IGNOU| ELEMENTS OF AUDITING (ECO - 12)| SOLVED PAPER – (JUNE - 2023)| (BDP)| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
(BDP)
Term-End Examination
June - 2023
(Elective Course: Commerce)
ECO-12
ELEMENTS OF AUDITING
Time: 2 Hours
Maximum Marks: 50
Weightage: 70%
Note: Attempt any five questions. All questions carry equal marks.
1. "Auditing begins where accountancy ends."
Discuss this statement. How does accountancy differ from auditing? 5+5
Ans:- The statement “Auditing begins where
accountancy ends” is accurate in understanding the relationship between
accounting and auditing.
How is
accounting different from audit:-
Accounting is
the process of recording, classifying, summarizing, and interpreting financial
transactions to provide a clear picture of a company's financial position and
performance.
The primary
objective of accounting is to prepare financial statements that accurately
reflect the financial activities of a company.
In contrast,
auditing is the systematic examination and verification of a company's financial
records and statements to ensure their accuracy and compliance with accounting
standards and regulations.
The main
objective of auditing is to provide an independent assessment of the
reliability and credibility of the financial information presented by a
company.
The main
differences between accounting and auditing are:-
(i)
Objective: The objective of accounting is to record and report financial
information, whereas the objective of auditing is to verify the accuracy and
reliability of that information.
(ii) Time: Accounting
is a continuous, continuous process, whereas auditing is a periodic, factual
check.
(iii)
Responsibility: Accounting is generally conducted by in-house accountants,
while auditing is conducted by independent, external auditors.
(iv) Scope:
Accounting covers all financial transactions and records, whereas auditing
focuses on the final financial statements and related records.
(v)
Regulation: Accounting is regulated by accounting standards, while auditing
is regulated by auditing standards.
Conclusion:-
The statement
“Auditing begins where accountancy ends” is accurate because auditing is the
next step after the completion of the accounting process. Auditing serves to
verify and validate the financial information produced by the accounting
function, ensuring its accuracy and reliability.
2. What are the qualities of an auditor? 10
Ans:- The qualities of an auditor include a variety
of skills and competencies required for effective performance in the field.
Some of the
key qualities of an auditor are:-
(i)
Communication skills: Auditors require strong communication skills to
interact with clients, understand their needs and address inquiries
effectively.
(ii)
Listening skills: Good listening skills are important for auditors to
understand instructions, client needs and provide detailed information.
(iii) Time
Management: Auditors must have excellent time management skills to handle
multiple tasks efficiently, especially during peak periods like the end of
financial years.
(iv)
Problem-solving ability: The ability to solve problems is important for
auditors to address financial issues, develop action plans and provide
solutions during a financial audit.
(v) Ethical
Standards: Auditors are required to adhere to high ethical standards
including independence, integrity and confidentiality.
(vi)
Analytical skills: Auditors need strong analytical skills to analyze
complex financial data, identify patterns, and assess the accuracy of financial
information.
(vii)
Organizational Skills: Being organized helps auditors to manage their
workload effectively and complete tasks efficiently
(viii)
Attention to detail: Auditors must pay close attention to details to
identify inconsistencies, errors or potential risks in the financial records.
(ix)
Knowledge of the IT industry: For IS auditors, it is important to have
knowledge of the IT industry to understand and assess information systems
effectively.
These qualities
are fundamental for auditors to perform their duties competently and ensure the
accuracy and integrity of financial statements.
3. Differentiate between the following: 5+5
[COMING SOON]
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