Private & government audit Private audit meaning Objectives of audit Types of private audit Sole trading concern Accounts of partnership firm Audit of other individuals Government audit meaning External & internal audit

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3. PRIVATE AUDIT
meaning:
An audit which is not compulsory under any statute,is known
as ‘ private audit’. It is undertaken by the owners voluntarily to get
the benefits of audit. Therefore, private audit is called voluntary
audit.
In case of private audit,the rights and duties of an auditors of
an auditor are determined on the basis of the audit agreement.

4. Objectives of audit
The important objectives of private audit includes the following :
1. Detection of and frauds.
2. Assessment of taxes payable.
3. Satisfying stake holders including the government office.
4. Knowing the results of business and position statement.

5. TYPES OF PRIVATE AUDIT
 Audit of a sole trading concern
Audit of accounts of partnership firm
Audit of other individuals and institutions

6. Audit of a sole trading concern:
Audit of sole trading concern is not legally mandatory. The audit of accont
of a sole trader depend upon personal wish and preference. The sole trading
decides how many accounts are to be audited.He determines the scope of
audit and the rights and duties of an auditors. He enters into a contract with
the auditor regarding the commencement of audit work and its conclusion.
The remuneration (or pay) payable for audit work is also decided before
assigning the audit work.

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8.  ADVANTAGES OF A SOLE TRADING CONCERN :
A. It ensure that there are no error and frauds.
B. It promises that book of accounts are maintained properly and they
are in order.
C. It helps in establish control over firm’s activities.
D. It helps in setting third party claims at the time of stoppage of
business.

9.  AUDIT OF ACCOUNTS OF PARNTERSHIP FIRM :
The audit of accounts of a partnership firm is also not mandatory from
the legal point of view. Inspite of this most firms desires to get their book of
account audited by external auditor for various reasons. Some times the
partnership deed contained a provision relating to appoint of auditor. The rights
and duties of an auditor are determined by the firm on the basis of mutual
agreements. Accordingly, an auditor will takeup audit work and submits
auditreport. In the absence of mutual agreement the auditor should study the
provision contained in the partnership Act,1932.

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12.  AUDIT OF OTHER INDIVIDUALS AND INSTITUTIONS :
Some non-profit oriented institutions, such as clubs, charitabale hospitals,
libraries and other voluntary orgazation raise fund from different sources
and spend for defined purposes.The honorary directors or paid servants of
these institutions maintains books of account. The audit for these
institutions maintains books of accounts. The audit for these institutions is
mandatory, however books of accounts are maintained in an orderly
manner. Audit of books of accounts is conducted to ensure that no erroe
and frauds are committed . Sometimes, in order to raise fund/donations
from the government, audit is necessary for these institutions.

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14. GOVT
GOVERNMENT

15. GOVERNMENT AUDIT
Meaning :
The audit of accounts of government department and institutions
is known as ‘ government audit’. The government maintins a separate
department, known as ‘ Accounts and audit department’ for this purpose.
The chief of this department is called the comptroller and Auditor
General of India’. He is appointed by the president of India, under the
powers vested in him by the constitution ( Article 148).

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EXTERNAL AUDIT AND INTERNAL AUDIT :
EXTERNAL AUDIT: An independent examination of books of
accounts of an enterprise by a qualified professional auditors,
is known as an external audit. External audit is also known as
an ‘ independent audit’ .
An independent auditor is not under the influences of any
person, he has no self-interst in the firm for which audit has
been undertaken. He receives fees as remuneration for his
work.

17. INTERNAL AUDIT :
A system of examination the correctness of book of
accounts and financial transaction by employees of the
same organization, is known as ‘internal audit’. An
internal auditor may or myay not be a qualified auditor.

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