Relationship Between Auditing & Other Disciplines

1

Auditing  and accounting

2

Auditing and Law

3

Auditing and economics

4

Auditing and Behavioural sciences:

5

Auditing and stats and mathematics

6

Auditing and data processing:

7

Auditing and financial management:

1

Auditing and accounting

It has been pointed out earlier that both accounting and auditing are closely related with each other as auditing reviews the financial statements which are nothing but a result of the overall accounting process. It naturally calls on the part of the auditor to have a thorough and sound knowledge of generally accepted principles of accounting before he can review the financial statements.

2

Auditing and Law:

The relationship between auditing and law is very close one. Auditing involves examination of various transactions from the view point of whether or not these have been properly entered into. It necessitates that an auditor should have a good knowledge of business laws affecting the entity. He should be familiar with the law of contracts, negotiable instruments, etc. The knowledge of taxation laws is also inevitable as entity is required to prepare their financial statements taking into account various provisions affected by various tax laws. In analysing the impact of various transactions particularly from the accounting aspect, an auditor ought to have a good knowledge about the direct as well as indirect tax laws.

3

Auditing and Economics

Before conducting audit , auditor needs to obtain knowledge regarding business & economic environment affecting client . moreover, accounting is concernedwith the accumulation and presentation of data relating to economic activity.

4

Auditing and Behavioural sciences:

The discipline of behavioural science is closely linked with the subject of auditing. While it may be said that an auditor, particularly the financial auditor, deals basically with the figures contained in the financial statements but he shall be required to interact with a lot of people in the organisation. The knowledge of human behaviour is indeed very essential for an auditor so as to effectively discharge his duties.

5

Auditing and stats and mathematics

In auditing , auditor should have knowledge of maths& stats since, auditor applies sampling techniques for which he should have sufficient knowledge of stat . similarly auditor should also have knowledge of mathematics to chech the estimations and calculations made by the management , specially at the time of verification of inventory .

6

Auditing and data processing

Today, organisations are witnessing revolution in the field of data processing of accounts. Many organisations are carrying out their financial accounting activities with the help of computers which can document, record, collate, allocate and value accounting data and information in very large quantity at very high speed. The computer is able to carry out each of these activities with complete accuracy. With such a phenomenal growth in the field of computer sciences, the auditor should have good knowledge of the components, general capability of the system and the related terms.

7

Auditing and financial management:

With the overgrowing field of auditing, the financial services sector occupies a dominant place in our system. While in general terms, the auditor is expected to have knowledge about various financial techniques such as working capital management, funds flow, ratio analysis, capital budgeting etc. The auditor is also expected to have a fair knowledge of the institutions that comprise the market place. The knowledge of various institutions and Government activities that influence the operations of the financial market are also required to be understood by an auditor.

1

Origion

In 1977, the International Federation of Accountants (IFAC) was set up with a view to bringing harmony in the profession of accountancy on an international scale. In pursuing this mission, the IFAC Board has established the International Auditing and Assurance Standards Board (IAASB) to develop and issue, in the public interest and under its own authority, high quality auditing standards for use around the world.

2

Function

The IAASB functions as an independent standard-setting body under the IFAC. The objective of the IAASB is to serve the public interest by setting high quality auditing standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession.