Audit Diwas PM Modi says Strong, scientific audits will make the system strong and transparent | Audit whose name people used to tremble earlier, has now become an important part of value addition

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Audit Diwas PM Modi says Strong, scientific audits will make the system strong and transparent

New Delhi. The first Audit Day was celebrated in the country on Tuesday i.e. 16 November. Prime Minister Narendra Modi said in the program organized on the audit day that There was a time when audit in the country was looked upon with an apprehension, a dread. CAG Vs Government had become the general concept of our system. But, today this mindset has been changed. Today audit is considered as an important part of value addition. The Prime Minister said that as an institution, the CAG not only examines the accounts of the country, but also adds value to productivity and efficiency, therefore, the audit day and its related programs reflect the country’s thinking, betterment and improvement. are an important part of.

Modi told all the government departments that if the CAG asks you for documents or other important documents, then they must be provided, because this makes the work of the government better and easier. He said that this makes the task of self-assessment easier. Cleanliness and transparency are the biggest moral boosters for us, be it in the life of an individual or in government.

definition of audit

Audit is the examination or inspection of various books of accounts by an auditor, followed by a physical examination of inventory to ensure that all departments are following a documented system of record keeping of transactions. Audit is done to ascertain the accuracy of the financial statements provided by an organization.

what is auditing

Auditing usually refers to a financial statement audit or the examination and evaluation of a company’s financial statements. Usually this is done by an external third party. The audit can be done by an internal party and a government entity such as the Internal Revenue Services (IRS).

importance of audit

Audit is an important term used in accounting, which examines and evaluates the financial records of a company. Audit ensures that the information provided is fairly and accurately correct. Further, audit is also done to ensure that the financial statements are prepared in accordance with the relevant accounting standards. It has three major financial statements:

  • income statement
  • balance sheet
  • cash flow statement

Financial statements prepared internally by management using relevant accounting standards such as International Financial Reporting Standards (IFRS) or General Accepted Accounting Principles (GAAP) have been developed to provide useful information to users of the following :

  • shareholder
  • lender
  • government authority
  • Customer
  • supplier
  • partner

Financial statements capture a company’s operating, investing and financing activities through various recorded transactions. Since financial statements are developed internally, there is a high risk of fraudulent behavior by those preparing the statement. Without proper regulations and standards, preparers can easily misrepresent their financial position in order to make a company appear more profitable or successful.

Auditing is important to ensure that companies present their financial position fairly and accurately and in accordance with accounting standards.

type of audit

Internal Audit: Internal audit is done by the employees of a company or organization. These audits are not distributed outside the company. Instead, these are prepared for use by management and other internal stakeholders. Internal audits are used to make better decisions within the company by providing managers with actionable suggestions to improve internal controls. They also ensure compliance with laws and regulations and provide timely, fair and accurate financial reports. Management teams can use internal audits to identify flaws or inefficiencies within the company before allowing external auditors to review the financial statements.

External Audit: Performed by external organizations and third parties, external audits provide an unbiased opinion that internal auditors are not able to provide. External financial audits are used to determine any material misstatements or mistakes in a company’s financial statements. When an auditor gives an unqualified opinion or an unequivocal opinion, it indicates that the auditor can provide assurance that the financial statements are presented with accuracy and completeness.

External audit allows various stakeholders to take decisions about the company with confidence. The key difference between an external auditor and an internal auditor is that the external auditor is completely independent. This means they are able to provide a more unbiased opinion than an internal auditor. There are several very good accounting firms, which usually do external audits for various corporations. Prominent among these are Deloitte, KPMG, Ernst & Young (EY) and PricewaterhouseCoopers (PWC).

Government Audit: Government audits are conducted to ensure that the financial statements of a company are correctly prepared to not misrepresent the amount of taxable income. In the US, the Internal Revenue Service (IRS) conducts audits, which verify the accuracy of a taxpayer’s tax returns and transactions. The Canadian equivalent of the IRS is known as the Canada Revenue Agency (CRA).

cag whatever document, Request data and files, be provided to them

Prime Minister Narendra Modi told the government departments that whatever documents, data and files the CAG asks for, they should be made available. Modi said that the CAG should study the best measures and systematic lessons adopted in the time of pandemic and scientific and vigorous audit will make the system strong and transparent. Modi said that even when he was the Chief Minister of Gujarat, he used to tell his officers that if the CAG asks you for documents or other necessary documents, then they must provide them, because it makes the work of the government better and easier. He said that this makes the task of self-assessment easier.

data is information

PM Modi said that in olden times information was transmitted through stories and history was written through stories, but in the 21st century data is information and in the coming times our history will also be seen and understood through data. He said that in future only data will determine history. Modi said that taking care and grooming of each generation and making it more suitable for the coming generations is also a huge responsibility and the CAG is playing this role very well.

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