What is an audit, what financial records are available and what is their individual function in completing your audit?
Audit is an independent examination of financial information of an entity, whether profit oriented or not and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion there on.
Record is kept by the management of their operations, their possessions, these records are vouched and verified by using supporting documents to search for evidence upon which team members draw conclusions provide a basis of audit report which is the ultimate opinion/ conclusion of the audit process.
Cash receipts/ cash book verification
Documents/ records maintained are
Cash collection totals/ reconciliations
Vouching of interest income
Investment ledger and interest accounts are supporting records to be verified.
Minutes of meeting referring to dividend declared
Property tax returns
Bills for collection
Sale of assets
Termination of insurance policy
Statement of sales
Hourly rate sheet
Overtime wage sheet
Verification of assets
Physical inspection record
All these are supporting records that provide audit evidences regarding material mis-statements existing or not role of these documents are that these are evidences but auditor has to verify each and every information that is received from management to get it confirmed from one or two alternative sources to collect reliable audit evidences upon which auditor is able to give reasonable assurance that financial statements are presenting true and fair view. That's why external confirmation is becoming a norm of the business in certain cases e.g. confirmation from banker etc.