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It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics started identifying an “Audit Society”. The auditor perceives and recognises the propositions before them for examination, obtains evidence, evaluates the same and formulates an opinion on the basis of his judgement which is communicated through their audit report. Any subject matter may be audited. As a result of an audit, stakeholders may effectively evaluate and improve the effectiveness of risk management, control, and the governance process over the subject matter. The word audit is derived from a Latin word “audire” which means “to hear”.
During the medieval times when manual book-keeping was prevalent, auditors in Britain used to hear the accounts read out for them and checked that the organisation’s personnel were not negligent or fraudulent. United States auditing was viewed mainly as verification of bookkeeping detail. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business. Hence, statistical sampling is often adopted in audits. But recently, the argument that auditing should go beyond just true and fair is gaining momentum.