The audit objective forms the basis of the audit. They are associated with the audit of financial statements. The objective states the subject matter under examination and how performance will be assessed. They are broad statements developed by auditors and define intended audit accomplishments.
Audit objectives: The objectives of an audit can be categorized into-
- Main objective,
- Secondary objective, and,
- Specific objective
(A) Main objective:
Expressions of expert opinion: Auditor’s cheek the facts as represented in the balance sheet and profit and loss account. Based on this checking the auditor expresses his opinion about the quality of the financial statement concerning proper disclosure of fact in the financial statement.
(B) Secondary objective:
Detection and prevention errors: The auditor should detect various kinds of error and take proper step to prevent them. The following are various kinds of errors-
- Clerical errors: Such errors may be divided into (a) errors of omission, (b) errors of Commission.
- Errors of principle: Such errors arise when the entries are not recorded according to the fundamental principle of the accounting.
- Compensating errors: Compensating error or offsetting errors in one which is counter balanced by other errors.
- Errors of duplication: Such man arise when an entry in a book of original entry has been made twice and has also been posted twice
Detection and prevention of fraud: Detection of fraud is one of the important duties of an auditor. The auditor should take proper step to prevail fraud. The following are the chief ways in which fraud may be prevented.
- Misappropriation of goods,
- Fraudulent manipulation of accounts.
(C) Specific objectives: we have emphasized that the term audit should not be taken to imply financial audit, the audit may encompass such other areas like review of operations performance management policy, cost record and so on.