Concept of Audit of Impersonal Ledger
Impersonal ledgers are also called General Ledgers or Nominal Ledgers. Impersonal accounts refer to real accounts and nominal accounts which are related to a trading account, profit and loss account, and balance sheet. Nominal accounts are related to Trading and Profit A Loss Accounts whereas real accounts record assets. So, if there are any errors in such accounts, they will affect adversely to the report and financial statements which are to be signed by the auditor. Checking of such accounts is known as an audit of the impersonal ledger. It does not only assure the correctness and reliability of nominal accounts but also helps to detect the errors which remain in personal accounts. Such audit is conducted with the help of cash book, journal and subsidiary books.
Following works are to be performed for the audit of the impersonal ledger:
- Cash transactions are to be checked on the basis of cash book or journal. The postings of cash transactions to the Impersonal Ledger should be carefully checked.
- Other impersonal transactions are to be recorded on the basis of sufficient evidence. The Journal should be carefully vouched to ensure that each entry is supported by sufficient evidence. An auditor has to check whether it is recorded on the basis of evidence or not.
- Special attention should be given while checking transfer entries because it affects the final accounts. The total of the subsidiary books should be checked.
- Totals and balances of the impersonal ledger should be ratified with the balance shown in the trial balance. The balances in the Impersonal Ledger should be checked and verified with the Trial Balance.
- Reviewing truthfulness of debtor balances in a customer account. Opening balance of impersonal ledger should be verified with the audited account of the previous year.
- Reviewing of Internal Control System. The auditor should thoroughly check the totals of the various other books of original entry and also the postings of their totals of the impersonal ledger.