Auditing is the process by which a competent, independent person accumulates and evaluates 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. According to section 210(6) of the Companies Act, 1994, the Boards of Directors of the company has the authority to appoint the first auditor(s). To become a auditor, one should follow some criteria.
a. Competent, Independent Person:
Competence
· Qualified to understand the criteria used.
· Know the types and amount of evidence to accumulate to reach the proper conclusion after the evidence has been examined.
Independence
Have an independent mental attitude (be independent in fact and in professionalism).
Unbiased information and objective thinking are needed for the judgment and decisions to be made.
b. Accumulating & Evaluating evidence:
Evidence-any information used by the auditor to determine whether the quantifiable information being audited is stated in accordance with the established criteria.
Deciding the amount of audit evidence-planning.
Accumulation of evidence – implementation.
Evaluation of evidence – implementation.
Drawing conclusion based on these evidence. Final stage.
Quality and volume of evidence – must satisfy the audit objective.
