages of audit

Auditing is necessary for any organization. It is important to check the organizational performance by checking its book of account. It helps to control the fraud and errors in time. It is necessary for both small or big organization. With regular auditing the business can be conducted well. Besides these it has also following advantages:
1) Help to detect and prevent errors.
2) Helps to detect and prevent fraud.
3) Helps to obtain loan easily.
4) Helps to control the irregularity
5) Helps to get compensation
6) Helps to assess tax
7) Helps to present as a proof
8) Helps to keep account regualarly

Meaning of auditing

Auditing is to provide a report by checking the books of account and concerned financial statements for the purpose of proving truth and fairness and whether they have shown the real situation of the business or not. In general auditing is defined as official examination of the books of the accounts.
 The word Audit is derived from latin word Audire which means to hear. At the end of the fourth century, the judges who used to hear accounts were known as auditors. The duties of the auditor was first described after the development of double entry book keeping system by luca pacialo.