AUDIT TRIAL
Definition: Audit trial is
the tracing of path or track of transactions from the beginning to the end. In
relation to purchase of an asset the auditor will examine from the person
authorizing the purchase, documents involved and the assets to satisfy himself
before forming his opinion.
Importance of audit trial to vouching audit
Audit
trial is indispensable to vouching audit such that the auditor cannot come up
with satisfactory opinion if he cannot trace the path of transactions to the
end. The vouching audit involves consideration of each entry in the books and
examining the available evidence to support each entry. The evidence usually
consists of documents and papers and should satisfy the auditor that: -
1. The transactions was authorized by management
2. The transaction came within the aims and objects of the organization
3. The transaction was correctly and adequately described by the entry in
the books.
4. The entry is correctly incorporated in the final accounting.
PROFESSIONAL ETHICS
All
worthy professional bodies impose a code of conduct on those who practice as
members in the pubic eye. The ideal of such code is one which lays down more
than the essential requisites which needs to be observed in the course of daily
professional life so that the service to clients remains flexible and
unhampered by petty restriction and yet is seen to be in accordance with the
highest standard of conduct at all times.
The
ethics codes operated by he major accountancy bodies do by and large; allow
their members that degree of freedom which is compatible with the nature
attitudes which the majority as men and women of undisputable integrity
displays' yet periodic challenges to those high standards lend greater urgency
to the professional ethics.
The
matters which traditional fall within the scope of professional conduct
guidelines for accurate pubic practice, are specified in the, ethical guide to
members of the ICAEW and the CACA, its contain wide ranging as demonstrated
below, and any member founds to be disregarding the rules laid down principles
in the letter or spirit, runs risk of disciplinary action and the severe
consequences which may follow from admonishment with or without disclosure of
his or her name) and payment of costs, to exclusion from membership. The latter
eventuality is comparatively rare. The ethical guide coves the following
subject matter.
a) Professional independence
b) The need to observe confidentiality
c) Rules on advertising and publicity including literature produced by
member or their firms such as 'house journal and recruitment brochures.
Following a review by the monopolies and mergers commission, which recommended
relation of the restrictive rules advertising, is permitted.
d) Descriptions and designator letters
e) Exchange of correspondence with farmer incumbent before accepting
engaging for professional work.
f) Determination of fees.
g) Participation in multidiscipline practices
h) Participation in organizations providing general and management
consultancy, data processing, company registrar services
More recent developments on professional
ethics are dealt with in section 3.33. A section of the ICAEW members handbook
deals with the legal and regulatory background to accountant's work and
includes guidance on enter alias the following matters, which also have a
strong bearing on professional conduct.
a. Custody of money held on behalf of client
b. Ownership of an or lien (in respect of unpaid fees) on books and papers
c. Acceptance of agencies
d. Liability of third parties.
e. Unlawful acts defaults by clients
f. Contents of letters setting out terms of new engagements (the letter of
engagement).
g. Financial and accounting responsibilities of directors.
h. Professional liability of accountants and auditors
i.
Personal interest
of directors in the transactions of companies
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