Unit I

Introduction to Principles of Auditing and Audit Process

Q1) What is the meaning and definition of Economics Development? 5

A1) Different economists and improvement thinkers have described financial improvement in distinct ways. In general, it's far associated with the monetary health of the human beings of the country. Economic improvement changed into a challenge for economists' rights from Adam Smith; however it obtained lots of interest after World War II. After this, many negative nations within side the international sought to sell financial improvement.

From the Fifties to the Sixties, financial improvement changed into described as a protracted-time period boom in keeping with capita earnings. It changed into additionally described as a boom.

Over a protracted time frame in real GNP. The predominant definitions of financial improvement within side the Fifties and Sixties are:

According to Arthur Lewis, economics may be described as "financial improvement manner a boom in keeping with capita manufacturing."

According to GM, Meyer's economics states that "financial improvement is the technique via way of means of which a country's actual in keeping with capita earnings will increase over a protracted time frame, according with the supply that numbers underneath absolute poverty do now no longer boom and earnings distribution does now no longer boom. Can be described as. It could be greater unequal. "

According to P.A., Baron's economics may be described as "financial improvement is a boom within side the in keeping with capita manufacturing of goods."

According to Kindleberger's economics, it may be described as:

According to Mrs. Hicks, economics may be described as "financial improvement is associated with the improvement of unused resources."

The definition of financial improvement above specializes in growing in keeping with capita earnings or output or actual GNP. However, those definitions have didn't be aware of the real troubles dealing with growing and growing nations in Africa and Latin America. These nations performed better increase rates, however the widespread majority of human beings in those nations have been similar to them. The culmination of financial improvement and increase has been unacceptable to the bulk of human beings in those nations. In the Sixties, the troubles of poverty, unemployment and earnings inequality in growing nations have been now no longer alleviated, however worsened. Therefore, Professor Dudley Seeas has proven the means of financial improvement consistent with a brand new perception.

According to Professor Dudley Seers,

"Economic improvement is ready lowering unemployment, poverty and earnings inequality."

According to Michael P. Todaro

"Economic improvement is a multifaceted technique of in addition modifications in social structure, public attitudes and country wide systems, with increased financial increase, decreased inequality and eradication of absolute poverty."

Recently, the idea of financial improvement has spread. It consists of now no longer handiest lowering poverty, inequality and unemployment, however additionally enhancing nice of lifestyles including a purifier environment, higher education, fitness and nutrition.

Meaning of financial improvement, consistent with the 1991 World Development Report

"The mission for financial improvement is to enhance nice of lifestyles. Especially within side the poorest nations of the international, enhancing nice of lifestyles regularly calls for better incomes, however it comes with lots greater. In itself, it embraces for the reason of higher education, better requirements of fitness and nutrition, much less poverty, a first rate environment, greater same opportunities, extra non-public freedom, and a richer cultural lifestyles. "

From this definition, it's far clean that financial improvement is a multifaceted technique that consists of main modifications in social structure, public attitudes and country wide institutions, in addition to increased financial increase, decreased inequality and eradication of poverty.

Q2) What is Economic development indicator?     5

A2) As a rustic keeps to broaden, its financial system will change. These modifications are referred to as signs of monetary improvement. Therefore, the measurements or standards used to degree the diploma of monetary improvement are known as signs. Economic improvement is known as a trademark of monetary improvement. Since improvement is a dynamic concept, its metrics may be modified as well. Therefore, there are numerous evaluations of economists concerning the signs of monetary improvement, including:

1. Per capita income (PCI):

The PCI of someone in a single indicates monetary improvement. If the growth in PCI is better than the price of populace growth, there may be monetary improvement. Economists including Meier, Paul Baron, Buchanan and Elis take delivery of the growth in PCI as a trademark of monetary improvement.

2. Gross National Product (GNP):

According to those requirements, if a rustic's manufacturing will increase sustainably over an extended duration of time, then there may be monetary improvement. The extra Grand National Party, the extra monetary improvement is likely, and vice versa. Economists including Baldwin, Simon, Kuznets and Meyer see GNP as a trademark of monetary improvement.

3. Physical Quality of Life Index (PQLI):

These requirements had been evolved through Morris D Morris. PQLI includes the subsequent 3 elements. – Life expectancy, toddler mortality, literacy price. The stage of those elements determines the extent of monetary improvement. If human beings stay lengthy and feature literacy skills, the price of PQLI will growth and monetary improvement is expected. The stages of those 3 additives are ranked from (1 to 100). If the price is extra than 50, is taken into consideration to be evolving, and if the price is much less than 50, the is taken into consideration to be evolving.

4. Basic human desires:

These requirements had been evolved through the World Bank. According to those standards, improvement is classed primarily based totally on assembly human being’s simple desires in phrases of health, training, water, food, cloth, safe haven and extra. If those simple desires are to be had to human beings, it's miles low-cost to broaden and vice versa.

5. Human Development Index:

These requirements had been evolved through UNDP (United Nations Development Program) in 1990 AD. This indicator is related to 3 elements of human lifestyles. – Income, training and lifestyles expectancy for a first rate lifestyles. HDI is measured on a scale of (0 – 11). Zero shows the bottom human improvement and 1 shows the best human improvement. HDI ranks international locations into 3 companies the usage of 3 improvement measures:

1. Lowest human improvement (0 – 0.49)
2. Moderate human improvement (0.50 – 0.79)
3. Best human improvement (0.80 – 1)

Q3) What is developed country? State its features.    5

A3) Developed countries are countries that have high per capita income, long life expectancy, high standards of living, and other facts that indicate a high quality of life. Developed countries are said to be more economically advanced than other countries, and are also known by other names such as First World countries, developed countries, and developed countries. These countries have excellent infrastructure and stable economies. Industrialization, development, and most of its citizens have the high standard of living found in these countries.

These developed countries have some things in common. For example, they are all industrialized. That means that these countries are technologically advanced and their economies are based on manufacturing. They have a free market economy. The market operates according to the law of supply and demand. That is, the prices of goods and services are determined based on the needs of the customer and the availability of those goods and services in the market.

Characteristics of developed countries

1. High per capita income 

Every year, developed countries have high per capita income. This means that people earn enough income to spend, invest, and save. This increases the economic value of the country. Therefore, it leads to lower levels of poverty.

2. Good healthcare developed countries

Developed countries guarantee good sanitation to their people. They ensure hospital availability and trained and reliable medical personnel. As a result, the mortality rate of the population is low and life expectancy is long. And in developed countries, you can intelligently control population growth.

3. Highly safe developed countries

Compared to developing countries, developed countries offer greater security. Developed countries have advanced and advanced technology, so it is necessary to develop better security facilities and weapons technology in the country.

4. Developed countries with low unemployment rate

In developed countries, every citizen has a source of income. Therefore, the unemployment rate is relatively low in these countries.

5. More exports, less imports

With excellent technology and human resources, developing countries export at a higher level than imports.

6. Advanced science and technology

Citizens of developed countries know and control the fields of technology and science. As a result, new and convenient devices such as industrial pendant lights are being introduced to the market. Therefore, in our daily lives, we mainly use the latest tools and advanced technology to make our lives easier.

Q4)) What is the meaning of developing country?     5

A4) Developing international locations are international locations with low in step with capita gross home product (GDP). They have a tendency to depend upon agriculture as their major industry. There are many definitions of this term, however they're now no longer but economically mature.

Investors regularly classify international locations round the sector primarily based totally on their degree of monetary development. There are numerous levels, which use many monetary and social standards. This variety from in step with capita profits and lifestyles expectancy to literacy costs. Developing international locations, least evolved international locations (LDCs), and rising markets are rated low.

Countries which are taken into consideration extra evolved are known as evolved international locations, and growing international locations are called underdeveloped international locations (LEDCs) or frontier markets. Although those phrases were the concern of criticism, they remain used in lots of circles, along with global organizations.

Features of developing countries:

1. Low in step with capita profits: Very low in step with capita profits in growing international locations. In those international locations, human beings are negative and their fashionable of dwelling is low because of low in step with capita profits. In India, for example, in step with capita profits is simplest approximately $ 1581 (2015). Compared to the in step with capita profits of evolved international locations like Canada, that is very low.
2. Importance of Agriculture: Agriculture is the primary career in growing international locations. In those international locations, the widespread majority of human beings rely upon agriculture for his or her livelihoods. In those international locations, approximately 70% of the populace is engaged in agriculture. Similarly, approximately 33% of countrywide profits come from agriculture. Agriculture is the primary profession; however productiveness in step with hectare could be very low in those international locations. In those international locations, small-scale ownership, vintage manufacturing techniques and absence of water centres are the reasons of decreased agricultural productiveness.
3. Low industrialization: Developing international locations are industrially negative international locations. Industrialization could be very low in those international locations. A very small percent of human beings are engaged within side the industry. Large industries aren't growing. Most industries are customer items industries. In those international locations, simplest 20% of human beings are engaged in industry. Lack of capital and absence of generation are accountable for the insufficient industrialization of those international locations.
4. Overpopulation: Population boom could be very excessive in those international locations. Due to the growth in clinical centers; mortality costs have declined, however fertility costs have remained constant. Therefore, the populace is developing rapidly. It is more than the boom fee of countrywide profits. Therefore, it isn't feasible to growth in step with capita profits. The unemployment fees will growth.
5. Unemployment: Unemployment is some other feature of growing international locations. Developing international locations aren't in a function to take in the developing populace because of loss of capital. In addition to knowledgeable unemployment, there's camouflaged unemployment in agriculture. Too many human beings are depending on land. This scenario is known as camouflaged unemployment. According to a UN O record in growing international locations, the camouflaged unemployment fee is 20-25%,
6. Insufficient capital: The inventory of capital is low. Capital boom in those international locations is likewise very low, simplest 5% to 10% of countrywide profits, as compared to 25% to 30% of funding in countrywide profits in evolved international locations. This low capital boom fee isn't even sufficient to fulfil the desires of populace boom. A loss of capital is each a motive and a outcome of decreased productiveness. The major motive for the dearth of capital is the low canyon.
7. Low-degree generation: Developing international locations are technically behind. The production technique is vintage and the productiveness is low. These international locations lack the capital had to enhance technological know-how and generation. Also, because of the dearth of overseas exchange, it isn't feasible to import generation from overseas.
8. Unused Resources: Natural sources in growing international locations are underutilized or underutilized. These international locations aren't in a function to make use of herbal sources because of loss of capital and generation. India's herbal sources are underutilized. For example, India nevertheless has approximately nine acres of arable wasteland. The United States of America’s capability hydropower is simplest as much as 25% utilized.

Q5) What are the features of Indian Economy?     8

A5) The characteristics of Indian Economy are:

1. Low profits in keeping with capita

According to a file with the aid of using the International Monetary Fund, India's PCI in 2017 changed into $ 1983, rating a hundred and fortieth out of 188 international locations. In addition, in line with a World Bank file, India's PCI in 2017 changed into $ 1,940, rating 138th out of 184 international locations.

Therefore, we will finish that the in keeping with capita profits of Indian citizens is decrease than in maximum international locations within side the world.

2. Occupational pattern-number one production

One of the primary traits of India as a growing us is that it's far in particular number one production. This method that almost all of the populace (approximately fifty two percentages) is engaged in agriculture. However, from 2011 to 2012, agriculture contributed simplest 13.nine percentage to countrywide profits. This disparity is slowing India's progress. The motive at the back of this distinction is that agriculture is a low-profits sector. Also, the productiveness in keeping with character engaged in agriculture may be very low.

3. Population pressure

Read this number: 1,362,099,836.

This is 1.36 billion human beings, the populace of India as of 21:30 on January 17, 2019. We are the second one maximum populous us of a withinside the world, with our populace accounting for approximately 17.74% of the world's general populace. In India, excessive tiers of illiteracy cause excessive tiers of fertility. In addition, stepped forward scientific centers have stepped forward the common lifestyles of Indians and decreased mortality.

4. India's continual unemployment and underemployment

Due to the dearth of capital in India, it's far tough to have interaction the whole populace in a position employment.

Therefore, there's ample reasonably-priced labour. As a result, continual unemployment and underemployment are happening in Japan.

5. Steady development of capital formation fee

In 2017, India's populace increase fee changed into 1.13%. Therefore, the economic system required a huge funding to offset the extra burden of populace increase. This stability is crucial for preserving dwelling expenses. Otherwise, there's a chance that increase can simplest be performed on the rate of unacceptable inflation.

6. Wealth / asset distribution inequality

Unequal asset distribution is a primary purpose of inequality in rural profits distribution. This inequality additionally highlights the truth that 50% of Indian families have a susceptible aid base.

7. Poor pleasant of human capital

It's an easy equation. There are tens of thousands and thousands of illiterate residents in growing international locations. Illiteracy additionally slows increase, as people want minimum schooling to collect abilities and recognize social issues.

8. Low degree technology

India is a rustic of eclectic mix. On the only hand, one corporation makes use of one of the maximum present day technologies, and some other within side the identical enterprise makes use of the maximum primitive technology. Unfortunately, in accordance to fashionable medical standards, maximum of our merchandise are made with the assist of inferior technology. A short have a take a observe the productiveness of advanced and growing international locations is that they may be greater effective due to the fact they use desirable technology.

9. The common Indian has a low popular of dwelling

In India, maximum residents have low calorie intakes and eat low tiers of protein, making it not possible to make certain a balanced food plan. In contrast, residents of advanced international locations eat a wealthy food plan of fish, clean fruit meat, sugar and butter. Today, Indians eat almost 1/2 of the protein in their residents. Developed international locations do so. As a result, the immune gadget to the sickness is weakened and performance within side the place of job is decreased. In addition, the housing state of affairs is dark.

10. Demographic traits

Demographically speaking, India is a densely populated us of a with a excessive little one mortality fee and a particularly brief lifestyles expectancy as compared to advanced international locations. Therefore, the economic system is underdeveloped. In addition, India's populace density changed into 412 in keeping with rectangular kilometre (2010). By comparison, the populace density of America changed into 34 human beings in keeping with rectangular kilometre. In truth, even China has a populace density of 143 human beings in keeping with rectangular kilometre. As a result, India locations a heavy burden on herbal sources together with land. India additionally faces the most important hassle of leveraging the working-age populace in rising economies.

Q6) Compare   Indian Economy with World Economy with reference to: National Income, Population                                                                                                                8

A6) India is considered one of the largest economies in the world and is growing at a steady pace. In today's article, we will compare the Indian economy with the other major economies in the world.

National Income:

Income per capita

In 2014, the per capita income of Indians was $ 1,560. This increased to $ 1,600 in 2015. The following is a simple comparison table.

As can be seen from the table above, India's per capita GNI was lower in both years than in other major economies such as the United States, United Kingdom, Japan, Germany and China. In addition, in 2015, GNI per capita in the United States was about 35 times higher than in India. On the other hand, the purchasing power parity of the United States was only 10 times that of India.

Simply put, official exchange rates showed exaggerated disparities between economies while purchasing power parity numbers balanced them. That said the difference in living standards between the average American and Indian is significant and important.

As for China, China's average GNI per capita in 2015 was about five times that of India. In addition, purchasing power parity was twice that of India. However, there are significant differences in living standards between the average Chinese and Indians.

Population growth

The world population in 1980 was about 4,426 million, but by 2010 it had increased to about 6,893 million. The compound annual growth rate of the population was 1.7% in 1980-81, but dropped to about 1.15% in 2009-10. In addition, population growth rates vary in different parts of the world.

From the table above, it is clear that low- and middle-income countries make up about 84 percent of the world's population.

Also, from 2000 to 2009, the growth rate of low-income countries was higher than that of middle-income countries. In addition, China's population growth fell to 0.5% in 200-09, while India recorded a 1.38% population growth.

Gender composition of the population

From the table above, we can see that the average gender ration decreased from 986 in 2001 to 982 females per 1,000 males in 2015. Of the above six countries, 1,025 to 1,034.

In India, the sex ratio was 934 in 1981, but dropped to 929 in 1991. In 2001, the sex ratio in India was 933, but in 2011 it increased to 940. However, in 2015 it decreased to 929 women per 1,000 men. In the United States, on the other hand, there are more than 1,000 women per 1,000 men.