What is an audit, what financial records are available and what is their individual function in completing your audit?
Audit is an independent examination of financial information of an entity, whether profit oriented or not and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion there on.
Financial records
Record is kept by the management of their operations, their possessions, these records are vouched and verified by using supporting documents to search for evidence upon which team members draw conclusions provide a basis of audit report which is the ultimate opinion/ conclusion of the audit process.
Cash receipts/ cash book verification
Documents/ records maintained are
Cash memos
Sales statement
Cash collection totals/ reconciliations
Cancelled memos
Trade discounts
Vouching of interest income
Investment ledger and interest accounts are supporting records to be verified.
Dividend income
Dividend warrants
Minutes of meeting referring to dividend declared
Rent income
Rent register
Lease agreement
Rent receipts
Arrears
Property tax returns
Bill receivable
Bills for collection
Bills discounted
Cash book
Insurance claim
Insurance policies
Claims filed
Money collected
Claims due
Sale of assets
Sales contract
Termination of insurance policy
Creditors
Purchase ledger
Invoices
Cash receipts
Statement of sales
Purchase order
Vendors list
Agreements
Vouchers
Wages
Internal control
Proper authority
Employee record
Hourly rate sheet
Cheques drawn
Overtime wage sheet
Revenue stamp
Wages register
Verification of assets
Assets schedule
Verify cost
Asset register
Physical inspection record
Title deeds
Insurance policy
Representation letters
All these are supporting records that provide audit evidences regarding material mis-statements existing or not role of these documents are that these are evidences but auditor has to verify each and every information that is received from management to get it confirmed from one or two alternative sources to collect reliable audit evidences upon which auditor is able to give reasonable assurance that financial statements are presenting true and fair view. That's why external confirmation is becoming a norm of the business in certain cases e.g. confirmation from banker etc.