Annexure C

Model Questions and Answers



Q. 1. Define the term ‘audit’.

Answer: The word ‘audit’ is derived from the Latin word ‘audire’, which means, “to hear”. In olden times, whenever the owners of a business suspected fraud, they appointed certain persons to check the accounts. Such persons sent for the accountant and ‘heard’ what they had to say in connection with the accounts.

The dictionary meaning of audit is official examination of accounts. Obviously, the person who examines the accounts must be a person who knows what to examine, how to examine and to whom his examination report and observations are to be submitted. In brief, it can be said that auditing is the process by which competent independent ...

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