What Are The Types Of Errors And Mistakes That Can Be Detected Through Audit?

Errors and mistakes detected are of two types :- Clerical errors and Errors of principle.

Clerical errors can be further classified into four types- a) errors of ommission , b) errors of commission ,c) compensating errors & d) errors of duplication.
A) errors of ommission- this happens when a transaction is partially or completely ommitted from the books of accounts , eg. Invoice has been received ,but not been entered in anywhere in the books of accounts.
B) errors of commission - it happens due to wrong totalling , wrong postings , etc. For an e.g, instead of debiting X account , it has been credited.
C) compensating errors- it happens when an error offsets the effect of another error. Eg. Debit side of X a/c has been undertotalled by 100 /-, while the credit side has been overtotalled by Rs 100/-.
D) errors of duplication - when same transaction is entered twice or more times at different times and dates.

Errors of principles - this happens when there is the violation in the principles of Accounting. For eg. Charging revenue expense to the capital account, purchase of machinery booked under purchase day book instead of machinery., etc.

The mistakes and errors can be measured up by the audits. There are different types of errors and mistakes. First one is called the clerical errors under which many other errors exist which are as follows:

Clerical Errors:
Errors of Omission: These occur where the transactions have been either omitted wholly or partially. Such errors do not affect the accuracy of the trial balance. A searching eye and a critical scrutiny of the accounts only can uncover such errors. For example scrutiny of salaries account in the general ledger may indicate that salaries for only 11 moths have been accounted for and the outstanding amount for the 12th month has not been provided for.

Errors of Commission: These consist of incorrect additions, wrong posting and entries. Some of the examples are errors in additions, carry forwards in the books of original entries or ledgers. Errors or incorrect postings debit amount posted to credit, wrong amount posted to an account an amount posted twice, omission to post an amount from a book of original entry to the ledger. Checking the arithmetical accuracy of books of original entries and ledger and posting from the books of original entries to the ledgers would reveal the above errors.