Auditing - Basic Principles


An Auditor should plan his work to complete his work efficiently and well within time. To plan work accordingly, an Auditor handles the following −

  • Accounting system and policies.
  • Internal control system of organization.
  • Determination of audit procedures and coordinating audit work.


An Auditor must have impartial attitude and should be free from any interest. He should be honest and sincere to his work and he should do his work without any bias and prejudice.


An Auditor should keep confidential all the information acquired by him during his audit. He should not share the information with anyone without the permission of the client and that too the information can be shared with the client’s permission only when it is bound to be so.

Audit Evidence

An Auditor should adhere to substantive and compliance procedure for collecting audit evidences before conducting an audit. Through substantive procedures, an Auditor may collect evidences regarding accuracy, completeness and validity of data; and through compliance procedure, he may collect evidences regarding internal control system as used in the client’s organization.

Internal Control System

It is the primary responsibility of a company to keep adequate internal control system in his organization. On the basis of such internal control system, an Auditor can determine the nature, timing and audit procedure to be applied to conduct his audit.

Skill and Competence

Audit should be done by trained, experienced and competent persons and audit staff should be updated with all the developments in accounting, auditing and legal rules and regulations as amended from time to time.

Work Done by Others

An Auditor is permitted to rely on work done by others but he should exercise due diligence when referring to it. He should mention the source of reference thereof in his report.

Working Papers

An Auditor should prepare and preserve all the necessary documents as obtained during his audit. These documents can be used by him as audit evidences.

Legal Framework

All business activities should be run adhering to the rules and regulations stipulated in the legal framework. This is to safeguard the interests and rights of the interested parties.

Audit Report

On the basis of the review and assessment of the audit evidences, Auditor should express his opinion regarding financial statements of an organization −

  • Financial statements are prepared using acceptable accounting principles.

  • Financial statements comply all relevant statutory requirements.

  • All material matters are disclosed and proper presentation of financial statements are done subject to statutory requirements.