Part I: Auditing and Assurance Standards · General Principles and Responsibilities SA - · Risk Assessment and Response to Assessed Risk SA -. Paper – 3: Cost Accounting and Financial Management · Paper – 4: Taxation Paper – 6: Auditing and Assurance · Paper – 7 Download Standards. Auditing and Assurance Standards. Share this (AAS 21) Consideration of Laws and Regulations in an Audit of Financial Statements Download Standards.

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Engagement and Quality Control Standards - Complete Text Revised Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and. Auditing and Assurance Standards (AAS) - Auditor's Report on Financial Statements Statement on Standard Auditing Practices (SAP) 4 (Revised) - Auditor's. BoS Announcements · At a Glance: CA Course · e-Sahaayataa Know Rules & Regulations · Post-Qualification Courses Free Download - Publications.

Audit File: One or more folders or other storage media in physical or electronic form, containing the records that comprise of the audit documentation for a specific engagement. Experienced Auditor: An Individual whether Internal or external to the firm who has practical audit experience and a reasonable understanding of audit processes, SA's and applicable legal and regulatory requirements, the business environment in which the entity operates and auditing and financial reporting issues relevant to the entity's industry.

Form, Content and Extent in addition to the Nature and Purpose An auditor should prepare audit documentation sufficient to enable an experienced auditor having no previous connection with the audit to understand. Nature, timing and extent of audit procedures: Identifying characteristics of specific items and matters tested. Who performed the audit and the date of completion. Who reviewed the report, the date and extent of review. Results of the audit procedures performed and evidence obtained: Document discussions of significant matters.

Nature of the significant matters - when and with whom discussed.

Significant matters arising during the audit: Document how the inconsistencies have been addressed. In case of departure from the standard, the relevant requirements and the reason for departure, the alternative audit procedures performed to achieve the aim of that requirement.

Matters arising after the date of the Auditor's Report If, in the exceptional circumstances, auditor performs new or additional audit procedures or draws new conclusions after the date of the auditor's report, the auditor shall document: Circumstances encountered Newer additional procedures performed, evidence obtained, conclusions reached and its effect on auditor's report.

When and by whom the resulting changes to audit documentation were made and reviewed. Additional points Assembling of the final Audit file should be completed on a timely basis after the date of the auditor's report. After assembling the same, the auditor shall not delete or discard documentation of any nature before the end of its retention period. In case the auditor finds it necessary to modify existing or add new documentation post assembly, he should specify the reasons for them and when and by whom it was made and reviewed.

ICAI issues 4 new standards for internal checks in firms

Application and Other Explanatory Material Timely preparation enhances quality, review, evaluation of the audit evidence and conclusions reached before finalisation of the auditor's report. Documentation prepared after audit work is less accurate than that prepared during audit. Form, content and extent depends on size and complexity of the entity, nature of procedures performed, risks, exceptions, audit methodology, tools used and professional judgment. Audit documentation may be recorded on paper or on electronic or other media.

Examples: Audit programmes, checklists, analysis, correspondence.

Audit documentation should not include superseded drafts of working papers and financial statements, notes reflecting incomplete and preliminary thinking. Oral explanations can clarify or explain information contained in audit documentation.

It is not necessary nor practicable for the auditor to document every matter considered or professional judgment made. Judging the significance of a matter requires an objective analysis of the facts and circumstances. Summary describing significant matters identified during the audit and how they were addressed, or that includes cross-references to other relevant supporting audit documentation that provides such information.

The identifying characteristics should be recorded which helps serve a number of purposes.


Documentation also includes records prepared by the entity's personnel. Retention period of audit engagements is no shorter than seven years from the date of the auditor's report. Unless otherwise stated audit documentation is the property of the auditor.

He may make disclosures but these should not affect his independence nor invalidate his work. SA - Consideration of Laws and Regulations in an Audit of Financial Statements Scope:- This Standard on Auditing SA deals with the auditor's responsibility to consider laws and regulations while performing an audit of financial statements and not compliance with specific laws or regulations. Non-compliance of the same shall attract fines, litigations or other consequences. Responsibility of Management: The management must ensure that entity's operations are conducted in accordance and with compliance of the various provisions of laws and regulations that determine the reported amounts and disclosures.

The management should:- Monitor legal requirements Institute and operate appropriate systems of internal controls Develop, publish and follow a code of conduct Ensure employees are properly trained Monitor compliance with code of conduct Engage legal advisors In larger companies the policies and procedures are assigned to: An Internal Audit function Compliance function. Responsibility of the Auditor This SA is designed to assist the auditor in identifying material misstatement of the financial statements.

He is responsible for obtaining a reasonable assurance that the financial statements as a whole are free from any material misstatement. However, due to inherent limitations of audit there exists an unavoidable risk.

Effective date: Audit of Financial Statements for period beginning on or after 1st April, Objectives:- The objectives of an auditor are:- To obtain sufficient audit evidence regarding compliance with provisions of laws and regulations, To perform audit procedures to help identify areas to non-compliance, To respond appropriately to non-compliance or suspected compliance, To maintain an attitude of professional skepticism.

Definition of Non-Compliance Acts of omission or commission by the entity either intentional or unintentional which are contrary in nature other than personal misconduct. Appropriateness is the measure of quent oral representation of what was the quality of evidence; that is, its relevance discussed.

The practitioner ordinarily obtains more likely to be required and also by the quality assurance from consistent evidence of such evidence the higher the quality, obtained from different sources or of a the less may be required. Accordingly, the different nature than from items of evidence sufficiency and appropriateness of evidence considered individually. In addition, are interrelated. However, merely obtaining obtaining evidence from different sources more evidence may not compensate for its or of a different nature may indicate that an poor quality.

The reliability of evidence is influenced by its For example, corroborating information source and by its nature, and is dependent obtained from a source independent of on the individual circumstances under which the entity may increase the assurance the it is obtained. Generalisations about the practitioner obtains from a representation reliability of various kinds of evidence can from the responsible party.

Conversely, be made; however, such generalisations are when evidence obtained from one source subject to important exceptions. Even when is inconsistent with that obtained from evidence is obtained from sources external another, the practitioner determines what to the entity, circumstances may exist that additional evidence-gathering procedures could affect the reliability of the information are necessary to resolve the inconsistency.

For example, evidence obtained In terms of obtaining sufficient appropriate from an independent external source may not evidence, it is generally more difficult to be reliable if the source is not knowledgeable. In addition, conclusions provided on processes ordinarily are limited to the period covered by the engagement; the practitioner provides no conclusion about whether the process will continue to function in the specified manner in the future.

The practitioner considers the relationship between the cost of obtaining evidence and the usefulness of the information obtained. However, the matter of difficulty or expense involved is not in itself a valid basis for omit- ting an evidence-gathering procedure for which there is no alternative.

The practitio- ner uses professional judgment and exercis- es professional skepticism in evaluating the quantity and quality of evidence, and thus its sufficiency and appropriateness, to sup- port the assurance report.

Materiality is relevant when the practitioner determines the nature, timing and extent of evidence-gathering procedures, and when assessing whether the subject matter information is free of misstatement. When considering materiality, the practitioner understands and assesses what factors might influence the decisions of the intended users.

For example, when the identified criteria allow for variations in the presentation of the subject matter information, the practitioner considers how the adopted presentation might influence the decisions of the intended users.

Materiality is considered in the context of quantitative and qualitative factors, such as relative magnitude, the nature and extent of the effect of these factors on the evaluation or measurement of the subject matter, and the interests of the intended users.

Assurance Engagement Risk Assurance engagement risk is the risk that the practitioner expresses an inappropriate conclusion when the subject matter July The Chartered Accountant Accounting And auditing information is materially misstated9. In not be prevented, or detected and a reasonable assurance engagement, corrected, on a timely basis by relat- the practitioner reduces assurance ed internal controls.

The level of nal control; and assurance engagement risk is higher in a b Detection risk: the risk that the practitio- limited assurance engagement than in a ner will not detect a material misstate- reasonable assurance engagement because ment that exists.

However, considers each of these components in a limited assurance engagement, the is affected by the engagement circum- combination of the nature, timing and stances, in particular by the nature of extent of evidence-gathering procedures the subject matter and whether a rea- is at least sufficient for the practitioner to sonable assurance or a limited assur- obtain a meaningful level of assurance as the ance engagement is being performed.

To be Nature, Timing and Extent of Evidence- meaningful, the level of assurance obtained gathering Procedures by the practitioner is likely to enhance the In theory, more than inconsequential.

In general, assurance engagement risk can procedures are possible.

Group II - Paper 6: Auditing and Assurance

In practice, be represented by the following compo- however, these are difficult to communicate nents, although not all of these components clearly and unambiguously. The practitioner will necessarily be present or significant for attempts to communicate them clearly and all assurance engagements: unambiguouslyandusestheformappropriate a The risk that the subject matter infor- to a reasonable assurance engagement or a limited assurance engagement These risks are not part of assurance engagement risk.

While not all suchconclusions need to relate to the same level of evidence-gathering procedures, each conclusion is expressed in the form that is appropriate to either areasonable assurance or a limited assurance engagement. Both reasonable assurance and limited assurance engagements require the ject matter and other engagement cir- application of assurance skills and techniques cumstances which, depending on the and the gathering of sufficient appropriate subject matter, includes obtaining an evidence as part of an iterative, systematic understanding of internal control; engagement process that includes obtaining b Based on that understanding, assessing an understanding of the subject matter the risks that the subject matter infor- and other engagement circumstances.

The mation may be materially misstated; nature, timing and extent of procedures for c Responding to assessed risks, including gathering sufficient appropriate evidence developing overall responses, and de- in a limited assurance engagement are, termining the nature, timing and extent however, deliberately limited relative to of further procedures; a reasonable assurance engagement.

Such assurance engagement. In the nature of the subject matter, tests of the absence of a relevant pronouncement, operating effectiveness of controls; and the procedures for gathering sufficient e Evaluating the sufficiency and appropri- appropriate evidence will vary with the ateness of evidence. Reducing assurance engagement of the intended users and the engaging party, risk to zero is very rarely attainable or cost including relevant time and cost constraints.

In a reasonable assurance engagement, the Ordinarily, available evidence will be persuasive practitioner expresses the conclusion in the rather than conclusive.

An unqualified conclusion is not appropriate respects, based on XYZ criteria. In a limited assurance engagement, the risk to the appropriate level.

The practitioner provides a written report attention that causes us to believe that internal control is not effective, in all material respects, containing a conclusion that conveys the based on XYZ criteria.

In addition, evidence-gathering procedures given the the practitioner considers other reporting characteristics of the subject matter and other responsibilities, including communicating engagement circumstances described in the with those charged with governance when it is assurance report.

In an assertion-based engagement, the The Board also takes care of the revision of syllabi of the various courses periodically.

It also oversees the performances of various Accredited Institutions which has been authorized to impart oral coaching to students. The Continuing Professional Education Directorate of the Institute assumes the responsibility of updating the members on professional issues arising out of new legislation, technological changes and latest pronouncements of the Institute as well as other developments relevant to the profession. This directorate also looks after the activities related to certain Post Qualification Courses viz.

With effect from Jan , the CPE has been made mandatory for members in practice who will have to gain specified number of CPE credit annually by undergoing approved learning activities.

Some relaxation has been given to senior members. Disciplinary mechanism The Institute has a pro-active Disciplinary Cell to ensure compliance of professional ethics and Code of Conduct in terms of the Chartered Accountants Act as well as various pronouncements issued by the Central Council of the Institute.

The provisions contained in the code of conduct of the institute are most stringent ones as comparing to any other in the world and the actions taken by the institute against the defaulting members are also very stringent. There are very few cases, where the Indian courts have taken more stringent action against the members than what is proposed by the institute.

The Institute had taken the initiative of introducing a system of Peer Review to further enhance the quality of professional work of practicing chartered accountants over a period of time, and for the purpose a Peer Review Board had been constituted in The first stage of implementation of the Peer Review mechanism commenced w.

The Institute has constituted a Financial Reporting Review Panel who would suo-moto look into the published accounts of different organisations including banks and financial institutions. If any deficiency is observed as a result of review made by the panel, the findings of panel would form the basis for initiating action under the disciplinary mechanism that would be in place. The Institute, on its part, is putting the vast experience of its structure and its members at the disposal of those charged with governance.

In this process, the Institute, at regular intervals, provides technical advice and necessary inputs in respect of the following : Comptroller and Auditor General of India - provides technical advice in response to references received including maintenance of audit panels, issues arising out of audit and accounts of government companies and public sector undertakings.

Reserve Bank of India - provides technical advice and maintains constant touch in regard to matters pertaining to bank audits and audit of non-banking financial companies etc, Y2K issue etc. Actively involved in offering suggestions to simplify tax laws and their administration for the purpose of making it more responsive to tax payers.

Insurance Regulatory Authorities - helps the authority in redesigning the format of accounts of insurance companies both in the life and non-life sectors and provides necessary inputs in response to references received.

Following the initiative taken by the Institute, more and more Departments of the Central and State Governments of the country are approaching the Institute for utilising the services of chartered accountants for advice on economy in expenditure, development of control mechanism over public funds, optimum and effective use of funds.Annually, the firm should communicate the results of the monitoring of its quality control system to appropriate individuals within the firm, including the firm's chief executive officer or, if appropriate, its managing partner s to enable them to take prompt and appropriate action necessary in accordance with their defined roles and responsibilities.

Similarly, every public company existing on 13th December with a paid-up capital of less than five lakh rupees, shall, within a period of two years from such commencement enhance its paid up capital to five lakh rupees. Nature of the significant matters - when and with whom discussed. This standard is regarding the acknowledgement by the management that it is fulfilling its responsibility relating to preparation of financial statements and internal control.

In a limited assurance engagement, the risk to the appropriate level. Such assurance engagement.