Briefly explain the meaning of the term ―audit‖ and What are the objectives of an audit according to the Companies Act?

You are required to explain the meaning of the term „audit‟

i. The explanatory foreword to the International Standards on Auditing (ISA) describes audit as the independent examination of and expression of an opinion on the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.

ii. Objectives of an audit

The primary objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and show a true and fair view. (Financial reporting framework refers to the international financial reporting standards, provisions of the companies Act and other relevant statutes and legislation). The auditor expresses an opinion as to whether the financial statements give a true and fair view of the financial position and performance of the company and cash flows.
Note that: an auditor does not certify the financial statements as true and fair butonly reports his opinion basing on the evidence obtained.



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