Essentials of Audit And Accounting In A Company/Organisation

The Essentials of Audit And Accounting In A Company/Organisation: The Basic And Essential Instruments And Procedures For Maintaining Transparency In Business

ABSTRACT:

The relationship between accounting and auditing is often summarized as –

“Accounting begins where the bookkeeping ends and auditing begins where accounting end”.

Accounting focuses on recording and reporting while audit independently varies accuracy of data.

Before coming to the main context let, we have the short description about both accounting and auditing.

Accounting enables comparison of financial statements of different companies in the same industry. Also, there are set principles laid down in order to ensure that accounting method remain consistent over the time also reduce the risk of financial mismanagement in an organization or the industry or the hidden debts, moreover, increase the trust and confidence of the stake holder.

Accounting and auditing both are co extensive with each other while auditing is the systematic, independent examination of the financial records of the company to verify the accuracy, compliance with the standards and reliability.

Keywords: accounting, auditing

INTRODUCTION:

As we have the idea about the definition of the company’s audit and accounting which involves in the process of the recording, classify, summarizing, analysing and reporting the financial statements of an organization.

The key difference between accounting and auditing is that the accounting is the daily and continuous process of the recording data while audit is the periodic independent examinations of those records.

We have the demo work illustration:

Accounting prepares annual balance sheet, and income statement after wards a independent auditor check and reviews those entries that represents those have done for the “true and fair view” of the company’s/ organization’s financial health.

CASE LAWS:

While taking the measures of the financial transparency and safety the supreme court laid down some of the significant and valuable judgements for the protection of such laws and regulations.

In the case of “COMMISSIONER OF INCOME TAX VS P.V.S BEDDIES PVT LTD. (1997)” the SC recognized that information provided by the internal audit party, detailing factual inaccuracies can be used for initiating reassessment, validating the role of internal auditors in ensuring accounting compliance.

In the case of “SHAJI POULOSE VS THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (2024 INSC 451)” the court upheld the ICAI authority to impose the limit of the number of tax audit a chartered accountant can perform.

There are also the case references for the nature of audit and accountability. In the case of “UNION OF INDIA VS DELOITTE HASKINS AND SELLS LLP (2023)” the SC ruled that an auditor’s resignation does not terminate proceedings under the section of the 140(5) of the companies act 2013. The judgement highlighted that auditor cannot escape liability for the fraudulent conduct or the negligence especially when the public money is involved.

In the companies (amendment) act 2020 Section 378-ZE; Every producer company shall keep at its registered office proper books and accounts in respect to All sum of the money received and expended by the producer company and the matter in respect of which the receipt and the expenditure take place, all sales purchase of the goods by the producer company, the instrument of liability executed on behalf of the producer company, the assets and liabilities of the producer company, in case of the producer company engaged in any trade, production relating to the utilisation of the material, the balance sheet and profit and loss account of the company.

In another section 378(ZF) Every producer company shall have internal audit of its account carried out, at such interval and in such manner as may be specified in the article also included the duties of the auditors such as;

“The amount of the debts due along with the bad debts, the verification of the cash balance and securities, the details of assets and liabilities, the loan given by the producer company, the donations and the subscriptions and the other matters considered necessary by the auditor.

CONCLUSION:

The essentials are not static with the rise of the automated accounting and real time auditing the profession is shifting from manual entry towards strategic oversight and risk management. As we previously know in this article about the co extensive nature of both accounting and auditing the essentials should bridge the gap between technical record keeping and broader goal of the financial integrity. It serves as final reminder that while accounting tells the story of a business auditing ensures that the story is true.