Category: Commerce Notes PPT

When we read a text, we apply different levels and forms of understanding to comprehend. We show different analyzing skills while reading the whole text. Bloom’s taxonomy considers such higher and lower order understanding and analytical skills. Let us study Bloom’s taxonomy examples, along with its details.

Bloom’s taxonomy is considered a three-rank hierarchical model. It talks about the skills of thinking and analyzing by following a particular order. Such a model helps in putting the intellectual skills in different categories so that some orders of specificity and complexity can be covered. For instance, the author does not follow a single order for writing a passage. It contains different layers of understanding and emotions. To understand these different layers, we resort to applying Bloom’s taxonomy. The three levels of Bloom’s Taxonomy are discussed below.

Cognitive Domain

The cognitive domain of Bloom’s taxonomy includes knowledge and intellectual skill development. In terms of complexity levels, there are six sub-heads of the cognitive domain. 

Knowledge – It involves the study of facts, figures, and basic concepts.

Comprehension – It involves understanding the facts gathered during the knowledge stage in a productive manner. 

Application – It involves using the knowledge and the concepts in a novel and productive manner.

Analysis – It involves analyzing the application, drawing conclusions, and establishing a relation between the different aspects of the application.

Evaluation – It involves the process of making judgements and defending opinions about the information generated from the application.

Creation – It involves the production of new results by the process of planning, designing, developing, and the actual application. 

Bloom’s taxonomy examples can be studied to know about these points, which will enable the student to understand and develop all these skills in the passage composition.

Affective Domain

The affective domain of Bloom’s taxonomy considers the feelings and the emotions associated with the passage. It can include complex ideas and phenomena, conscience, and characters. The essential aspects of the affective domain used while applying Bloom’s taxonomy are as follows.

• Reception
• Response
• Values
• Organization
• Characterization

Psychomotor Domain

If you study the revised Bloom’s taxonomy examples, you will understand the aspect and need of the psychomotor domain in Bloom’s taxonomy examples. This domain considers coordination, sensory organ movement, and the physical movement of the body as a whole. To be a pro at such skills, great practice is necessary. Bloom’s taxonomy examples consider the act of driving, playing keyboard, guitar, etc. as prime examples of the psychomotor domain.

A better understanding of each of these domains can be obtained by studying Bloom’s taxonomy examples at each level.

Bloom’s Taxonomy Application

We often get an unseen passage and we are required to comprehend it. We have to answer the given questions by reading the passage. We analyze the topic, questions, and recall the facts by applying Bloom’s taxonomy protocols. Bloom’s taxonomy can be used in the following ways.

Obtaining the meaning of the phrases, words, idioms used in the passage by using Bloom’s taxonomy concepts of understanding and application.

Concluding the points mentioned in the passage by using Bloom’s taxonomy concepts of evaluation and analysis.

Obtaining the details mentioned in the passage by using Bloom’s taxonomy concepts of understanding and remembering.

Identifying the author’s tone by using Bloom’s taxonomy concepts of evaluation.

Consider a proper title for the passage by using Bloom’s taxonomy concepts of evaluation and understanding.

What are the Different Means of Refining the Reading Speed?

The major problem in reading a long passage is to remember all the salient points mentioned in the passage. We need to read it multiple times, which will be both time and energy-consuming. The following points can help to deal with such a scenario better.

Practice reading.

However, do not just continue reading. Ensure that you understand what you read.

Consider reading in a calm and quiet environment so that you can be more attentive.

There is a misconception that reading aloud facilitates understanding. It hampers the speed.

Follow a particular space and have a time limit for reading.  Go for a lesser time limit when you hit the time mark.

Do not go for continuous reading. Take intermittent breaks so that your eyes can relax.

Consider referring to a dictionary whenever you encounter a new word. It will help you in understanding and pronunciation.

The Levels of The Bloom’s Taxonomy 

Before we look at some of Bloom’s taxonomy examples, let’s review the six levels of Bloom’s Taxonomy which can be described as follows. 

Knowledge 

It entails employing memorizing skills to retain previous information as well as collect and organize new data. As we’ll see in Bloom’s taxonomy examples below, these are the building blocks of cognition.

Comprehension 

It entails a thorough grasp of the information gathered earlier from various perspectives.

Application 

It entails adapting information to a specific context or circumstance, which will become clearer as you experience real-life Bloom’s taxonomy instances.

Analysis 

Examining a subject, theme, or topic of study for patterns, embedded meanings, and analogies with other items.

Synthesis 

It entails synthesizing many ideas to produce something unique—a product of critical thought.

Evaluation 

It entails making judgments about the values and learning methods of a certain programme.

Levels of Updated Version of Bloom’s Taxonomy 

Bloom’s model of Taxonomy was upgraded in 2001, with a few tweaks. The conceptual domain’s “Synthesis” stage was replaced by “Create,” Bloom’s taxonomy’s greatest level of learning. The nouns were replaced with verbs there in the second alteration. The following are the levels in Bloom’s updated taxonomy:

Remember 

You need to use the new information and the data that is already saved in your memory to draft a list of a variety of communications that are needed daily

Understand 

Recognize how each of these methods of communication fits into a specific strategy or style, such as frank communication, remote communication, or spontaneous communication.

Apply 

To test the application concerning the communication style of any person, you can take any academically credible communication theory.

Analyze 

See how they change their communication style when they are exposed to different audiences or situations.

Evaluate

Discuss the various challenges faced by the process of communication when perceived from a macro level.

Bloom’s Taxonomy Model Benefits

Bloom’s Taxonomy paradigm has a lot of benefits. It provides a simple learning process layout structure and has a wide range of applications in the corporate world, particularly in the field of training and development. It can also be used for even the tiniest learning process, such as a kindergarten student’s learning process.

Bloom’s Taxonomy Model’s Drawbacks

Here are some of the model’s flaws. Many firms may reject you since there is no method in place to measure how successful your learning is. For others, it may be too easy to follow.

Entrepreneurship refers to the ability to develop and organise a business enterprise. It involves running a business for earning profit. An entrepreneur is a decision-maker person who establishes and administers a startup along with the risks and uncertainties entitled to it. Business management refers to the process of managing the administration of a business organisation. A manager is responsible for overseeing the business operations and reviewing the contracts. He helps the employees in working towards the fulfilment of the organisation’s goals and objectives. More often, the term entrepreneurship and small business management are misunderstood as one. However, there is a difference between these two.

Entrepreneurship can be defined as the desire and ability to establish and administer a startup venture. It involves the will to succeed in the venture and make profits. Generally, an entrepreneur earns profits by combining land, labour, natural resources and capital. 

Who is an Entrepreneur?

An entrepreneur is a person who is willing to take risks to earn profits. He must be a person with great imaginative power, orderliness and professionalism. He must be dedicated and opinionated. 

What is Management?

The management of a business is its foundation which organises and structures its entire ecosystem. Management refers to the overall functioning of the business. It involves planning and creating, managing and governing. It is an executive function which helps in the utilisation of all the resources of a company. 

The number of managers in a company depends upon the size of its management. Generally, the manager of a business is responsible for getting all the jobs done. He directly helps the company in achieving its goals and objectives. 

Difference Between Business Management and Entrepreneurship

Business management and entrepreneurship play a very important role in its success. However, these two are different from each other. The following are the main points of difference between management and entrepreneurship in business:

Meaning

Entrepreneurship is the process of building and creating an enterprise. It involves taking a financial risk to earn profits. An entrepreneur is the owner of the organisation and is directly affected by its working.

Management is a business activity. It involves getting jobs done by other workers in the organisation. A manager is responsible for managing all the business activities.

Function

Business management entrepreneurship involves deciding the production policy of the business organisation. An entrepreneur takes all the decisions such as what is to be produced and in what quantity, the place of production etc. 

The management in a company is responsible for the following activities- planning, organising, controlling and leading. A manager looks after an ongoing venture in the company. He allocates the employee resources and delegates responsibilities between them.

Status 

The status of an entrepreneur is of the owner of the business organisation. He is responsible for its working and success.

The manager is an employee of the organisation. He is hired by the entrepreneur and is given a monthly salary.

Rewards

An entrepreneur is the owner of the organisation earns from its profits and has to bear the losses. He does not earn a specified fixed amount every month.

A manager is a paid employee of an organisation. He gets a fixed salary to carry out his job. His reward is not affected by the profits or losses of the company.

Goals and Objectives

Its owner or entrepreneur sets the goals and objectives of an organisation. The concerned body is responsible for deciding the policies of the company. The job of a manager is to imply the goals and objectives set by the entrepreneur. He cannot decide the objectives or alter any policies on his own.

Decision Making

The decisions made by an entrepreneur are based on his gut feelings and personal perception. He is free to make any decision on his own without considering the advice of others. 

A manager has to make decisions after collecting all the information in detail. He has to analyse every factor before concluding. He has to consider the company’s objectives and policies before making any decision. 

Innovation

An entrepreneur is an innovator. He is responsible for bringing creative and innovative ideas into the business. A manager is an executor. His only responsibility is to execute the ideas and decisions made by entrepreneurial management.

Fraud

An entrepreneur is the owner of the business. He can never get involved in any fraud in the organisation.

A manager is a paid employee of the organisation. He can be involved in fraudulent behaviour or cheating by not giving his best or working inefficiently.

This article highlights the major difference between entrepreneurship and management. Both entrepreneurship & small business management play an important role in the success of a business organisation.

A cash book can be defined as a financial journal which contains all the cash receipts and disbursements. Cash Book also includes bank deposits and bank withdrawals. The entries that come in the cash book are then posted into the general ledger.

In the cash book entries, the daily cash receipts and cash payments are easily and smoothly analysed. The Cash in hand at any point of time can be easily ascertained through the Cash Book balance. Also, any mistake in the book can be easily detected at the time of verification of the cash. Any defalcation of money from the business can even be detected while verifying cash book.

Working of the Cash Book

A cash book is said to be a set up of the subsidiary to the general ledger, where all the cash transactions are made during an accounting period. The cash recordings are recorded in a chronological manner. Larger business concerns generally divide the cash book into two parts.  

The cash disbursements journal – Cash Disbursement Journal records all the cash payments and the cash receipts journal, which helps in recording the cash received into the business. The cash disbursement journal consists of such items as payments payable to vendors, which is done to reduce the accounts payable. The cash receipts journal consists of the payments that are made by the customers on the outstanding accounts receivable or the cash sales.  

The prior goal of a cash book is to manage the cash efficiently, it is easy to determine the cash balances at any point which will allow the managers and the company accountants to budget the business’s cash effectively when the need comes. This is much faster to access the cash information in a cash book than by following the cash through a ledger. 

Types of Cash Book

A cash book is both a ledger and also a journal. The book is for all the cash transactions required for a company since this performs the function of both the ledger and journal. The cash book records all the cash receipts on the debit side and all the cash payments of the company on the credit side. To know the four main kinds of cash book which a company may maintain, we need to delve deeper in its types:

1. Simple Cash Books- This is also known as the Single Column Cash Book. This cash book will only be recorded for the purpose of cash transactions. The cash that is coming in is known as the receipts which will be on the left and the cash payments are recorded on the right. As all the cash transactions are recorded here, there is no need for an extra ledger account.

2. Two Column Cash- BooksHere we have an additional column for the discounts. Thus, along with the cash transactions, we are also required to have discounts in the same cash book. Hence both the discounts received and the discount which is given here is recorded. The organizations who are in a general practice of giving or receiving the discounts, this type of cash book is the preferable option.

3. Three Column Cash- BooksThis cash book has three columns, consisting of the – cash, the discount and the additional column as the bank columns in it. With the development of banking most of the firms, these days prefer to deal in cheques or with the bills of exchange. Thus, having a bank column in the same cash book makes things concise and simpler to record and function. 

4. Petty Cash Book- The firm usually has cash transactions which are happening in all the departments. The cash transactions are then recorded in one of the above formats of the cash books. But there are a lot of cash transactions which are recorded for every small amount. Even the dozens of such transactions that occur in just one day are also recorded here. These are known as the petty transactions. 

More about Cash Book

It is defined as a financial book of records in which cash receipts, disbursements, are recorded. It also includes the record of bank deposits and withdrawals. The entries made in the cash book are posted into the ledger account. The concept of cash book is taught in class 11, in the accounts stream in chapter 4 called recording of transactions. This chapter is extremely important as after reading this chapter in-depth and referring to ‘s notes on cash book, students will be able to know what is the need for special purpose books, they will learn to record transactions in the cash book and how to post them in the ledger, they will learn what is a petty cash book and how to prepare a petty cash book, they will be able to record the transactions in the special-purpose book, they will be able to post entries in the special-purpose book as well as in the ledger, also they will learn the most important part of accounting that is how to balance the ledger accounts.

The balance in the cash book is updated and verified continuously and it is recorded in chronological order.

Large industries and firms divide the cash book into two parts in order to make accounting much easier and efficient, the two parts that the cash book is divided into are– the cash disbursement journal and the cash receipts journal.

There is a difference between a cash book and a cash account, a cash book is a separate ledger in which all the cash transactions are recorded, while a cash account is an account within a general ledger.

Cash books are of three types – single column, double column, triple column.

The cash disbursement journal includes items such as payments that are made to vendors in order to reduce accounts payable, a cash receipts journal includes items such as payments that are made by customers on accounts receivable or cash sales.

Cash books are updated continuously. This is done in order to manage cash efficiently which makes it easier to determine cash balances at any point whenever necessary. This allows the company heads or the company accountants to keep a systematic record to budget their cash.

Cashbook is an easier way to retain information about budget cash rather than by the following cash through a ledger.

Key Elements Whose Knowledge is Needed to get a Comprehensive Understanding of Cash Book:

In any business, communication is the key to express thoughts, ideas, facts, and plans. The means and ways of communication vary from person to person and depend on the situation. Business communication is best explained as the information sharing processes that lead to profit for any business. Business communication can take place between people within the organization or outside the organization. The characteristics of good business writing and the features of business communication are discussed here, in detail. 

What is Business Communication?

Any communication related to business is referred to as business communication. Communication, in general, refers to the sharing of thoughts and ideas between two or more individuals. All those communications that lead to the benefits for one or both the business partners are called business communication.

Business communication encompasses communication linked to administration, law, trade, finance, management, etc. Business communication is targeted towards the goal of any business firm. The communication occurs continuously between the two parties and is two-way in nature. Certain features of business communication make it clear and fruitful.

Features of Business Communication

There are six basic elements of any business communication and they are as follows. 

• Message- The message is the information that is needed to be exchanged between the parties.

• Sender- The person who is conveying the message to other parties is called the sender. It can be a single person or a group of people.

• Receiver- The person or parties who are receiving the messages from the sender.

• Channel- Every sender uses a medium to transfer the message to the receiver. The medium used to transmit the message is called the channel. It can be done over the letter, telephone, emails, fax, in-person conferences, or video conferences. 

• Symbols- In order to make the message concise and clear, the sender might use certain words, signs, and actions to express the emotions. These elements of the message are called symbols.

• Feedback- After receiving the message from the sender, the receiver responds in the form of feedback. This is the final element of any business communication.

All these basic elements also constitute the characteristics of written communication.

Objectives of Business Communication

The next question is, why business writings are being used. The objectives of business communication are listed below.

• A holistic approach to organizational development. 

• To elicit mutual relationships between the employees or collaborators of an organization.

• Conducting training programs for new and existing employees.

• Developing plans to attain the goals of the company.

• Providing necessary information for the proper execution of the plans.

• Providing support to the employees.

• Encouraging and supporting others in their action.

• Portraying any decision.

• Building trust.

• Conveying warnings.

• Calling for participation in problem-solving.

 

Characteristics of Business Communication

There are certain basic concepts for effective business writing. The characteristics of business communication that will help you to understand these concepts are given below.

• Realistic communication must be maintained.

• Imaginary information must be avoided at all costs.

• The communications must be targeted to a common goal. Any doubts in these communications must be taken care of.

• The business communications must be so formulated that it targets dedicated customers.

• Polite language must be used. It should not attack customers.

• The communication must not reflect any personal opinion. The use of metaphors and imagery must be avoided.

• The communication must depict real facts and figures. It should consider mutual understanding as to the base.

• It must follow the general characteristics of business reports.

• The basic concepts in effective business writings can be used to appreciate or warn against any specific activity. It can also be used to provide advice, instructions, information, suggestion, or support.

What are the Steps for Effective Business Communication?

In order to make your business communication approaches effective, it is important to follow the general characteristics of written communication. These characteristics are listed below.

• Do away with any form of assumptions. Consider facts, figures, and real-world items in your communication.

• Develop a good habit of listening. Listen carefully about the topic and then speak out your ideas.

• Ask important questions that can contribute to the cause.

• Consider both verbal and nonverbal communication with equal importance.

• Show your patience during any communication.

• Conduct any business conversation at an appropriate place and time.

• Maintain a proper decorum with all employees at a company. Have elevated levels of politeness for seniors and employees at higher ranks.

With the introduction of liberalisation in the global market during the year 1985 to 1990, the Indian government introduced several short term debt instruments. One such debt tool is the commercial paper that came into the Indian money market in 1990 and initiated financial reform in India. 

To put it simply, it is a short-term debt instrument availed by companies when they need immediate funds to meet their short-term liabilities. These liabilities can be anything from stocking up inventories to financing payroll or others. 

According to the Commercial paper definition, this unsecured promissory note comes along with a set maturity and is issued by All India Financial Institutions (FIs) and Primary Dealers (PDs). In India, this period is between 15 days to 364 days. 

To understand the concept of CP easily, consider this example. A firm named ABC requires funds to stock up inventory for the upcoming sale season. To do so, they have a deficit of ＄20 Million. In such a case, they can buy commercial paper from the issuers for a face value of say ＄20.1 Million (depending upon prevailing interest rate) and receive＄20 Million cash. So, the ABC Company pays an interest amount of ＄0.1 Million for the deal.

Commercial Paper Market in India

With CP as a debt instrument, the commercial paper market has become a component of the Indian money market. Here, the balance between supply and demand is met by two sections of people – 

These two promotes the market and help companies accumulate funds for their short-term financial liabilities or obligations at times of financial crisis. 

Types of Commercial Paper 

These can be broadly categorised into two parts depending upon the security it offers. 

• Secured Commercial Papers – These are often known as Asset-backed commercial papers (ABCP) wherein it is backed by physical assets like trade receivables, etc. 

• Unsecured Commercial Papers – In this unsecured kind, the paper isn’t backed by pledging any asset and is allotted without any security. 

Subsequently, the Uniform Commercial Code (UCC) has divided the commercial paper in India into four categories, as mentioned below. 

1. Draft – It is written by one individual to another (usually banks) asking to pay a definite sum to the third party. A drawer, drawee, and acceptor are involved in the process. It can be of two kinds – sight draft and time draft. 

2. Note – Also known as a promissory note, these are written by specifying the amount to be paid after a certain amount of time. Here two parties are involved – promisor (maker) and promisee (payee). 

3. Cheque – Like drafts, these are written in paper forms where the drawee is a bank.  

4. Certificates of Deposit – Often known as CD, this is an acknowledgement form issued by the bank confirming receipt of the deposit. Some of the difference between commercial paper and certificate of deposit is in terms of issuer, denomination, etc. 

Features of Commercial Paper 

• It is a short-term debt instrument tool that is set for a maturity period. 

• It is usually an unsecured debt where the company doesn’t pledge any asset but still qualifies for it based on their company’s liquidity, revenue-generating power, and achievements. 

• The commercial paper issuer guarantees or promises to pay the fixed amount to the subscriber in cash in future. 

• This paper can be used as a certificate of unsecured debt. 

Advantages and Disadvantages of Commercial Paper

Mentioned below are some pointers that discuss the merits and demerits of commercial paper. Have a look at these pointers to understand when it is beneficial to avail this paper. 

Merits 

• Since it is mostly unsecured in nature, your company’s assets aren’t on risk. 

• The method is a quick way to raise funds for working capital. It is a cost-effective method, as well as cheaper than bank loans. 

• The range of maturity varies, which makes it flexible. 

• Companies may save extra cash and convert them into good returns to save more through the process. 

• A customisable maturity range makes the process feasible for companies. Issuers can pay for the matured papers by selling new commercial paper. 

Demerits 

Even though the commercial paper has several advantages in the Indian market, there can be scenarios that make it inconvenient for certain companies. The amount for which a commercial paper is made is quite high, and since these are unsecured debt, only a few renowned blue-chip and profitable companies can subscribe to this. Besides, the credit available from a bank or financial institution may get reduced after issuing the paper. 

Despite a few limitations, this has helped bring financial reform in India and helped companies overcome the financial crisis. You can learn in detail about various such concepts included in the syllabus by visiting ’s website.

Commercial Papers used Today

Commercial papers do have a vital role in today’s world. In general, they are used to settle the debts that are short-term and also which are unsecured. If you don’t know it has been introduced to India only by 1990. So within the ten years lapse itself, the development it gave is really big.

So to increase the short-term borrowings the companies that are already having higher ratings will use commercial papers. Since they are using the bank and large corporations it is easier to get through the short-term obligations that are faced by newer projects. And in another way, we could say that by using commercial paper (CP) it is easier for any investor to get through the processing even faster. 

And the surprising fact is that the commercial paper does have a validity of maturity from a minimum of 7 days. And there is a maturity period of up to one year as well. The only thing we must take care of is that the period must not get over the credit rating date of the owner. So that is why the companies that are having a huge rating are given it. 

Auditing is the process of checking the financial statements along with other accounting information of a business entity. It is a systematic procedure where the economic condition of the entity is analyzed. The person taking up the responsibility of the process is called an “Auditor”.

In this process, it is checked if the business is running profitably or not. Auditing is an important process for the company, the investors, the government, creditors, shareholders, etc. They very much rely on audit reports to make important business decisions.

This is the concept of auditing in a nutshell.

Definition of Auditing:

An audit is when an auditor examines or inspects various books of accounts, followed by a physical inventory check, to ensure that all departments are using a defined system of recording transactions. It is done to ensure that the financial statements presented by the organisation are accurate.

Internal auditing can be done by employees or department heads, and external auditing can be done by a firm or an independent auditor. The goal is for an independent body to audit and verify the accounts to ensure that the books of accounts are completed fairly and that no misrepresentation or fraud is taking place.

Before they can announce their quarterly results, all publicly traded companies must have their accounts examined by an independent auditor.

What qualifications do you need to perform an audit? Any institution in India will have an independent audit conducted by chartered accountants from the Institute of Chartered Accountants of India or ICAI. Principles are set out by CPAs in the United States (Certified Public Accountants).

There seem to be four steps to the auditing process. The very first stage is to establish the auditor’s position and terms of engagement, which is typically done through with a letter signed by the client.

The second phase is to prepare the audit, which gave information like timelines and organizations that will be scrutinized by the auditor.

Is the auditor in charge of a particular division or the rest of the company? The audit could last a day or even a week, due to the nature of the audit.

When an auditor examines a company’s accounts or inspects its major financial statements, the results are usually published in a report or prepared methodically.

Analyzing the findings is the final and most important element of an audit. The conclusions of the auditor are detailed in the report.

Principles of Auditing

The basic principles of auditing are planning, honesty, secrecy, audit evidence, internal control system, skill and competence, work done by others, working papers, and legal frameworks.

Audit Report

Now we know what is meant by auditing. As discussed above, it is the inspection of financial statements of a business entity followed by checking inventory. Based on this investigation and assessment of the financial records, the auditor gives his opinion regarding the financial position of the organization in the form of a report.

It is ensured that the statements are prepared following the accounting standards, they comply with all statutory requirements and proper presentation of the records is done with all matters duly disclosed.

Advantages and Disadvantages of Auditing

Advantages of Auditing

• The major advantage of auditing is that It gives assurance to the owners, investors, etc. about the accuracy of their financial statements.

• During the auditing process, errors and frauds in the account books are discovered. In a way, it also prevents such errors for the fear of being detected.

• In the case of external audits, the books are very closely inspected, and the management gets a second opinion of their financial standing.

• Since the books are closely examined, it helps the employees to be honest and responsible while preparing the reports.

• The financial statements get more credibility while they are audited.

Disadvantages of Auditing

• Auditing involves a deep examination of records, which ends up in extra cost to the company.

• The reports of the audit act as evidence to make major changes in the accounts of the distribution of profits.

• The changes are calibrated and it makes the employees feel harassed

• Since the rules and regulations of business vary from time to time, it affects the result of the audit.

• Since the audit report is credentialed, there are chances for the companies to commit fraud and ultimately it will force the auditors to commit crimes after the audit.

• Smaller concerns do not consider auditing that important and proceed with regular transactions.

• The auditing report is prepared based on the information agreed by the clients and so it is not guaranteed.

Basic Principles Governing an Audit

This Auditing and Assurance Standard was the standard on auditing that was first issued by the Institute. It explains the basics of auditing that govern the professional responsibilities of an auditor.

The basic principles of auditing are confidentiality, integrity, objectivity, independence, skills and competence, work performed by others, documentation, planning, audit evidence, accounting system and internal control, and audit reporting.

1) A thorough examination of all systems

The assessment of all systems and procedures related to accounting and financial operations is the primary goal of any audit. Before beginning the audit of the final statements of accounts, the auditor must first comprehend the system and its functionality. It will serve as the foundation for the entire auditing process.

2) Internal Controls Assessment

The extent of the audit will be determined by the efficacy of the organization’s internal control system. The auditor can rely on the system if the company’s internal controls are in place and very effective. Then he won’t have to go over the accounting in great detail.

If the internal controls, on the other hand, are ineffective, the auditor must go over the accounts with a fine-tooth comb. The auditor must also assess the internal control system, according to CARO 2003.

3)Arithmetic Precision

The auditor must also check the accuracy of the books of accounts regularly. This includes double-checking the books’ arithmetical accuracy and verifying that the entries are properly posted.

4) Principles of Accounting

The auditor must check that the capital and income transactions are properly distinguished. All financial transactions must fall into one of two categories: revenue or capital. The auditor must also verify the accuracy of both income and expenditure items.

5) Assets Verification

All of the company’s assets must be physically verified by the auditor. As a result, he must examine all legal documents, certifications, official statements, and other documents to determine the ownership of all assets. The auditor must also make certain that no assets are missing from the balance sheet.

6) Liabilities Verification

The auditor must also verify the organization’s liabilities. He’ll go over all of the documents, letters, and certificates once again. He can also seek confirmation from outside parties if necessary.

7) Attestation

A paper trail is left behind by every financial transaction. These supporting documentation must be examined by the auditor to ensure that the transactions are valid and accurate. Vouching is the term for this. The organisation, for example, has a 12,000/- electrical expense. The auditor must then examine the electrical bill to double-check the transaction.

8) Statutory Obligations

The auditor’s job is to ensure that the company’s financial records conform with all laws, rules, and regulations in effect at the moment. As a result, he must ensure that the accounts are compliant with the Companies Act 2003, the Income Tax Act 1961, and other relevant laws.

Features of Auditing

The images tell about the essential features of an audit.

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Characteristics of Auditing

• It is a systematic procedure of examining the financial records of an organization

• Its main objective is to find out any frauds or errors in the financial records.

• It is conducted either by the auditors who have in-depth knowledge of accounting procedures and legal formalities.

• It ensures the truth and fairness of the financial statements if it reflects the exact status of the state of affairs of the business.

• It also ensures that the statements follow the accounting standards.