What Is Auditing?

Auditing is also known as Processing. It can be described as the application and evaluation of processes and procedures by a trained auditor. Thus it can be defined as the action of asking a question, getting an answer and acknowledging the person for that answer. Thus it is nothing but the actual verification of a procedure and its suitability.

An audit can be carried out properly and successfully only if there is a clear knowledge about the procedures carried out because only then it can be compared with the recommended procedure. To put auditing in simple terms it is the process of recording database activity and access to database objects as it occurs in the database. It is done to reduce mistakes and enhance effectiveness.

The word audit is derived from the Latin word admire which mean to hear. In the good old days whenever the proprietors of a concern suspected a fraud, certain people were appointed to hear verbal evidence of transactions of barter and to judge the facts. They heard the points of view of those who maintained the accounts. An audit may then be said to be such an examination of the books, accounts and vouchers of business as shall enable the auditor to satisfy himself whether the balance sheet is properly drawn up, so as to give a true and fair view of the state of affairs of the business and that the profit and loss account gives a true and fair view of the profit or loss for the financial period, according to the best of his information and the explanations given to him as shown by the books.

Perhaps the best way to define the audit is to tell why it is done as the action is presumably such as to fulfill its purpose. In this context the definition of audit would differ depending upon where it is the case of concerns which voluntarily get their accounts audited on whether it is mandatory.