Auditing in Depth
Auditing is a systematic process of objectively obtaining and evaluating evidence assertions about economic actions and events to ascertain of correspondence between those assertions and established criteria and communicating the results to interested users. Auditing-in-depth is a concept that will be reinforced throughout this paper; it is the logical extension of “defense-in-depth” to auditing. In the words of AICPA-
“Auditing is a process by which competent, independent people accumulates and evaluate evidence about quantifiable information related to a specific economic entity for the purpose of determining and reporting on the degree of correspondence between the quantifiable information and established criteria.”
From the above discussion, we find out the following characteristics –
Systematic process: A systematic process connotes a logical, structured and organized series of steps or procedures.
Objectively obtaining and evaluating evidence: It means examining the bases for the assertions and judiciously evaluating the results without bias or prejudice either for or against the individual making the assertions.
Assertions about economic actions and events: These are the representations made by the individual or entity. They comprise the subject matter of auditing.
The degree of correspondence: It refers to the closeness with which the assertions can be identified with established criteria. The expression of correspondence may be quantified.
Established criteria: These are standards against which the assertions or representations are judged.
Communicating the results: It is achieved through the written report that indicates the degree of correspondence between the assertions and established criteria.
Interested users: They are individuals who use the auditor’s findings. In a business environment, they include stockholders, management, creditors, government agencies, and the public.
Audit in depth involves the examination of books of accounts in depth. Such a system of checking is adopted in big business houses, where a detailed examination of all the records is not possible. This system of checking is undertaken with a view to check the incidence of errors or frauds in the books of accounts.