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Fundamentals of Auditing by S. K. Basu

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Chapter 7

Company Audit

7.1 INTRODUCTION

A company is said to be an artificial person created by law having a separate legal entity distinct from its shareholders. It cannot be directly managed by its owners, i.e., shareholders, because they are very large in number having small holding and also scattered over a wide area. As such, the management and control of the affairs of the company is done by other persons generally known as directors. Hence, it becomes essential for a company to appoint an independent and qualified person, i.e., an auditor, to verily and certify the truth and fairness of the financial statements.

7.2 PRELIMINARIES BEFORE COMMENCEMENT OF COMPANY AUDIT

Before commencing the actual audit work of a company, the auditor should ...

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