Balance Sheet Audit
The term “Balance sheet Audit” is an American
contribution. It is more popular in U.S.A. It is very rarely used in India and
other countries. In balance sheet audit, the auditor verifies the balance sheet
items such as capital, liabilities, reserves and provisions, assets and other
items given in the balance sheet. The auditor checks only those documents,
which are related to the items given in the balance sheet and does not review
other items which are not connected with the Balance Sheet.
Although, Balance Sheet Audit concentrates on the
items of Balance Sheet, it does not exclude audit of other business operations.
As the balance of Profit and Loss Account itself is part of the Balance Sheet,
it will invariably include the examination of the items recorded in the Profit
and Loss Account. It is similar to an annual audit. In India, no distinction is
made between Balance Sheet Audit and Annual Audit.
In this audit, a backward process is followed to
audit the balance sheet. First the item is located in Balance Sheet, and then
it is located in the original records for the purpose of verification. This
audit is based on the assumption that there exists a reliable system of
internal control. It presumes that auditor is highly skilled and experienced.