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Microlesson · 5-min read

Audit of Different Types of Entities - General Approach

# Audit of Different Types of Entities - Common Considerations

Major points to be kept in mind while performing audit of different entities:

## 1. Constitution of the Organisation

  • Examine constitution of the organisation
  • Examine bye-laws / rules and regulations / trust deed
  • Examine powers of members of management and other officers
  • Examine minute books of managing committees and of members' general meetings

## 2. Internal Controls

  • Evaluate the ICS in the organisation

## 3. Accounting Framework

  • Examine accounting policies followed
  • Examine accounting records maintained

## 4. Expenditure Verification

Check various expenditures of the organisation - Salary, Rent, General Expenses, etc.

## 5. Assets and Liabilities

  • Verification of assets and liabilities

## 6. Income Verification

Check various receipts in the form of fees, rent, income on investment, and donations.

Worked example

### Example 1

Example: Auditing a co-operative society - the auditor first reads the bye-laws to understand powers of management, then reviews minute books to confirm material decisions were approved, and only then proceeds to substantive testing.

⚠️ Common exam mistakes

  • Jumping into vouching without first reading the constitutional documents
  • Ignoring minute books - they often reveal unrecorded liabilities and unauthorised expenditure
Reference:
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