Audit of Individuals
There are individuals like estate managers, rent collectors, investors, etc. who derive large income and incur heavy expenses to earn such incomes. They appoint accountants to prepare and maintain accounts. They may appoint auditors to audit their accounts and to verify their accuracy. Auditing of their accounts will relieve them from the harassment of the income tax authorities.
In case of audit of accounts of these people, the person so appointed as an auditor must get clear instructions from his client as to what he is expected to do. His scope of work will depend upon the agreement entered into with his client.
Advantages of Audit of Individuals
The individuals get the following benefits from the audited accounts:
1. Audited accounts are generally taken as correct by income tax authorities. In that way, auditing of accounts helps in the assessment of income for income tax purposes.
2. The audited accounts assure the individuals as to the accuracy of accounts.
3. It keeps a moral check on the employees of the accounts department, as they know that the auditor would verify whatever they record.
4. The individual can know the true income from various sources and value of his assets.
Audit of Other Institutions
There are institutions other than a company, a partnership firm or a sole proprietorship concern, which are not meant for earning profits such as, clubs, hospitals, libraries, colleges, schools, etc. Such institutions also require the services of an auditor whose scope of work is defined by the appointment letter. They are increasingly realizing the significance of a scientific audit and hence, auditors are regularly being appointed especially in big institutions.
The primary objective of such audit is to detect error or frauds committed by the staff. At times these institutions avail grant from Government, International agencies, etc. In such cases, audit of utilization of such grants becomes essential. If the amount involved is large, the government may send its auditors to conduct the audit.