📘 Introduction – What Are Principles of Auditing?
Before an auditor starts checking the books of a company,
they must follow some basic rules – like how a cricketer follows the rules of the game.
These rules are called “Principles of Auditing.”
They help the auditor stay honest, fair, and professional.
Let’s learn each principle step-by-step with very simple examples.
📸 Image Suggestion 1
🏷️
🔷 1. Integrity – Be Honest Always
An auditor should always speak the truth.
They should never hide a fraud or lie in the report.
💡 Example:
If a company is doing something wrong, the auditor must report it — even if it’s a big company.
🔷 2. Objectivity – No Favouritism
The auditor should not take sides.
They must give an unbiased opinion based on facts.
💡 Example:
Even if your friend owns the company, check everything honestly and report the truth.
🔷 3. Confidentiality – Keep Secrets Safe
The auditor sees private information.
They should never share it with anyone.
💡 Example:
If the auditor knows the company is going to shut down, they must not tell outsiders.
🔷 4. Proper Evidence – Don’t Trust Without Proof
Auditors should ask for proof of every transaction.
No guessing allowed!
💡 Example:
If ₹10,000 is shown as spent on rent, auditor will ask for the rent receipt.
📸 Image Suggestion 2
🔷 5. Documentation – Write Everything Down
The auditor must keep records of what they checked, what they found, and their observations.
💡 Example:
If the auditor checks the cashbook, they must write “Checked on 5th July, All okay.”
🔷 6. Consistency – Follow the Same Method Every Time
Auditors should use the same audit method every year.
This helps in comparing results.
💡 Example:
If stock was checked physically last year, same should be done this year unless changed officially.
🔷 7. Planning – Always Make a Plan
Before starting the audit, the auditor must plan what to check and when.
💡 Example:
Week 1 – check cash and bank
Week 2 – check purchases
Week 3 – check salaries
🔷 8. Use Skill and Care – Do the Job Seriously
Auditing is serious work.
The auditor must use full knowledge, care, and attention.
💡 Example:
If unsure about a tax rule, auditor should ask a senior or refer the rulebook.
📊 Quick Summary Table
| 📌 Principle | 💬 What It Means | 💡 Simple Example |
|---|---|---|
| Integrity | Be honest | Report fraud if found |
| Objectivity | No personal bias | Don’t favour a friend’s business |
| Confidentiality | Keep info private | Don’t share salary details |
| Evidence | Ask for proof | See rent bill for rent entry |
| Documentation | Keep proper records | Note: “Cashbook checked – okay” |
| Consistency | Same method each year | Check stock same way every year |
| Planning | Make a proper schedule | Week-wise audit plan |
| Skill & Care | Do work with attention | Don’t ignore doubts – clarify them |
🎯 Conclusion – These Rules Make Audits Strong
Even the best auditor needs these principles.
Without these rules, the audit may become weak or unfair.
🧠 Easy Tip to Remember:
Just think – Would you trust a doctor who hides things or doesn’t check reports?
No, right? Same for auditors.