There are two types of object of auditing.
1. The main objects and
2. The secondary or subsidiary object.
The Main object- the main object of auditing is to help the auditor to form an opinion as to whether the books of account and the financial statements show true and fair view of the business. Auditor has to check the books of account and financial statements keeping the main object in mind.
According to DE PAULA â€œThe main object of audit is to ascertain that the balance sheet and profit and loss account of an undertaking do show true and fair view of its financial position and earnings.â€
A similar view was observed by the Institute of Chartered Accountants of India when it state that,â€ the objective of an undertaking do show true and fair view of its financial postion and earnings.â€
Subsidiary objects â€“ The subsidiary object of auditing is to detect and prevent errors and frauds in the books of accounts. There are following types of errors, which may be present in the books of account.
Errors of principle- When accountings principles are violated in writing the books of account the error of principal occurs. For example, when wrong account head is chosen to record a transaction, error of principal occurs. When expenses of capital nature are debited to revenue or vice versa it is said that error of principal has occurred.
Error of Commission- This error occurs when the amount in the transaction is not written properly, for example, if Mr. buys goods for Rs. 1,000 and the accountant writes in the books that goods purchased of Rs.100 only. OR the totaling, carry forward, casting errors.
Error of omission – When a particular part of the transaction is totally or partially omitted, carry forword, casting errors.
For example a credit sales of Rs.1,000 totally omitted and not transaction is totally or partially omitted, the error forward, casting errors.
Goods purchased on credit sales of Rs.1, 000 written in the purchased book but not in the creditor account. (Partial omission, hence it will affect the trial balance).
Compensating Errors-These types of errors are said to occur when they offset the effect of each other either wholly of partially. For example, if a person was to be credited by Rs.1, 000 and he is wrongly debited by Rs. 1,000 and he is wrongly debited by Rs.1,000 was trial balance. It may also occur when the name of two persons are interchanged for each other. For examples, we buy goods from Mr.B.
Errors of duplication â€“ these types of errors occur when a particular transaction is recorded twice in the books of account. Since they are also posted twice these do not affect the trial balance.