The objectives of audit can be classified into three types:
1)Main objective(Expression of expert opinion)
2)Secondary objective(Detection and prevention of error and fraud):
A)Detection and Prevention of
errors:
(i)Clerical errors: This types of errors occurs in the events of
posting, totaling and balancing. They are of two types:
(a)Errors of omission: Occurs when a transaction has not been
recorded in the books of accounts either wholly or partially.
ex-On 3rd August, X company purchased material for tk. 5000 but the
transaction hasn't been recorded.
(b)Errors of commission: Occurs when a transaction recorded but
wrongly entered in the books of the original entry.
ex- X company purchased material of tk. 5200 but the transaction
recorded as 2500.
(ii) Errors of principle: Occurs when a transaction is not
recorded by following the fundamental rules of accountancy.
ex-X company paid office rent tk.1000 but instead of crediting cash
tk.1000 the entry is debited to tk.1000.
(iii)Compensating error or off-setting errors: Occurs when an
error compensate another error that is one error counter-balanced by another
error.
ex-On January 5 a transaction of X company is to be debited for tk.1000
but wrongly debited to tk.100, and on January 23 a transaction is to be debited
for tk.100 but mistakenly debited as tk.1000.
(iv)Errors of duplication: Occurs when an entry recorded twice
and also been posted twice.
ex-X company purchased materials of tk.2400, the entry recorded on it's
dated event but mistakenly recorded again.
B)Detection and prevention of
fraud:
(i)Embezzlement of cash: Occurs when the actual transaction or
entry of cash is been misappropriated.
ex- A transaction of tk.5200 occurred but it has been showed by
misappropriation as tk.5000.
(ii)Misappropriation of goods: Occurs when the actual quantity
of goods is been misappropriated.
ex- Amount of goods is shown as worth of tk.8000 but it is actually
worth of tk.10000.
(iii)Fraudulent manipulation of accounts: Occurs when an entry
or transaction being manipulated for misappropriation.
ex-(1+2)
3)Specific objective.
