Abstract The article comments on budgeting principles and budget-auditing standards. Budget audits are similar to audits on audits in the sense that the central task of both types of audits is to check whether reasonable inferences were made in preparing budgets or in preparing audit reports, and not to make inferences by auditors themselves. The budgeting principles and procedures can be divided into two parts, one concerning predictions of events and the other the recording of predicted events. The latter deals with the ordinary accounting procedures after certain events are predicted according to the former. Therefore, if the budgets are to be reported in the form of projected financial statements, accountants may simply quote the generally accepted accounting principles and procedures and state that the predicted events must be recorded according to them. Thus, the cost principle, the realization principle, the matching principle of revenue and costs, etc., will all be observed. In addition to budgeting principles and procedures, a set of budget-auditing standards and procedures must be prepared in order to define methods of examining budget working papers and related evidence which support inferences as well as the extent of examination. They must also provide reporting standards for budget audits. The main purpose of budget audits is to make sure that budgeting processes are carried out as specified by budgeting principles and procedures.
Yuji Ijiri (Tue,) studied this question.