What are essential Qualities of an Auditor? As we know that an auditor is a watchdog means that he appointed to look after the interest of shareholders or owners of the business. A watchdog looks after the property of the owner. It is the qualities of an auditor to protect the property of the owners.
He must inform the shareholders when their rights are affected by wrong deeds of management. The auditor must try his best for detecting errors and frauds in order to protect the rights of shareholders.
Moreover, an auditor is not a bloodhound. He should not protect management who has been found guilty of committing errors and frauds. He cannot show his favor towards those who are responsible for negligence and manipulation of accounting records. He has the right to report the matter to shareholders in case the management fails to protect rights of shareholders.
Essential Qualities of an Auditor
No doubt auditor ‘is not a bloodhound, He cannot loot the property of the business for his personal benefit. He cannot allow management to misuse the property. He must use reasonable skill and care to locate errors and frauds in order to meet the requirements of an audit. Here check below the essential qualities of an auditor, which divided in two categories: Some people mix the qualities and responsibilities of an auditor together, but don’t mix them. Both are completely different from each other.
- Professional Qualities of an Auditor
- Personal Qualities of an Auditor
Professional Qualities of an Auditor
- Accounting
The auditor is an expert in the field of accounting. He knows the principles, methods, and techniques of accounting. It is a process that goes on for the whole year. The accounting system includes personnel, procedures, records, forms, and devices used by any business.
- Auditing
The auditor is an expert in the field of auditing. He knows the rules and regulations often audit. He has practical experience in the field of auditing. The auditor knows the checking of financial statements records and performance of any concern.
- Company Law
An auditor has full knowledge of Companies Ordinance 11984, Companies Rules 1985, Modaraba Companies Ordinance 1980, Modaraba Companies Rules 1981, and Banking Companies Ordinance 1962, the auditor carry examine the statements in the light of these rules.
- Mercantile Law
An auditor is an expert in the Mercantile Law. He has complete knowledge of Contract Act 1872, Sales of Goods Act 1930, Negotiable instruments Act 1881, Partnership Act 1932, Insolvency Act, Transfer of Property Act and Common Carrier Act.
- Taxation Laws
The knowledge of taxation is essential for professional auditor. He knows Income Tax Ordinance.2001, Sales Tax Act, Gift Tax Act, Excise, and Customs Act. He knows the rates of Tax.
- Business Organization and Operation
The auditor must know organization structure and operations of the business. Placement of Workers on the job is organizational structure. He should know the working of various departments of the business.
- Budget Preparation
The auditor must be expert in preparing budgets. The figures are collected from past year. The estimates are established for the next year. The various budgets are prepared for all functions of the business concern.
- Electronic Data Processing
The auditor must be expert in electronic data processing. The computers are used in business for accounting and other functions. The auditor must have the training to handle data through computers.
- General Knowledge
The auditor must have knowledge of general matters, which may help him in his professional life. He must be aware of economic and political conditions. He should remain in touch with the latest knowledge affecting business concerns.
Personal Qualities of an Auditor
- Tact
The auditor needs technical information to comment and criticize policies of management. When any information is missing he can collect such information with argument and debate without offending them.
- Honesty
The auditor must have high moral standards. It’ is his duty to report true and fair view of business matters. He must be straightforward, and honest in his professional work.
- Independence
The auditor must be independent at the time of programming, investigation, and reporting. Other people do not influence him directly or indirectly.
- Vigilance
The auditor is Vigilant about activities of accounting and audit staff. He can discover errors and frauds due to vigilance. He has an alert mind to watch audit work.
- Judgment
The auditor must have judgment for Selection depreciation, provision for bad debts, and inventory can apply professional knowledge to make decisions.
- Leadership
The auditor is a leader of an audit team. The senior and junior audit clerks are working under his leadership- As team leader. He can guide the auditors through demonstration.
Conclusion
An auditor is a professional accountant. He must check internal control system before start working on audit. He must verify assets and liabilities personally. He must check that financial statements conform to generally accepted accounting principles. In case of any doubt relating error or fraud, he should investigate the matter in depth to clear it.
The standard of audit work has been changed after the case of the McKesson and Robbins in the United States of America in 1938. Now auditor must be present at the time of stocktaking. He can examine whether the procedure followed for stocktaking is proper. If he is not satisfied he can mention the fact in his report.
