How Would You Audit The Accounts Of A Textile Mill?

The auditor can examine the internal control system in operation. If the internal control system is effective the auditor can check few items to form an opinion. When internal control system is poor the duty of an auditor increases. He can check all items appearing in the books of accounts to prepare an audit report. The auditor should vouch the transactions relating to receipt and payments of cash. Vouching is concerned with comparing entries and vouchers. The accuracy of books of accounts can be checked with the help of vouching.

The auditor can examine the different types of raw material purchased and consumed. He can check the entries appearing in material ledger. The auditor can see that figures are facts. The value of raw materials can be determined by the management. The auditor can go through the record to make sure that valuation is fair.

The auditor can ask for schedule of foxed assets. The assets are purchased at various dates. The calculation can be made to know the correct value. The purchase and sale of assets is possible. The auditor can note the value of fixed assets of previous year from old audit working papers. The audited trial balance can provides facts and figures.