Explain audit-financial records, Auditing

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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.

Financial records

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 memos

Sales statement

Cash collection totals/ reconciliations

Cancelled memos

Trade discounts

Vouching of interest income

Investment ledger and interest accounts are supporting records to be verified.

Dividend income

Dividend warrants

 Minutes of meeting referring to dividend declared

Rent income  

Rent register

Lease agreement

Rent receipts

Arrears

Property tax returns

Bill receivable  

Bills for collection

Bills discounted

Cash book

Insurance claim

Insurance policies

Claims filed

Money collected

Claims due

Sale of assets

Sales contract

Termination of insurance policy

Creditors 

Purchase ledger

Invoices

Cash receipts

Statement of sales

Purchase order

Vendors list

Agreements

Vouchers

Wages

Internal control

Proper authority

Employee record

Hourly rate sheet

Cheques drawn 

Overtime wage sheet

Revenue stamp

Wages register

Verification of assets

Assets schedule

Verify cost

Asset register

Physical inspection record

Title deeds

Insurance policy

Representation letters

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.


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