Refresher : Standards on...

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Refresher:StandardsonAuditing

MPVijayKumar FCA

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INSURANCE !!

Theviewsexpressedarethoseofthepresenterand,therefore,donotnecessarilyrepresenttheviewsofeithertheCounciloranyCommittee(s)/Board(s)oftheCounciloftheInstituteofCharteredAccountantsofIndia(ICAI).

• Theslidedeckshouldbeunderstoodincontextofthespeakerpresentation

• E&OE

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AuditingStandards

• Standards on Quality Control (SQCs)

• Engagement Standards -• Standards on Auditing (SA)• Standards on Review Engagements (SREs)§ Standards on Assurance Engagements(SAEs)§ Standards on Related Services (SRSs)

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AuditingStandards

• Engagement Standards - These are classified into followingcategories

• 100 – 999 Standards on Auditing (SAs)• 100 – 199: Introductory Matters• 200 - 299: General Principles & Responsibilities• 300 – 499: Risk Assessment & Response to Assessed Risks• 500 – 599: Audit Evidence• 600 – 699: Using Work of Others• 700 – 799: Audit Conclusions & Reporting• 800 – 899: Specialised Areas

§ 2000 – 2699: Standards on Review Engagements (SREs)§ 3000 – 3699: Standards on Assurance Engagements(SAEs)§ 4000 – 4699: Standards on Related Services (SRSs)

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S.No Reference Titleofthestandard Effectivedate

1 SQC1QualityControlforFirmsthatperformauditandreviewsofHistoricalFinancialInformation,andotherAssuranceandrelatedServiceEngagements

1stApril2009

2 SA200 OverallObjectivesoftheIndependentAuditorandtheConductofanAuditinAccordancewithStandardsonAuditing 1stApril2010

3 SA210 AgreeingtheTermsofAuditEngagement 1stApril2010

4 SA220 QualityControlforanAuditofFinancialStatements 1stApril2010

5 SA230 AuditDocumentation 1stApril2009

6 SA240 TheAuditor'sResponsibilitiesRelatingtoFraudinanAuditofFinancialStatements 1stApril2009

7 SA250 ConsiderationofLawsandRegulationsinAnAuditofFinancialStatements 1stApril2009

8 SA260(R) CommunicationwithThoseChargedwithGovernance 1stApril2017

9 SA265 CommunicatingDeficienciesinInternalControltoThoseChargedwithGovernanceandManagement 1stApril2010

10 SA299 ResponsibilityofJointAuditors 1stApril1996

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11 SA300 PlanninganAuditofFinancialStatements 1stApril2008

12 SA315IdentifyingandAssessingtheRisksofMaterialMisstatementsthroughUnderstandingtheEntityanditsEnvironment

1stApril2008

13 SA320 MaterialityinPlanningandPerforminganAudit 1stApril2010

14 SA330 TheAuditor'sResponsetoAssessedRisks 1stApril2008

15 SA402 AuditConsiderationsRelatingtoEntitiesUsingServiceOrganisations 1stApril2010

16 SA450 EvaluationofMisstatementsidentifiedDuringtheAudit 1stApril2010

17 SA500 AuditEvidence 1stApril2009

18 SA501 AuditEvidence—SpecificConsiderationsforSelectedItems 1stApril2010

19 SA505 ExternalConfirmations 1stApril2010

20 SA510 InitialAuditEngagements– OpeningBalances 1stApril2010

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21 SA520 AnalyticalProcedures 1stApril2010

22 SA530 AuditSampling 1stApril2009

23 SA540 AuditingAccountingEstimates,IncludingFairValueAccountingEstimatesandRelatedDisclosures 1stApril2009

24 SA550 RelatedParties 1stApril2010

25 SA560 SubsequentEvents 1stApril2009

26 SA570(R) GoingConcern 1stApril2017

27 SA580 WrittenRepresentations 1stApril2009

28 SA600 UsingtheWorkofAnotherAuditor 1stApril2002

29 SA610(R) UsingtheWorkofInternalAuditors 1stApril2016

30 SA620 UsingtheWorkofanAuditor’sExpert 1stApril2010

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31 SA700(R) ForminganOpinionandReportingonFinancialStatements 1stApril2017

32 SA701 CommunicatingKeyAuditMattersintheIndependentAuditor’sReport 1stApril2017

33 SA705(R) ModificationstotheOpinionintheIndependentAuditor'sReport 1stApril2017

34 SA706(R) EmphasisofMatterParagraphsandOtherMatterParagraphsintheIndependentAuditor'sReport 1stApril2017

35 SA710 ComparativeInformation- CorrespondingfiguresandComparativefinancialstatements 1stApril2011

36 SA720TheAuditor’sResponsibilityinRelationtoOtherInformationinDocumentsContainingAuditedFinancialStatements

1stApril2010

37 SA800 SpecialConsiderations-AuditsofFinancialStatementsPreparedinAccordancewithSpecialPurposeFramework 1stApril2011

38 SA805SpecialConsiderations-AuditsofSinglePurposeFinancialStatementsandSpecificElements,AccountsorItemsofaFinancialStatement

1stApril2011

39 SA810 EngagementstoReportonSummaryFinancialStatements 1stApril2011

40 SRE2400(R) EngagementstoReviewHistoricalFinancialStatements 1stApril2016

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39 SA810 EngagementstoReportonSummaryFinancialStatements 1stApril2011

40 SRE2400(R) EngagementstoReviewHistoricalFinancialStatements 1stApril2016

41 SRE2410 ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity 1stApril2010

42 SAE3400 TheExaminationofProspectiveFinancialInformation 1stApril2007

43 SAE3402 AssuranceReportsonControlsAtaServiceOrganization 1stApril2011

44 SA3420 AssuranceEngagementstoReportontheCompilationofProFormaFinancialInformationIncludedinaProspectus 1stApril2016

45 SRS4400 EngagementstoPerformAgreed-uponProceduresRegardingFinancialInformation 1stApril2004

46 SRS4410(R) CompilationsEngagements 1stApril2016

GeneralClarificationsissued

47 GeneralClarifications(GC)- AASB/2/2004onSA210

48 GeneralClarifications(GC)- AASB/1/2004onSA620

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200-299:GeneralPrinciplesandResponsibilities• SA200(Revised)“OverallObjectivesoftheIndependentAuditorandtheConductofanAuditinAccordancewithStandardsonAuditing”

• SA210(Revised),“AgreeingtheTermsofAuditEngagements”

• SA220(Revised),“QualityControlforanAuditofFinancialStatements”

• SA230(Revised)“AuditDocumentation”

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200-299:GeneralPrinciplesandResponsibilities

• SA240(Revised)“TheAuditor’sResponsibilitiesRelatingtoFraudinanAuditofFinancialStatements”

• SA250(Revised)“ConsiderationofLawsandRegulationsinanAuditofFinancialStatements”

• SA260(Revised)“CommunicationwithThoseChargedwithGovernance”

• SA265“CommunicatingDeficienciesinInternalControltoThoseChargedWithGovernanceandManagement”

• SA299(AAS12),“ResponsibilityofJointAuditors”

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300-499:RiskAssessmentandResponsetoAssessedRisks

• SA300(Revised),“PlanninganAuditofFinancialStatements”•

• SA315,“IdentifyingandAssessingtheRisksofMaterialMisstatementthroughUnderstandingtheEntityandItsEnvironment”

• SA320(Revised),“MaterialityinPlanningandPerforminganAudit”

• SA330“TheAuditor’sResponsestoAssessedRisks”

• SA402(Revised)“AuditConsiderationsRelatingtoanEntityUsingaServiceOrganisation”

• SA450,“EvaluationofMisstatementsIdentifiedDuringtheAudit”

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500-599AuditEvidence

• SA500(Revised)“AuditEvidence”

• SA501(Revised)“AuditEvidence—SpecificConsiderationsforSelectedItems”

• SA505(Revised)“ExternalConfirmations”

• SA510(Revised)“InitialAuditEngagements– OpeningBalances”

• SA520(Revised),“AnalyticalProcedures”

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500-599AuditEvidence

• SA530(Revised),“AuditSampling”

• SA540(Revised)“AuditingAccountingEstimates,IncludingFairValueAccountingEstimates,andRelatedDisclosures”

• SA550(Revised)“RelatedParties”

• SA560(Revised)“SubsequentEvents”

• SA570(Revised)“GoingConcern”

• SA580(Revised),”WrittenRepresentations”

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600-699:Usingworkofothers• SA600(AAS10),“UsingtheWorkofAnotherAuditor”

• SA610(Revised)“UsingTheWorkofInternalAuditors”

• SA610(Revised),UsingtheWorkofInternalAuditors

• SA620(Revised)“UsingtheWorkofanAuditor’sExpert”

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700-799:AuditConclusionsandReporting• SA700(Revised),ForminganOpinionandReportingonFinancialStatements

• SA705,ModificationstotheOpinionintheIndependentAuditor’sReport

• SA706“EmphasisofMatterParagraphsandOtherMatterParagraphsintheIndependentAuditor’sReport”

• SA710(Revised)“ComparativeInformation—CorrespondingFiguresandComparativeFinancialStatements”

• SA720“TheAuditor’sResponsibilityinRelationtoOtherInformationinDocumentsContainingAuditedFinancialStatements”

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800-899:Specialpurpose

• SA800“AuditsofFinancialStatementsPreparedinAccordancewithSpecialPurposeFrameworks”

• SA805“SpecialConsiderations—AuditsofSingleFinancialStatementsandSpecificElements,AccountsorItemsofaFinancialStatement”

• SA810“EngagementstoReportonSummaryFinancialStatements”

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2000-2699:StandardsonReviewEngagements

• SRE2400(Revised),EngagementstoReviewHistoricalFinancialStatements

• SRE2410“ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity”

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3000:36909:StandardsonAssuranceEngagements• 3000-3399ApplicabletoAllAssuranceEngagements• 3400-3699SubjectSpecificStandards

• SAE3400(AAS35),“TheExaminationofProspectiveFinancialInformation”

• SAE3402,“AssuranceReportsonControlsataServiceOrganisation”

• SAE3420,AssuranceEngagementstoReportontheCompilationofProformaFinancialInformationIncludedinaProspectus

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4000-4699:StandardsonRelatedServices• SRS4400(AAS32),“EngagementstoPerformAgreed-uponProceduresRegardingFinancialInformation”

• SRS4410(Revised),CompilationEngagements

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SQC

• SQC1,“QualityControlforFirmsthatPerformAuditandReviewsofHistoricalFinancialInformation,andotherAssuranceandRelatedServicesEngagements”

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SA200OverallObjectivesoftheIndependentAuditor&ConductofanAuditinAccordancewithSAs

EffectiveforAuditsoffinancialstatementsforperiodsbeginningonorafterApril1,2010

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Overview• Introduction

• Scope• Anauditoffinancialstatements(FS)• Effectivedate

• OverallObjectivesoftheAuditor• Definitions• Requirements&Application

• EthicalrequirementsRelatingtoAuditofFS• Professionalskepticism• Professionaljudgment• SufficientandAppropriateAuditEvidence(SAAE)• ConductofanAuditinAccordancewithSAs

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Scope• Establishesindependentauditor’soverallresponsibilitieswhenconductinganauditofFS

• Overallobjectiveofauditor• Nature&scopeofauditdesignedtomeetthoseobjectives

• ExplainsScope,authority&structureofSAs• SetsoutGeneralresponsibilitiesoftheauditor• ObligationtocomplywithSAs

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AnAuditofFinancialStatements• AuditenhancesdegreeofconfidenceinFS• ExpressionofopiniononpreparationofFSinaccordancewithapplicableFRF

• Doesnotensure:• futureviabilityofentity• efficiency&effectivenessofmanagement

• SAsdonot• imposeresponsibilitiesonmanagement/TCWG• overrideL&R

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ReasonableAssurance• SAsrequireauditortoobtainreasonableassurance.

• ObtainSAAEtoreduceauditrisktoanacceptablylowlevel.

• Absoluteassurancenot possiblebecauseofinherentlimitationsofaudit

• Materialitytobeappliedatplanningaswellasperformance

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OverallObjectiveoftheAuditor

• ObtainreasonableassurancewhetherFSasawholearefreefrommaterialmisstatementwhetherduetofraud/error

• ReportonFSandcommunicateasrequiredbySAs

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ConductofAuditinAccordancewithSAs

• ComplywithallSAsrelevanttoaudit• SAisrelevantwhen

• thatSAisineffect&• circumstancesaddressedbySAexist

• HaveanunderstandingoftheentiretextofSA

• Do not represent compliance with SAs inaudit report unless auditor complies withSA 200 & other SAs relevant to audit

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SA210AgreeingtheTermsofAuditEngagements


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OverviewofSA210• Introduction

• Scope• EffectiveDate

• Objective• Definitions• Requirements

• PreconditionsforanAudit• AgreementonAuditEngagementTerms• RecurringAudits• Acceptance of a Change in the Terms of the Audit Engagement• Additional considerations in Engagement Acceptance

• Application and Other Explanatory Material on these aspects• Appendices

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Scope

• DealswithAuditor’sresponsibilitiesinagreeingthe termsofauditengagement(ToAE) withmgt &TCWG

• Includesestablishingthatpreconditionsforauditarepresent.

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Auditor’sObjectiveAccept/ContinueAuditEngagementonlywhen

Basisonwhichengagementistobeperformedhasbeenagreed

Establish Confirm

Existenceofpreconditionsforaudit

CommonunderstandingofToAEbetweenauditor,

mgt&TCWG

AND

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PreconditionsforAudit

Determine Obtain

AcceptabilityofFRF Mgtagreementthatitunderstandsitsresponsibility

PreparationofFSinaccordancewithapplicableFRF

InternalControlsnecessarytoprepareFSfreeofmaterialmisstatement

Allrelevantinfo&unrestrictedaccesstoauditor

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AgreementonAuditEngagementTerms

• AgreetheToAE withMGT/TCWG.

• AgreedToAE shallinclude:• Objective&scopeofauditofFS.• Auditor’sresponsibilities.• Management’sresponsibilities.• IdentificationofapplicableFRF.• Expectedform&contentofreport.• A statement that these may undergo change due to circumstances.

• If L & R prescribe ToAE in details:• Written Engagement Letter may not be necessary for above.

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AcceptanceofChangeinTermsDonotagreetochangeifnoreasonablejustificationforit.

• IfToAE arechanged:• AuditorandMGTshallagreeonnewterms,and• recordnewtermsinengagementletterorothersuitableformofwrittenagreement.

• IfunabletoagreewithchangedToAE ANDnotpermittedbyMGTtocontinue:

• WithdrawifpermittedunderL&R;and• DetermineneedtoreporttootherpartiessuchasTCWG/regulators/owners

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SA220QualityControlFor

AnAuditofFinancialStatements


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• Scope• Effectivedate

• Objective• Definitions• Requirements&Application

• Leadershipresponsibilitiesforqualityonaudits• Relevantethicalrequirements• Acceptance&continuanceofclientrelationship&auditengagements

• Assignmentofengagementteams• Engagementperformance• Monitoring• Documentation

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Scope

• Dealswith:• SpecificresponsibilitiesoftheauditorregardingQualityControl(QC)proceduresforanauditofFS

• ResponsibilitiesofengagementQCreviewer

• Shouldbereadinconjunctionwithrelevantethicalrequirements

• PresumesthatfirmissubjecttoSQC1

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QCSystem&RoleofEngagementTeam

• ResponsibilityofAuditFirm• ImplementQCsystemthatprovidesreasonableassurance:

• Firm&itspersonnelcomplywithprofessionalstandards&regulatory&legalrequirements

• Reportsissuedbyfirm/engagementpartnersareappropriateinthecircumstances

• ResponsibilityofEngagementTeam• ImplementapplicableQCprocedures

• Providefirmwithrelevantinfowrt QCsystemrelatingtoIndependence

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RelyonFirmQC

EngagementTeamentitledtorelyonfirm’sQCunlessinformationprovidedbyfirmorotherpartiessuggestsotherwise:

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Auditor’sObjectiveImplementQCprocedures

AtEngagementLevel

ThatprovideReasonableAssurance

Auditcomplieswithprofessionalstandards&legalrequirements

Auditreportissuedisappropriateinthecircumstances&

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SA230AuditDocumentation

EffectiveforauditsoffinancialstatementsforperiodsbeginningonorafterApril1,2009

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• Objective

• Definitions

• Requirements• TimelyPreparationofAuditDocumentation• DocumentationoftheAuditProceduresPerformedandAuditEvidenceObtained

• AssemblyoftheFinalAuditFile

• ApplicationandOtherExplanatoryMaterial

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Scope

Scope

Tobeadaptedtoauditsofotherhistoricalfininfo

DealswithAuditor’sresponsibilitytoprepareauditdoxforanauditofFS

SpecificdoxrequirementsofotherSAsdonotlimitapplicationofthisSA

L&Rmayestablishadditionalrequirements

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Objective

Sufficient&Appropriaterecordofbasisforauditor’sreport

Evidencethatauditwasplannedandperformed

inaccordancewithSAs&L&R

Preparedocumentationthatprovides

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AssemblyofFinalAuditFile• Timely basis after date of audit report

• Set policy in terms of SQC 1• Within 60 days (SQC 1)

• Changes permitted:• Deleting/ discarding superseded dox.• Sorting, collating, cross referencing working papers• Signing off on completion checklists re file assembly• Documentation of discussion with engagement team beforedate of audit report

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• Nodeletion/discardingpermittedafterfinalassemblyexceptforexampletoclarifyexistingdoxarisingfrominternal/externalinspections

• Documentspecificreasonsformakingthem

• When&bywhommade/reviewed

• Retentionperiod–7yearsfromdateofauditreport

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OwnershipofDocumentation• UnlessotherwisespecifiedbyLorR,auditdocumentationisthepropertyoftheAuditor.

• Mayathisdiscretion,makeportionsof,orextractsfrom,auditdocumentationavailabletoclients,provided:

• suchdisclosuredoesnotunderminethevalidityoftheworkperformed,or,

• inthecaseofassuranceengagements,doesnotunderminetheindependenceofauditor/hispersonnel.

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SA240TheAuditor’sResponsibilityRelatingtoFraud

inanAuditofFinancialStatements

Effectiveforauditsoffinancialstatementsforperiodsbeginningonorafter1stApril,2009

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• Objectives• Definitions• Requirements

• Professionalskepticism• DiscussionamongtheEngagementTeam• Riskassessmentproceduresandrelatedactivities• IdentificationandAssessmentofRisksofmaterialmisstatementduetofraud• ResponsestotheAssessedRisksofmaterialmisstatementduetofraud• Evaluationofauditevidence• Auditorunabletocontinuetheengagement• ManagementRepresentations• Communicationwiththosechargedwithgovernanceandmanagement• CommunicationstoRegulatoryandEnforcementauthorities• Documentation

• ApplicationandOtherExplanatoryMaterialontheseaspects• Appendices

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Scope

• Dealswithauditor’sresponsibilitiesrelatingtofraudinauditoffinancialstatements

• ExpandsonhowSA315andSA330,aretobeappliedinrelationtorisksofmaterialmisstatementduetofraud.

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ResponsibilityforFraudPrevention&Detection

1. Thosechargedwithgovernance• Oversightofmanagementpolicies• Considerpotentialformanagementoverrideofcontrols• Considerpotentialformanagement’sinappropriateinfluenceonfinancialreporting

2. Management• Establishproperpolicies• Emphasisonethicsandhonesty

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ResponsibilityofAuditor

• Obtainreasonableassurancethatfinancialstatementsarefreeofmaterialmisstatements.

• Subjectto:• Inherentlimitationsofaudit

• Fraud– deliberatelyconcealed,sodifficulttodetect

• ButexerciseProfessionalSkepticism.

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Auditor’sObjectives

1. Identifyandassessriskofmaterialmisstatementsduetofraud

2. ObtainSAAEaboutassessedrisks

3. Respondappropriatelytoidentified/suspectedfraud

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ProfessionalSkepticism• Requiresongoingquestioningof:

• Whetherinfo.&auditevidenceobtainedsuggestpossibilityofmaterialmisstatementduetofraud.

• Donottakeclientintegrityandhonestyforgranted

• Documentsmaybeacceptedasgenuineifnocontraryindications,butwhenindoubt,may:

• Confirmdirectlywith3rdparty

• Engageexperttoassessauthenticity

• Investigate-responsetoinquiriesisinconsistent

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SA250ConsiderationofLawsandRegulationsinanAuditofFinancialStatements


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• Objectives• Definition• Requirements

• TheAuditor’sconsiderationofcompliancewithLawandRegulation(L&R)

• Auditprocedureswhennon-complianceisidentifiedorsuspected• Reportingofidentifiedorsuspectednoncompliance• Documentation


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Scope• Dealswithauditor’sresponsibility:

• toconsiderL&RwhenperformingauditofFS.

• Doesnotapplyto:• assuranceengagementswheretesting&reportingoncompliancewithL&Risthespecificobjective.

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WhatisNonCompliance?

• Actsofomissionorcommission

• eitherintentionalorunintentional• whicharecontrarytotheprevailingLorR

• Doesnotincludepersonalmisconduct(unrelatedtobusinessactivitiesofentity)byTCWG,Mgt.,employeesoftheentity.

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MGT.ResponsibilityforCompliancewithL&R• MGTresponsible

• UnderoversightofTCWG

• PoliciesandProcedures:• Monitorlegalrequirements• Ensureeffectivenessofoperatingprocedures• Instituting/OperatingappropriatesystemsofInternalcontrols• Developing/publicising/following/monitoringofCodeofconduct• Employeetraining• Engagelegaladvisors• MaintainregisterofsignificantL&R&recordofcomplaints

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Auditor’sResponsibility• Auditor responsible for obtaining reasonable assurance that FS takenas a whole are free from Material Misstatement, whether by fraudor error

• SA assists auditor in identifying material misstatements in FS due tonon-compliance

• Auditor is not, responsible for preventing non compliance andcannot be expected to detect non- compliance with all L & R

• Factors increasing the risk of not detecting the non- compliance:• Inherent limitations of audit• Some L&R relate to operations, no impact on FS and are not captured by entity’s

information system• Deliberate concealment of non compliance, e.g., collusion, forgery• Non compliance - Ultimate determination is a matter of court of law.

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Responsibilityw.r.t.differenttypesofL&R

TypesofL&R

ObtainSAAEregcompliance

Undertakespecifiedprocedurestohelp

identifynon-compliancethatmayimpactFS

Exerciseprofessionalskepticism

A BDirecteffectonmaterialamounts&disclosuresinFS

Fundamentalimpactonoperations&GoingConcern

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SA260CommunicationwithThoseChargedwith

Governance


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• Scope• Effective Date


• Those Charged with Governance• Matters to be Communicated• The Communication Process• Documentation

• Application and Other Explanatory Material

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Deals with Auditor’s responsibility to

communicate with TCWG in an audit of FS

Provides a framework

for auditor’s Communication

with TCWG,and identifies some specific

matters to be communicated

may also be applicable to audits of other

historical financial information

This SA does not preclude the auditor fromcommunicating any other matters to TCWG

Scope

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CommunicateclearlywithTCWGresponsibilitiesofauditorandplannedscopeandtimingofaudit

ProvideTCWGwithtimelyobservations–significantandrelevantinoverseeingfinalreportingprocess

ObtainfromTCWGinformationrelevanttoaudit

Promoteeffectivetwo-waycommunicationbetweenauditorandTCWG

Auditor’s Objectives

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MatterstobeCommunicated

Auditor’sresp inrelationtoFSaudit

PlannedScopeandtimingof

audit

Significantfindings

fromtheaudit

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Documentation• Matterscommunicatedorally:

• Documentmatters;and

• alsowhenandtowhommatterwerecommunicated.

• MattersCommunicatedinwriting–• retainacopyofthecommunication.

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SA265CommunicatingDeficienciesinInternalControltoThoseChargedwithGovernance&Management


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• Objective• Definitions• Requirements• Application&OtherExplanatoryMaterial

• Determination of whether Deficiencies in Internal Controlhave been identified

• Significant Deficiencies in Internal Control• Communication of Deficiencies in Internal Control

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Scope• Dealswithauditor’sresponsibilityto:

• Communicate appropriately with TCWG/ MGT Deficiencies in ICIdentified by auditor in audit

• Doesnotimposeadditionalresponsibilitywrt:• ObtaininganunderstandingofInternalcontrolsand• Designing & performing Tests of Controls over and above thatrequired by SA 315 & SA 330

• Does not override SA 260.

• Specifies which deficiencies need to be communicated toTCWG/Mgt.

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Auditor’sObjective

• CommunicateappropriatelytoTCWG&Mgt:

• DeficienciesinICidentifiedduringaudit,and

• Thatinhisprofessionaljudgmentaresufficientlyimportanttomerittheirattentions.

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Definitions

Deficiency in IC

Control designed/ implemented/ operated in a way

Fails to prevent/ detect & correct misstatements in FS on timely basis

Control necessary to prevent/ detect & correct misstatement in FS on timely basis

Is missing

OR

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MainRequirements• Determinewhetherdeficiency(s)inICidentified.

• IfdeficienciesinICidentified,determine:• whetherindividually/incombinationtheyconstitutesignificantdeficiencies.

• communicateinwritingsignificantdeficienciesinICidentifiedtoTCWGonatimelybasis.

• communicatetoMGTatappropriatelevelonatimelybasis:

• Inwriting,significantdeficienciesinIC.• OtherdeficienciesinIC.

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SA299ResponsibilityofJointAuditors

EffectiveforallauditsrelatingtoaccountingperiodsbeginningonorafterApril1,1996

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ScopeoDealswithauditor’sprofessionalresponsibilitiesasjointauditors.

oDoesnotcoversituationscoveredunderSA600.

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DivisionofWork• Bymutualdiscussion:

• Usuallyintermsofauditofidentifiableunits/specifiedareas.

• Wheresuchdivisionnotpossible– intermsofassets/liabilities/income/expenditure,etc.

• Criticalareascoveredbyallauditors.

• Documentthedivision&communicatetoclient.

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RelationshipamongJointAuditors• EachJointAuditorresponsibleonlyforworkallocated,whetherornotseparatereportthereforismade.

• EachJointAuditorjointlyandseverallyresponsiblefor:• undividedwork.

• nature,timing,extentofauditprocedures.

• compliancewithdisclosurerequirements.

• auditreportcompliancewithstatuterequirements.

• matterbroughttonoticeofallbyanyoneofthem,andonwhichthereisanagreement.

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Reporting• Normally,jointauditorsareabletoarriveatanagreedreport.

• Ifdisagreement,then:• eachoneofthemshouldexpresshisopinionthroughaseparatereport.

• ajointauditorisnot boundbymajorityviewregardingmatterstobecoveredinthereportandshouldexpresshisopinioninaseparatereport.

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SA300PlanninganAuditofFinancialStatements


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• Objective• Requirements

• Involvement of Key Engagement Team Member• Preliminary Engagement Activities• Planning Activities• Documentation• Additional Considerations in Initial Audit

Engagements• ApplicationandOtherExplanatoryMaterialontheseAspects

• Appendix

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Scope&ObjectiveSCOPE• DealswithAuditor’sresponsibilitytoplanauditofFS.• Itisframedinthecontextofrecurringaudits.• Additionalconsiderationsidentifiedforinitialauditengagements.

Auditor’sObjectivePlananauditsothatengagementisperformedinaneffectivemanner.

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Requirements1. InvolveKeyEngagementTeamMembersinplanning

2. PreliminaryEngagementActivities• PerformproceduresrequiredbySA220reg.Clientacceptance,etc.

• Evaluatecompliancewithethicalrequirementsincludingindependence.

• EstablishunderstandingoftermsofengagementasperSA210

3. PlanningActivities• Establishoverallauditstrategy

• Developanauditplan

• Updateandchangeoverallauditstrategyandauditplanasnecessary

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Documentation• Overallauditstrategy:

• Necessary for proper planning & communicating significant matters to audit team.

• Auditplan:• Record of proper planning & review of audit

procedures for approval before use.

• Significantchangestooverallauditstrategy/auditplanandreasonsforchanges:

• Reflects appropriate response to these changes.

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AdditionalConsiderationsinInitialAuditEngagements

• Before starting initial audit engagement:• Perform procedures required under revised SA 220 – client

acceptance, etc.• Communicating with predecessor auditor.

• Additional matters to consider in Audit Strategy andAudit Plan:

• Any major issues discussed with management.• Audit procedures necessary regarding opening balances.• Other procedures required by firm’s QC system.

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SA315IdentifyingandAssessingtheRiskofMaterial

MisstatementsthroughUnderstandingtheEntity&ItsEnvironment


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• Risk Assessment Procedures and Related Activities• The Required Understanding of the Entity and Its Environment, includingInternal Control

• Identifying and Assessing the Risks of Material Misstatement• Material Weakness in Internal Control• Documentation

• Application and other Explanatory Material on these Aspects• Appendices

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Scope• Auditor’sresponsibilitytoidentify&assessrisksofmaterialmisstatementsinfinancialstatements.

• Throughunderstanding:• theentity.

• itsenvironment.

• itsinternalcontrols.

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Objective– oftheAuditor

Identify&assessriskofmaterialmisstatements

Understandtheentity

Financialstatement&Assertionlevel

Design&implementresponsestoassessedrisk

Entity’senvironment

Entity’sinternalcontrols

Fraud Error

Reducerisktoacceptablylowlevel

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RiskAssessmentProcedures(RAP)– Need

RAPEstablishframeworkofreferencefor:• AssessingriskofmaterialmisstatementsinFS.• Establishingandassessingcontinuedrelevanceofestablishedmaterialitylevels.

• Evaluatingappropriatenessofaccountingpolicies-selection&application,disclosures.

• Identifyingareasneedingspecialauditconsideration.• Developingexpectationswrt AnalyticalProcedures.• Respondingtoassessedriskofmaterialmisstatements.• Evaluatingsufficiency&appropriatenessofauditevidence.

However,RAPbythemselves,donotprovideSAAEonwhichtobasetheauditopinion

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RAPs– Types

Information from discussion among engagement team

Information from previous engagements & other audits

– significant changes that have occurred

Informationfromclientacceptanceorcontinuanceprocess

Informationfromotherengagementsdonefortheentity

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5ComponentsofInternalControl1. ControlEnvironment

2. Entity’sRiskAssessmentProcess

3. InformationSystemandCommunication

4. ControlActivitiesrelevanttoAudit

5. MonitoringofControls

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SA320MaterialityinPlanning&PerforminganAudit


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• Scope• MaterialityintheContextofanAudit• EffectiveDate

• Objective• Definition• Requirements

• DeterminingMaterialityandPerformanceMaterialitywhenPlanningtheAudit

• RevisionastheAuditProgresses• Documentation

• ApplicationandOtherExplanatoryMaterialontheseaspects

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SCOPE

ThisSADealswith

SA450Explains

Auditor’sresponsibility

ToApplytheconceptofmateriality

Inplanning&performingauditofFS

Applicationofmateriality

Identifiedmisstatements

onaudit

Evaluatingeffectof

Uncorrectedmisstatements

onFS

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MaterialityintheContextofanAudit

• FinancialReportingFrameworksoftendiscuss“materiality”incontextofpreparation&presentationofFSe.g.

• Misstatementsarematerialifinaggregate/individuallymayinfluenceeconomicdecisionsofusers.

• Auditor’sdeterminationofmaterialityisamatterofprofessionaljudgement

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• Conceptofmaterialityisappliedbytheauditorin:

• planningandperformingaudit,• evaluatingeffectofidentifiedmisstatementsonauditandofuncorrectedmisstatements,ifany,onFSand

• formingtheopinionintheauditor’sreport.

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DocumentationDocumentationRequirements

• MaterialityfortheFSasawhole.

• Ifapplicable,thematerialitylevelorlevelsforparticularclassesoftransactions,accountbalancesordisclosures

• Performancemateriality.

• Anyrevisionofaboveduringaudit

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SA330TheAuditor’sResponsestoAssessedRisks


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• Overall responses• Audit Procedures Responsive to the Assessed Risk of

material Misstatement at the Assertion level• Adequacy of Presentation & disclosures• Evaluating the sufficiency & appropriateness of audit

evidence• Documentation

• Application&OtherExplanatoryMaterialontheseAspects

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Scope&ObjectiveSCOPE• DealswithAuditor’sresponsibilityto:

• design & implement responses to risk of material misstatements identified & assessed in accordance with SA 315.

AUDITOR’SOBJECTIVE• ObtainSAAEabouttheassessedriskofmaterialmisstatement:

• through designing & implementing appropriate responses to risks.

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Definitions• SubstantiveProcedures

• AuditProceduresdesignedtodetectmaterialmisstatementsatassertionlevel.Theseinclude:

• Testsofdetails– classesoftransactions/accountbalances/disclosures

• Substantiveanalyticalprocedures

• TestsofControls• AuditProcedureforevaluatingoperatingeffectivenessofcontrolsinpreventing/detecting&correctingmaterialmisstatementatassertionlevel

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OverallResponses• Auditorrequiredtodesign&implementoverallresponses toaddressriskofmaterialmisstatementatFinancialStatementlevel.

• Theseinclude:• Emphasizingonprofessionalskepticism• Assigningmoreexperienced/skilledstafforexperts• Moresupervision• Incorporateunpredictabilityinauditprocedures• Generalchangestonature,timing&extentofauditprocedures

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SA402AuditConsiderationsRelatingtoanEntityUsinga

ServiceOrganisation


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• Objectives

• Definitions

• Requirements• Obtaining an Understanding of the Services provided by a ServiceOrganisation, including Internal Control

• Responding to the Assessed Risks of Material Misstatement• Type 1 and Type 2 Reports that Exclude the Services of a Sub-serviceOrganisation

• Fraud, Non-Compliance with Laws and Regulations and UncorrectedMisstatements in Relation to Activities at the Service Organisation

• Reporting by the User Auditor

• Application & Other Explanatory Material on these aspects

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Scope• DealswithAuditor’sResponsibilitytoobtainSAAE

• whenclientusesservicesofoneormoreServiceOrganizations(SO).

• ItexpandsonhowtoapplySA315&SA330insuchsituations

• Natureandextentofworktobeperformedbyuserauditordependson:

• nature&significanceofthoseservicestouserentityand• relevanceofthoseservicestotheaudit.

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Auditor’sObjectivesObtain Design & Perform

Understanding of services of SO

Nature &significance

Effect on Internal controls relevant to audit

Risk Responsive Audit procedures

Sufficient to identify & assess

Risk of Material

Misstatements

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ReportingbyUserAuditor• Modifiedopinionif:

• UnabletoobtainSAAEregardingservicesofSOrelevanttoauditofuserentity’sFS

• DonotrefertoworkofserviceauditorinunmodifiedauditorreportunlessrequiredbyL&R

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SA450EvaluationofMisstatementsIdentified

DuringtheAudit


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• AccumulationofIdentifiedMisstatements• ConsiderationofIdentifiedMisstatementsastheAuditProgresses• Communication&CorrectionofMisstatements• EvaluatingtheEffectofUncorrectedMisstatements• WrittenRepresentation• Documentation


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Scope• Dealswithauditor’sresponsibilitytoevaluateeffectof:

• Identifiedmisstatementsonauditand

• Uncorrectedmisstatement(ifany)onFS

• Auditor’sopinionasperSA700influencedby:• evaluationofimpactofuncorrectedmisstatementsonFSasperSA320.

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Evaluate:

• Effectofidentifiedmisstatementsonaudit AND

• Effectofuncorrectedmisstatements(ifany)onFS

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DefinitionsMisstatementDifferencebetweenamount,classification,presentation,disclosuresofreportedFSitemvis-à-vis:

• requirementsofFRF• includesadjustmentsasarenecessary,inauditor’sjudgment,toprovideTrue&Fairview

• canarisefromfraud/error

UncorrectedMisstatements• Misstatementsaccumulatedbyauditorduringtheauditand• thathavenotbeencorrected.

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MainRequirements• AccumulationofIdentifiedMisstatements

• auditorneedtoaccumulatemisstatementsidentifiedduringtheaudit,otherthanthosethatareclearlytrivial

• CommunicationandCorrectionofMisstatements• auditorneedtocommunicateonatimelybasisallmisstatementsaccumulatedduringauditwithappropriatelevelofmgt.unlessprohibitedbylaworregulation.

• auditorshallrequestmgt.tocorrectthosemisstatements

• EvaluatingeffectofUncorrectedMisstatements• auditorshalldeterminewhetheruncorrectedmisstatementsarematerial,individuallyorinaggregate.

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SA500AuditEvidence


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• Sufficient Appropriate Audit Evidence (SAAE)• Information to be used as audit evidence• Selecting items for testing to obtain audit evidence• Inconsistency/doubts over reliability of audit evidence

• Application and Other explanatory Material on theseAspects

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Scope

Explainswhatis Dealswith

AuditEvidencewrt auditofFS

Auditor’sResponsibility

ToDesign&PerformauditprocedurestoobtainSAAE

Drawreasonableconclusionstobaseauditopinion

SA500isapplicabletoallAuditEvidence

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ObjectiveoftheAuditor

• Design&performauditprocedures:• insuchawaythat• enablehimtoobtainSAAE

• tobeabletodrawreasonableconclusions• onwhichtobasetheauditor’sopinion

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ProceduresforObtainingAuditEvidenceInspection

Observation

Confirmation

Re-calculationRe-performance

AnalyticalProcedures

Inquiry

Inquiry alone, ordinarily, does not provide SAAE

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Inconsistency/Doubts

• Ifauditevidenceobtainedfromonesourceisinconsistentwiththatobtainedfromanother;

OR

• auditorhasdoubtsoverreliabilityofinformationtobeusedasauditevidence

Then• auditorshalldeterminewhatmodified/additionalauditproceduresarenecessarytoresolvethematter

AND

• shallconsidereffectofthematter,ifany,onotheraspectsoftheaudit.

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SA501AuditEvidence– SpecificConsiderations

forSelectedItems


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• ScopeofthisSA

• EffectiveDate

• Objective

• Requirements&Application• Inventory

• Litigation&Claims

• SegmentInformation

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Scope

• DealswithspecificconsiderationsbyauditorinobtainingSAAEw.r.t.certainaspectsof:

• Inventory• Litigation&claims• Segmentinformation

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Inventory Litigation&Claims

SegmentInfo

Existence&

ConditionCompleteness

Presentation&disclosureinaccordancewithFRF

ObtainSAAE

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Inventory

Auditor’sProcedures

Attendanceatphysicalinventorycounting

Auditinventoryrecords

Evaluatemgtinstructions&proceduresforrecording

&controllingresults

Observeperformanceofmgtprocedures

InspectinventoryPerformtestcounts

Recordsaccuratelyreflectactualinventorycountresults

AND

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Litigation&Claims

• Inquiry– ofmanagement&otherswithintheentity

• Review– minutesofmeetingsofTCWG,communicationbetweenentity&externallegalcounsel

• Review– legalexpensesaccount

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SegmentinformationObtainSAAErepresentation&disclosureofsegmentinfoinaccordancewithapplicableFRF:• Obtainunderstandingofmethodsusedbymgt indeterminingsegmentinfo

• EvaluatingwhethersuchmethodsarelikelytoresultindisclosureinaccordancewithapplicableFRF;and

• Whereappropriate,testingapplicationofsuchmethods

• Performinganalyticalproceduresorotherauditproceduresappropriateinthecircumstances

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SA505ExternalConfirmations


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• Scope• External Confirmation Procedures to Obtain AE

• Objective• Definitions• Requirements & Applications

• External Confirmation Procedures• Mgt refusal to allow auditor to send confirmation request• Results of external confirmation procedures• Negative confirmations• Evaluating audit evidence

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Scope• Dealswithauditor’suseofexternalconfirmationprocedures(ECP)toobtainAuditEvidenceinaccordancewithSA330&SA500

• Doesnotcoverinquirieswrt litigations&claims.

• ImportanceofECPasauditevidencerecognizedinotherSAse.g.SA330,SA240,SA500

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• WhenusingECPs,

• Istodesign&performsuchprocedurestoobtainrelevant&reliableauditevidence

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ExternalConfirmationProcedures

Maintain control over EC Requests including:

1 Determining info to be requested/ confirmed

2 Selecting appropriateconfirming party

3 Designing confirmation requests

4 Sending requests including follow-up requests to confirming party

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SA510InitialAuditEngagements-OpeningBalances


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• AuditProcedures• AuditConclusionsandReporting


• Appendix:IllustrationsofAuditors’Report

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Scope&ObjectiveSCOPE• Deals with auditor’s responsibility relating to openingbalances (OB):

• when conducting Initial Audit Engagement

OBJECTIVE§ Obtain SAAE in respect of OB about whether:

- OB contain material misstatements affecting current period FSand

- Appropriate accounting policies have been consistently appliedOR changes have been properly accounted for and adequatelypresented & disclosed in FS.

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Definitions• InitialAuditEngagement– AnengagementinwhichPriorPeriodFS

• Notaudited;or• Auditedbyapredecessorauditor.

• OpeningBalances– AccountingBalancesexistingatthebeginning

• Closingbalancesofpriorperiod– Reflecttheeffectofpriorperiodtransactionsandevents,andaccountingpoliciesapplied

• Disclosureofaccountsi.e.,contingencyandcommitments

• Predecessorauditor– Theauditorfromdifferentauditfirm

• AuditedFSinthepriorperiod• Replacedbycurrentauditor.

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AuditConclusionsandReportingQualifiedorDisclaimer

• UnabletoobtainSAAEwrt OB.

QualifiedorAdverse

• OBcontainmisstatements:• ThatmateriallyaffectcurrentFS,and

• Effectnotproperlyaccountedforordisclosed.

• Accountingpoliciesnotconsistentlyapplied.

• Accountingpolicieschanges notproperlyaccountedordisclosed.

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SA520ANALYTICALPROCEDURES


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• Objectives• Definition• Requirements&Application

• Substantiveanalyticalprocedures• Analyticalproceduresthatassistwhenforminganoverallconclusion

• Investigatingresultsofanalyticalprocedures

• Appendix

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Scope• Dealswithauditor’suseofanalyticalprocedures(AP)as:

• substantiveanalyticalprocedures(SAPs)AND

• proceduresneartheendofaudittohelpinforminganoverallconclusiononFS

• SA315dealswithuseofAPsasriskassessmentprocedures

• SA330includesrequirements&guidancewrt nature,timing,extentofauditprocedures(includingAP)inresponsetoassessedrisks

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OBTAIN DESIGN&PERFORM

Relevant&reliableauditevidencewhenusingSAPs

APsneartheendofauditwhenformingoverallconclusionwhetherFSareconsistentwithauditor’sunderstandingoftheentity

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MAINREQUIREMENTSSubstantiveAnalyticalProcedures• WhendesigningandperformingSAPs,auditorshall:

• DeterminesuitabilityofparticularSAPs• Evaluatereliabilityofdata• Developexpectationofrecordedamounts/ratios• Determineamountofanydifferenceofrecordedamountsvsexpectedvalues

APsthatAssistWhenForminganOverallConclusion• auditorshalldesignandperformAPsnearendofauditthatassisttheauditorwhenforminganoverallconclusionasto

• whethertheFSareconsistentwithauditor’sunderstandingofentity.

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SA530AUDITSAMPLING


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• SampleDesign,SizeandSelectionofItemsforTesting• PerformingAuditProcedures• NatureandCauseofDeviationsandMisstatements• ProjectingMisstatements• EvaluatingResultsofAuditSampling

• ApplicationandOtherExplanatoryMaterial• Appendices

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Scope• SAApplieswhenauditorhasdecidedtouseauditsamplinginperformingauditprocedures

• SAdealswithauditor’suseofstatisticalandnon-statisticalsamplingwhen-

• SA530complementsSA500

Designingandselectingauditsample

Performingtestsofcontrolsandtestsofdetails

Evaluatingresultsfromsample

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Objective

• ObjectiveofAuditorwhenusingAuditSamplingis:

• Toprovideareasonablebasistodrawconclusionsaboutpopulationfromwhichsampleisselected

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SampleDesign,SizeandSelectionofItemsSampleDesignoWhendesigningauditsample,Consider

• Purposeofauditprocedure• Characteristicsofpopulation

SampleSize• Shouldbesufficienttoreducesamplingrisktoacceptablylowlevel

SelectionofItems• Insuchawaythateachunithaschanceofselection

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Performingauditprocedures

• Performauditprocedures,appropriatetothepurpose,oneachitemselected.

• Ifauditprocedurenotapplicabletoselecteditem,performprocedureonreplacementitem

• Ifunabletoapplyauditprocedures/alternativeprocedures,toselecteditem,treatthatitemas

• adeviationfromtheprescribedcontrol,inthecaseoftestsofcontrols,or

• amisstatement,inthecaseoftestsofdetails

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SA540AuditingAccountingEstimates,IncludingFairValueAccountingEstimates,andRelatedDisclosures


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OverviewofSA540o Introduction


o Objectiveso Definitions

• Requirements• RiskAssessmentProceduresandRelatedActivities• IdentifyingandAssessingtheRisksofMaterialMisstatement• ResponsestotheAssessedRisksofMaterialMisstatement• FurtherSubstantiveProcedurestoRespondtoSignificantRisk• EvaluatingtheReasonablenessoftheAccountingEstimates(AE),andDetermining

Misstatements• DisclosuresRelatedtoAccountingEstimates• IndicatorsofPossibleManagementBias• WrittenRepresentations• Documentation

o ApplicationandOtherExplanatoryMaterialo Appendix

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Scope

Scope

ExpandsonapplicationofSA315SA330andotherrelevantSAs

inrelationtoAE

Dealswithauditor’sresponsibility

wrt AE,fairvalueAEAndrelateddisclosures

IncludesrequirementandguidanceonmisstatementsofindividualAE,

andindicatorsofpossiblemanagementbias

152 MPVijayKumarFCA

SomeExamples§ AccountingEstimates

• Allowancefordoubtfulaccounts• Inventoryobsolescence• Warrantyobligations• Depreciationmethodorassetusefullife• Provisionagainstthecarryingamountofaninvestment• Outcomeoflongtermcontracts• FinancialObligations/Costsarisingfromlitigationsettlementsandjudgments

§ FairValueAccountingEstimates• Complexfinancialinstruments,whicharenottradedinanactiveandopen

market• Share-basedpayments• Propertyorequipmentheldfordisposal• Certainassetsorliabilitiesacquiredinabusinesscombination,includinggoodwill

andintangibleassets• Transactionsinvolvingtheexchangepartieswithoutmonetaryconsideration

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Objective

• ObtainSAAEincontextofapplicableFRFthat:• AEincludingfairvalueAEintheFSarereasonable

AND

• relateddisclosuresintheFSareadequate

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RiskAssessmentProceduresandRelatedActivities

Auditortoobtainunderstandingof:

RequirementsofapplicableFRFrelevanttoAE,includingrelated

disclosures

Howmgt identifiestransaction,eventsandconditionsgivingrisetotheneedforAEtobedisclosedintheFS

Howmgt makesAEandunderstandingofthedataonwhichtheyarebased

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SA550RelatedParties(RP)


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OverviewofSA550Ø Introduction


ØObjectivesØDefinitionsØRequirements

• RiskAssessmentProceduresandRelatedActivities• IdentificationandAssessmentoftheRisksofMaterialMisstatementAssociated

withRelatedPartyRelationshipsandTransactions• ResponsestotheRisksofMaterialMisstatementAssociatedwithRelatedParty

RelationshipsandTransactions• EvaluationoftheAccountingforandDisclosureofIdentifiedRelatedParty

RelationshipsandTransactions• WrittenRepresentations• CommunicationwithThoseChargedwithGovernance• Documentation

ØApplication&OtherExplanatoryMaterialontheseaspects

157 MPVijayKumarFCA

Scope

• DealswithAuditor’sresponsibilities:• regardingRPrelationshipsandtransactionswhenperformingauditofFS.

• ExpandsonapplicationofSAs315,330,240wrt:• risksofmaterialmisstatementsassociatedwithRPrelationshipsandtransactions.

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ResponsibilitiesofAuditorPerformprocedurestoidentify,assessandrespondtoriskofmaterialmisstatementonaccountoffailuretoaccountfor/discloseRPrelationship,transactionandbalancesaslaiddownbyFRF.o EvaluatepresenceoffraudriskfactorsasperSA240.o EvenIfFRFestablishesminimalornorequirements–

• concludewhetherFSachieveatrue&fairview;and

• arenotmisleading

oAuditor’sinabilitytodetectmaterialmisstatementsisgreaterincaseofRPrelationship/Transactions.

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Auditor’sObjectives• ObtainanunderstandingofRPrelationships&transactions(irrespectiveofwhetherFRFestablishesRPrequirements)sufficienttobeableto:oRecognizefraudriskfactors.oConcludewhetherFS:

§ achieveatrueandfairpresentationand§ arenotmisleading.

• WhereFRFestablishesRPrequirements:oObtainSAAEaboutwhether:

§ RPrelationships&transactionsappropriatelyidentified,accountedfor&disclosedinFSinaccordancewithFRF.

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RiskAssessmentProcedures(RAPs)&RelatedActivities

RiskAssessmentProcedures&

RelatedActivities(SA315&SA240)

UnderstandingtheEntity’sRP

Relationships&Transactions

MaintainingAlertnessforRPInformationwhenreviewing

Records/Documents

SharingRPInformationwithEngagement

Team

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SA560SubsequentEvents(SE)


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§ Scope§ Effectivedate


§ EventsoccurringbetweenthedateoftheFinancialStatementsandthedateoftheAuditor’sReport

§ FactsWhichBecomeKnowntotheAuditorAftertheDateoftheAuditor’sReportbutBeforetheDatetheFinancialStatementsareIssued

§ FactsWhichBecomeKnowntotheAuditorAftertheFinancialStatementshavebeenIssued


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Scope

• DealswithAuditor’sresponsibilitiesrelatingtoSEinauditofFS.

• TwotypesofSE:• TYPE1:provideevidenceofconditionsthatexistedatdateofFS

• TYPE2:provideevidenceofconditionsthataroseafterdateofFS.

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Objectives

DateofFS

DateofAuditreport

DotheseSErequireadjustmentof/disclosureinFS

ObtainSAAE

FactsthatwouldhaveledtoamendedARifknownatdateofAR

Respondappropriately

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Definitions• DateofFS

• DateofendoflatestperiodcoveredbyFS

• DateofApprovalofFSDateonwhich• CompletesetofFSincludingtherelatednotesprepared;and• AppropriatepersonsassertresponsibilityforabovecompletesetofFS.

• DateofAuditor’sReport• DateofARonFSinaccordancewithSA700• CannotbebeforeSAAEobtainedtoformopinion• CannotbeearlierthanthedateofapprovalofFS

• DateofIssuanceofFS• WhenAR&auditedFSmadeavailableto3rdparties

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Definition– SubsequentEvents

(1)Eventsoccurringbetween:• ThedateofFS;andthedateofAR

AND(2)FactsthatbecomeknowntoauditorafterdateofAR.

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SA570GoingConcern(GC)


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OverviewofSA570§ Introduction


§ Objectives

§ Requirements• RiskAssessmentProceduresandRelatedActivities• EvaluatingManagement’sAssessment• PeriodBeyondManagement’sAssessment• AdditionalAuditProcedureswhenEventsorConditionsareIdentified• AuditConclusionsandReporting• UseofGoingConcernAssumptionAppropriatebutaMaterialUncertaintyExists

• UseofGoingConcernAssumptionInappropriate• ManagementUnwillingtoMakeorExtendItsAssessment• CommunicationwithThoseChargedwithGovernance• SignificantDelayintheApprovaloftheFinancialStatements

§ Application&OtherExplanatoryMaterialontheseAspects

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Scope

DealswithAuditor’sresponsibilityinAuditofFS

Wrt management’suseofGCAssumption

InthePreparation&PresentationofFS

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ResponsibilitiesofManagement• GC- afundamentalprincipleinpreparationofFinancialStatements

• ManagementtomakeaspecificassessmentofGCAssumption

• Judgmentaboutinherentlyuncertainfutureoutcomeofevents/conditions

• Period- atleast12monthsfromdateofFS• Basedon– Informationavailableatparticularpointoftime• Affectedby– Size&Complexityofentity,Nature&Conditionofbusiness

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ResponsibilitiesofAuditor

Obtain SAAE about appropriatenessof management’s use of GCassumption AND

Conclude whether there is materialuncertainty about entity’s ability tocontinue as GC

AbsenceofanyreferencetoGCuncertaintyinAuditor’sreport

nottobeviewedasguaranteeastoentity’sabilitytocontinueasGC

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§ ObtainSAAE:• aboutappropriatenessofuseofGCAssumptioninpreparation&presentationofFS.

§ Conclude,basedonauditevidence:• whetheramaterialuncertaintyexiststhatmaycastsignificantdoubtonentity’sabilitytocontinueasGC.

§ Determine• implicationsfortheauditor’sreport.

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SA580WrittenRepresentations


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OverviewofSA580o Introduction

• Scope• WrittenRepresentations(WR)asAuditEvidence• EffectiveDate

o Objectiveso Definitionso Requirements

• ManagementfromwhomWRRequested• WRaboutManagement’sResponsibilities• OtherWR• DateofandPeriod(s)CoveredbyWR• FormofWR• DoubtastotheReliabilityofWRandRequestedWRNotProvided

o Application&OtherExplanatoryMaterialontheseAspects

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Scope

DealswithAuditor’sResponsibilitytoobtainWRfrom

Management TCWG(whereappropriate)

176 MPVijayKumarFCA

WRasAuditEvidence

• WRarenecessaryauditevidence:• butdonotprovideSAAE.

• WRdonotdiluteauditor’sresponsibilitytoobtainotherauditevidenceformatterscoveredbyWR.

• IfMgt.modifiesordoesnotproviderequestedWR-

• possibilityofexistenceofoneormoresignificantissues.

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Supportotherauditevidence

ObtainWRthatMgt/TCWGhavefulfilledtheirresponsibilitiesreg:

PreparationoftheFSandCompletenessofinfo.providedtoauditor

Respondappropriatelyto:WRprovided,or

Mgt/TCWGrefusaltoprovideWR

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WRrequiredaboutManagement’sResponsibilities§ PreparationoftheFS:

§ CompliancewithapplicableFRF.

§ InformationProvided&completenessoftransactions:§ HasprovidedallrelevantinformationandaccessasagreedintermsofAuditEngagement.

§ Alltransactionsrecorded&reflectedinFS.

§ Descriptionofmanagement’sresponsibilitiesinWR§ Management’sresponsibilitiesshallbedescribedinWRinthemannerinwhichtheseresponsibilitiesdescribedintermsofauditengagement

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SA600UsingtheWorkofAnotherAuditor

EffectiveforallauditsrelatingtoaccountingperiodsbeginningonorafterApril1,2002

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Introduction

• Establishesstandardsforapplicationinsituationswhereauditorusestheworkofanotherauditor.

• Doesnotcover:• Jointaudits.• Relationshipwithpredecessorauditor.

• Considerhowotherauditor’sworkaffectstheaudit.

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DefinitionsPrincipalAuditor(PA):• Auditorresponsibleforfinancialinformation(FI)ofanentitywhenitincludesFIofoneormorecomponentsauditedbyanotherauditor.

OtherAuditor(OA):• Auditor,otherthanPA,whoisresponsibleforreportingonFIofacomponentwhichisincludedinFIauditedbythePA.

Component:• Division,branch,subsidiary,jointventure,associatedenterpriseoranyotherentitywhoseFIisincludedinFIauditedbyPA.

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PA’sProcedures• ConsidertheprofessionalcompetenceofOA,ifOAisnotamemberofICAI.

• Visitcomponentandexaminebooksofaccount,ifessential.

• Obtainsufficientappropriateevidence,thatworkofOAisadequateforPA'spurposes.

• DiscussauditproceduresappliedbyOA.

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PA’sProcedures• ReviewawrittensummaryofOA’sproceduresandfindingsthroughquestionnaires/checklist.

• ConsidersignificantfindingsofOA:• discussauditfindingswithOAandMgt.ofcomponent.• performsupplementaltestsifnecessary.

• IncaseOAisnotaprofessionallyqualifiedauditor- forinstance,whereacomponentissituatedinforeigncountry:

• Proceduresmentionedaboveassumeaddedimportance.

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DocumentationComponentswhoseFSareauditedbyOAandtheirsignificancetothefinancialinformationoftheentityasawhole.

• Namesoftheotherauditors.• Anyconclusionsreachedthatindividualcomponentsarenotmaterial.

• Proceduresperformedregardingcomponents.• Conclusionsreached.• MannerofdealingwithModifiedReportofOAwhilefinalising PA’sReport.

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Co-ordinationBetweenAuditors

• Sufficientliaison/co-ordinationbetweenPAandOA.• PAmayrequireOAtoansweradetailedquestionnaire.

• OAshouldcoordinatewithPA:• adheringtotime-table.• bringingtotheattentionofPAanysignificantfinding.• compliancewithrelevantstatutoryrequirements.• respondtodetailedquestionnaire.

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ReportingConsiderations

• Expressaqualified/disclaimerofopinionbecauseofscopelimitation:

• ifPAconcludesthathecannotusetheworkofOAand• PAunabletoperformsufficientadditionalproceduresregardingFIofthecomponentauditedbyOA.

• ReportshouldstateclearlydivisionofresponsibilitybetweenPAandOA.

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SA610UsingtheWorkofInternalAuditors


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OverviewofSA610Introduction


§ Objectives§ Definitions§ Requirements

• DeterminingWhetherandtoWhatextenttousetheworkoftheInternalAuditors

• UsingSpecificWorkoftheInternalAuditors• Documentation

§ ApplicationandOtherExplanatoryMaterial

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Scope

1. DealswithExternalAuditor’sresponsibility:a) Regardingtheworkofinternalauditorsb) Whenexternalauditorhasdeterminedin

accordancewithSA315that• internalauditfunctionislikelytoberelevanttoaudit

2. Doesnotdealwith caseswhereinternalauditorsprovidedirectassistancetoexternalauditorsincarryingoutauditprocedures

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RelationshipbetweenInternalAuditFunction&ExternalAuditor

§ Role&objectivesofinternalauditfunctiondeterminedbyMgt/TCWG.

§ IrrespectiveofDegreeofautonomy/objectivity,internalauditfunctionisnot independentofentity.

§ externalauditorhassoleresponsibilityforauditopinion,and

• thatresponsibilitynotreducedbyuseofworkofinternalauditors.

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Auditor’sobjectives

Ifexternalauditordeterminesinternalauditfunctionlikelytoberelevanttoaudit,heneedstodetermine:

• whether&towhatextenttousespecificworkofinternalauditors;and

• Ifso,whethersuchworkisadequateforexternalauditpurpose.

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UsingSpecificWorkofIAEvaluatetheworktodetermineitsadequacywhether:

• WorkwasperformedbyIAhavingadequatetechnicaltraining&proficiency.

• Workwasproperlysupervised,reviewed&documented.

• AdequateauditevidenceobtainedbyIA.• Conclusionsreachedareappropriate&IAreportsareconsistentwithresultsofwork.

• Exceptions/unusualmattersdisclosedbyIAareproperlyresolved.

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SA620UsingtheWorkofAnAuditor’sExpert


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• Scope• Theauditor’sresponsibilityfortheauditopinion• Effectivedate

• Objectives• Definitions• Requirements&Application

• Determiningtheneedforanauditor’sexpert• Nature,timing&extentofauditprocedures• Competence,capabilities&objectivityoftheauditor’sexpert• Obtaininganunderstandingoffieldofexpertiseofauditor’expert• Agreementwiththeauditor’sexpert• Evaluatingtheadequacyoftheauditor’sexpert’swork• Referencetotheauditor’sexpertinauditreport

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ScopeofSA

Auditor’sresponsibilities

Individualororganisation’s work

AuditorusesthisworkinobtainingSAAE

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ResponsibilityforAuditOpinion

• Auditopinionissoleresponsibilityofauditor

• Thatresponsibilitynotreducedbyuseofworkofauditor’sexpert

• Nonetheless,IfrequirementsofthisSAarefollowed&auditorconcludesexpert’sworkisadequate,hemayacceptthatworkasSAAE.

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Determine

Whethertouseworkof

auditor’sexpert

Ifyes,whetherthatworkisadequate

forauditor’spurposes

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Competence,Capabilities&ObjectivityofAuditor’sExpert• Evaluatecompetence,capability&objectivityofexpert

• IfExternalexpert- inquireintointerestsandrelationshipsthatthreatenobjectivity

• Competence• nature&levelofexpertise

• Capability• abilitytoexercisecompetenceincircumstancesofengagement

• Objectivity• possibleeffectsthatbias/conflictofinterest/influenceofothersmayhaveonprofessional/businessjudgment

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SA700ForminganOpinion&ReportingonFinancial

Statements


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§ Objectives§ Definitions§ Requirements

• ForminganopiniononFS• Formofopinion• Auditor’sreport• SupplementaryinformationpresentedwithFS

• ApplicationandOtherExplanatoryMaterial• Appendix- IllustrativeFormatsofAuditorReport

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Scope• Dealswithauditor’sresponsibilitytoformanopinionontheFS

• Alsodealswithform&contentofauditor’sreportissuedasaresultofanauditofFS

• Modifiedopinion,EMP,OMPdealtwithbySA705&706• SA700writtenincontextofgeneralpurposeFS

• FSunderspecialpurposeframeworkdealtbySA800&SA805

• Itpromotesconsistencyinauditreports

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• FormanopiniononFSbasedonevaluationofconclusionsdrawnfromauditevidence

AND• Express clearlythatopinionthroughawrittenreportthatalsodescribesthebasisforopinion

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ForminganOpiniononFS

• WhetherFSarepreparedinallmaterialrespectsinaccordancewithapplicableFRF

• Toformthisopinion,auditorneedstoconcludewhetherhehasobtainedreasonableassurancethatFSasawholearefreeofmaterialmisstatements(fraud/error)

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FormofOpinion

• UNMODIFIEDOPINION:• AuditorconcludesFSarepreparedinallmaterialrespectsasperapplicableFRF

• MODIFIEDOPINION(dealtbySA705):• Basedonauditevidence,auditorconcludesFSasawholenotfreefrommaterialmisstatements OR

• AuditorunabletoobtainSAAEthatFSasawholearefreefrommaterialmisstatements

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Auditor’sReport

• Shallbeinwriting• Writtenreportencompassesreportsissued:• inhardcopyformatAND• usingelectronicmedium

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TitleAddresseeIntroductoryParaMgt ResponsibilityforFSParaAuditor’sResponsibilityParaAuditor’sOpinionOtherReportingResponsibilities

SignatureoftheAuditor

DateoftheAuditor’sReport

PlaceofSignature

AuditReportforAudits

ConductedinAccordancewithSAs

ELEMENTS

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SA705ModificationstotheOpinioninthe

IndependentAuditor’sReport


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• Objective• Definitions• Requirements&applications

• Circumstanceswhenmodificationofauditor’sopinionisrequired

• Determiningtypeofmodificationtoauditopinion• Form&contentofauditreportwithmodifiedopinion

• CommunicationwithTCWG

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Scope

• DealswithAuditor’sresponsibilitytoIssueanappropriatereportincircumstanceswhen:§ InforminganopinionasperSA700,Auditorconcludesthatamodificationtoauditor’sopinionisnecessary

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TypesofModifiedOpinions

Qualified Adverse Disclaimer

Natureofmattergivingrisetomodification

Auditor’sjudgmentrepervasivenessofeffects/possibleeffectsofmatteronFS

WhetherFSaremateriallymisstated

InabilitytoobtainSAAEleadingtopossiblematerialmisstatementinFS

AffectingFactors

AND

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• Expressclearlyanappropriatelymodifiedopinionthatisnecessarywhenauditor:

• CONCLUDES (basedonauditevidenceobtained)thatFSareasawholenotfreefrommaterialmisstatements

OR• UNABLE toobtainSAAEtoconcludethatFSasawholearefreeofmaterialmisstatements

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DeterminingtheTypeofModificationtoAuditor’sOpinion

NatureofMatterGivingRiseto

theModification

Auditor’sJudgmentaboutthePervasivenessoftheEffectsor

PossibleEffectsontheFSMaterialbutNot

PervasiveMaterialand

PervasiveFSarematerially

misstatedQualifiedopinion

Adverseopinion

InabilitytoobtainSAAE

Qualifiedopinion

Disclaimerofopinion

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SA706EmphasisofMatterParagraphsandOtherMatterParagraphsintheIndependentAuditor’sReport


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• Objective• Definitions• Requirements&Application

• Emphasisofmatterparagraphs• Othermatterparagraphs• CommunicationwithTCWG

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Scope&Auditor’sObjectives

• DealswithAdditionalcommunicationinauditreport(AR)

• Whenauditorconsidersitnecessarytodrawusers’attentionto:

• Matter/spresentedordisclosedinFSthatareofsuchimportancethattheyarefundamentaltousers’understandingofFS

OR• Matter/sotherthanthosepresented/disclosedinFSthatarerelevanttousers’understandingofaudit/auditor’sresponsibilities/AR

216 MPVijayKumarFCA

EMPinAuditReport

• MattersfundamentaltounderstandingofFS• AuditorshouldhaveobtainedSAAEthatmatterisnotmateriallymisstatedinFS

• EMPtoreferonlytoinfopresented/disclosedinFS

• WidespreaduseofEMPreduceseffectivenessofauditor’scommunicationofsuchmatters

• MoreinfoinEMPthanFSmayimplymatternotadequatelypresenteddisclosedinFS

• Thus,EMPlimitedtomatterpresented/disclosedinFS

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OMPinAuditReport

• IncludeifnotprohibitedbyL&R• Useheading“OtherMatter”/otherappropriateheading

• Placement:• immediatelyafterOpinionpara&EMPor• elsewhereifOMPisrelevanttoOtherReportingResponsibilitiessection

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SA710ComparativeInformation– CorrespondingFigures

andComparativeFinancialStatements


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Overview§ Introduction


§Objectives§Definitions§ Requirements&Application

• Auditprocedures• Auditreporting

§ Appendix:Illustrativeauditor’sreports

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Definition- ComparativeInformation

Amountsanddisclosures

IncludedinFS

Inrespectofoneormorepriorperiods

InaccordancewithapplicableFRF

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Scope• Dealswithauditor’sresponsibilitiesrelatingtocomparativeinfoinauditofFS

• WhenpriorperiodFSwereauditedbyanotherauditororwerenotaudited:

• RequirementsofSA510wrt openingbalancesalsoapply

• NatureofComparativeInfo:• DependsuponapplicableFRF.• Twoapproaches:

• Correspondingfigures• ComparativeFS

• ApproachoftenspecifiedbyL&R• Mayalsobespecifiedbytermsofengagement

222 MPVijayKumarFCA

CorrespondingFiguresvisavisComparativeFS– Auditreportingdifferences

CorrespondingFigures ComparativeFSAuditor’s opinion on FSrefers to current periodonly

Auditor’s opinion refers toeach period for which FSare presented

SA710separatelycoversauditreportingforbothtypesofapproaches

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Auditor’sObjectivesOBTAIN REPORT

SAAE

Whethercomparativeinfo(CI)includedinFShasbeenpresented

inallmaterialrespectsinaccordancewithrequirementsofapplicableFRF

Inaccordancewithauditor’sreportingresponsibilities

and

224 MPVijayKumarFCA

SA720TheAuditor’sResponsibilitiesinRelationtoOtherInformationinDocumentsContaining

AuditedFinancialStatements


225 MPVijayKumarFCA




• ReadingOtherInformation(OI)• MaterialInconsistencies• MaterialMisstatementofFact

• Application&OtherExplanatoryMaterialontheseaspects

226 MPVijayKumarFCA

Scope• Dealswithauditor’sresponsibilitywrt otherinformation(OI)indocumentscontaining:

• auditedFSandauditor’sopinionthereon.

• Unlessanyspecificrequirementinanengagement:• Auditor’sopiniondoesnotcoverOI.• AuditorhasnospecificresponsibilitytodeterminewhetherOIisproperlystated.

• BUT,needtoreadtheOI since:• inconsistenciesofOIvis-a-visauditedFSunderminesthecredibilityoftheauditedFS.

227 MPVijayKumarFCA


• Respondappropriately:§wheresuchotherinformationcouldunderminecredibilityofauditedFSandAuditReport.

228 MPVijayKumarFCA

DefinitionsOtherInformation(OI)§ Financial&non-financialinformation,Includedbylaw/regulation/custom,indocumentscontainingauditedFSandAuditReport.Examples:

• Reportbymanagement/TCWG.• Financialsummaries/highlights.• Financialratios.• Selectedquarterlydata.

• Doesnotinclude:• Pressrelease/transmittalmemorandumaccompanyingthedocumentscontainingauditedFS.

• Informationcontainedinanalystbriefings.• Informationonentity’swebsite.

229 MPVijayKumarFCA

DefinitionsInconsistency• OIthatcontradictsinformationcontainedinauditedFS.

• Mayraisedoubtabout:• auditconclusionsdrawnfromauditevidenceobtainedearlier.

• basisofauditopiniononFS.

MisstatementofFact• OIthatis:

• unrelatedtoauditedFSand• incorrectlystated/presented.

• MayunderminecredibilityofauditedFS.

230 MPVijayKumarFCA

MainRequirementsReadingOI• ReadOItoidentifymaterialinconsistenciesvis-a-visauditedFS.

• Makeappropriatearrangementswithmgt/TCWGtogetOIbeforedateofAuditReport:§ Helpstimelyresolutionofpossiblematerialinconsistency/misstatementoffacts.

§ AgreementwithmanagementastotimeofavailabilityofOI.§ Ifnotpossiblebefore,thengetOI,assoonaspracticable.

MaterialInconsistencies• Itmaterialinconsistenciesidentified:

§ DeterminewhetherauditedFSorOIneedsrevision

231 MPVijayKumarFCA

StandardonQualityControl(SQC)1QualityControlforFirmsthatPerformAudits&ReviewsofHistoricalFinancialInformation,andOtherAssurance&

RelatedServicesEngagements

EffectiveforallEngagementsrelatingtoaccountingperiodbeginningonorafterApril1,2009

232 MPVijayKumarFCA

Objective

• Firm’s responsibility for its system of quality control for:• Audits and reviews of historical financial information

• Other assurance and related services engagements

Note:• QualitycontrolresponsibilityoffirmpersonnelforspecificengagementssetoutinotherStandards,

e.g., SA 220.

233 MPVijayKumarFCA

Parameters

SQC1istobereadinconjunctionwith

• TheCharteredAccountantsAct,1949• CodeofEthics• OtherrelevantpronouncementsofICAI

Collectivelyknownas“theCODE”.

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SystemofQualityControl

Allfirmsshouldestablishasystemofqualitycontrolthatprovidesreasonableassurancethat:

• Firm&itspersonnelcomplywithprofessionalstandards,regulatory&legalrequirements.

• Reportsissuedbyfirmorpartnersareappropriateinthecircumstances.

235 MPVijayKumarFCA

Definitions

• Engagementdocumentation• Engagementpartner• Engagementquality

controlreview• Engagementqualitycontrol

reviewer• Engagementteam• Firm• Inspection• Listedentity

•Monitoring• Networkfirm• Network• Partner• Personnel• Professionalstandards• Reasonableassurance• Staff• Suitablyqualified

externalperson

236 MPVijayKumarFCA

ElementsofSystemofQualityControl

1. Leadershipresponsibilitiesforquality

2. Ethicalrequirements

3. Clientacceptance/continuance

4. Humanresources

5. Engagementperformance

6. Monitoring

237 MPVijayKumarFCA

Documentation

§ DocumentQCpolicies&procedures

§ Communicatetoallfirmpersonnel:• descriptionofQCpolicies• objectivestobeachievedtherefrom• allresponsibleforquality• allexpectedtocomply

§ ObtainfeedbackonQCsystemfrompersonnel

238 MPVijayKumarFCA

SA800SpecialConsiderations– AuditofFinancialStatements

PreparedinAccordancewithSpecialPurposeFrameworks


239 MPVijayKumarFCA


• Scope

• Effectivedate

§ Objective

§ Definitions

§ Requirements&Applications• considerationswhenacceptingtheengagement• considerationswhenplanning&performingtheaudit• forminganopinion&reportingconsiderations

240 MPVijayKumarFCA

ScopeofSA800• DealswithspecialconsiderationsintheapplicationofotherSAs:

• ToauditofFSpreparedinaccordancewithaspecialpurposeframework(SPF)

• WritteninthecontextofcompletesetofFSpreparedinaccordancewithaSPF

• DoesnotoverriderequirementsofotherSAs;

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Auditor’sObjectiveAddressappropriatelyspecialconsiderationsrelevantto:

• Engagementacceptance

• Engagementplanning&performance

• Formingopinion&reportingonFS

242 MPVijayKumarFCA

EngagementAcceptance- Considerations• Obtainunderstandingof:

• PurposeforwhichFSareprepared• Intendedusers• Stepstakenbymgt todeterminethatapplicableFRFisacceptable

243 MPVijayKumarFCA

Planning&PerforminganAudit–Considerations• DeterminewhethertheapplicationofSAsrequirespecialconsiderationsincircumstancesoftheengagement

244 MPVijayKumarFCA

ForminganOpinion&ReportingConsiderationsApplySA700(R)Also:• DescribethepurposeforwhichFSareprepared&intendedusers

• Ifmgt hasachoiceofFRFsinthepreparationofFS:• Explanationofmgt’s responsibilityfortheFSmakereferencetoitsresponsibilityfordeterminingacceptabilityofapplicableFRF.

• EvaluatewhetherFSadequatelydescribetheFRFapplied• IncludeEmphasisofMatterparatoalertusersreapplicationofspecialpurposeFRF

• FSmaynotsuitableforanotherpurpose

245 MPVijayKumarFCA

SA805SpecialConsiderations– AuditsofSingleFS&SpecificElements,AccountsorItemsofFS

Effectiveforauditsofsinglefinancialstatementsorofspecificelements,accountsoritemsforperiods

beginningonorafterApril1,2011

246 MPVijayKumarFCA



• Objective

• Definitions

• Requirements&Application• Considerationswhenacceptingtheengagement• Considerationswhenplanning&performingtheaudit• Forminganopinionandreportingconsiderations

247 MPVijayKumarFCA

Scope• SA 805 deals with special considerations in applicationof Other SAs to:

• Audit of single financial statements (SFS)• Specific element/account/ item of FS (EFS)

• IT DOES NOT:• Apply to the report of component auditor• Override the requirements of other SAs• Deal with all special considerations that may be relevant inthe circumstances of the engagement

248 MPVijayKumarFCA

Auditor’sObjective• Addressappropriatelyspecialconsiderationsrelevantto:

• Acceptanceoftheengagement• Planning&performanceofthatengagement• Forminganopinion&reportingonSFS&EFS

249 MPVijayKumarFCA

ApplicationofSAs• SA200requirescompliancewithallSAsrelevanttoaudit

• ThisappliestoauditofSFSeveniftheauditoralsoauditsthecompleteFS.

• IfauditornotalsoengagedtoauditthecompleteFS,considerthepracticabilityofauditofSFSinaccordancewithSAs.

250 MPVijayKumarFCA

AcceptabilityofFRF§ AuditortodetermineacceptabilityofFRF(SA210)

§ ConsiderwhetherFRFincludesallrequirementsrelevanttopreparationofSFS/EFS

§ ForauditofSFS,determine:• WhetherapplicationofFRFwillresultinpresentationthatprovidesadequatedisclosurestoenableintendeduserstounderstandinfoconveyedinSFSand

• EffectofmaterialtransactionsandeventsoninfoconveyedinSFS

251 MPVijayKumarFCA

FormofOpinion• ExpectedformofopiniondependsuponapplicableFRF&applicableL&R

• Communicateexpectedformofreport– SA210• Considerwhetherexpectedformofopinionisappropriateinthecircumstances

252 MPVijayKumarFCA

Planning&PerformanceConsiderations

• AdaptallSAsasnecessaryintheauditofSFS• CarefulconsiderationofrelevanceofeachSAisnecessary

• WhenauditingSFSinconjunctionwithfullFS,auditevidenceobtainedaspartofauditoffullFSmaybeusefulBUTauditorneverthelessneedstoplan&performauditofSFStoobtainSAAE

• SomeitemsfromcompleteFSmaybeinterrelatedwithEFS

• Auditorwouldneedtoperformproceduresonsuchinterrelateditems

• MaterialityofSFS<materialityforfullFS

• AffectsNatureTimingExtentofauditprocedures

253 MPVijayKumarFCA

FormingOpinion&Reporting-Considerations• ApplySA700,asnecessary.• IfalsoengagedtoreportonfullFS,expressseparateopiniononeachengagement.

• IfauditedSFSpublishedwithentity’sauditedfullFS,presentationofSFSshouldbeclearlydifferentiatedfromfullFS.

• DonotissueauditreportonSFSuntilsatisfiedwiththedifferentiation.

254 MPVijayKumarFCA

SA810EngagementstoReporton

SummaryFinancialStatements

Effectiveforauditsofsinglefinancialstatementsorofspecificelements,accountsoritemsforperiodsbeginningonorafterApril1,2011

255 MPVijayKumarFCA



• Objectives• Definitions• Requirements&Application

• Engagementacceptance• Natureofprocedures• Formofopinion• Timingofworkandeventssubsequenttothedateofauditor’sreport• Auditreportonsummaryfinancialstatements• Restrictionondistributionoruse• Comparatives• Unauditedsupplementaryinformationpresentedwithsummaryfinancialstatements

• Otherinformationindocumentscontainingsummaryfinancialstatements• Auditorassociation

256 MPVijayKumarFCA

Scope• Dealswithauditor’sresponsibilities:

• Whenundertakingengagementtoreportonsummaryfinancialstatements(SFS)

• DerivedfromFSauditedinaccordancewithSAbythatsameauditor

257 MPVijayKumarFCA

Objectives

DETERMINEAPPROPRIATENESS

FORMOPINIONONSFS

EXPRESSTHEOPINIONCLEARLY

OfacceptingtheengagementtoreportonSFS

Basedonevaluationofconclusionsdrawnfromevidenceobtained

Throughwrittenreportthatalsodescribesbasisfor

thatopinion

258 MPVijayKumarFCA

EngagementAcceptance• AuditorshallOrdinarily accepttheengagementtoreportonSFSonlywhen:

• AlsoengagedtoconductauditinaccordancewithSAsofthoseFSfromwhichtheseSFShavebeenderived.

259 MPVijayKumarFCA

BeforeAcceptingtheEngagement

DETERMINEwhetherappliedcriteriaareacceptable

OBTAINmgt agreementthatitacknowledges&understandsitsresponsibilities

AGREEwithmgt theformofopiniontobeexpressedonSFS

Donotacceptengagementif:• criteriaareunacceptableOR• unabletoobtainmgt agreementunlessrequiredbyL&R

260 MPVijayKumarFCA

SRE2400EngagementstoReviewFinancialStatements

EffectiveforreviewsoffinancialstatementsforperiodsbeginningonorafterApril1,2010.

261 MPVijayKumarFCA

OverviewofSRE2400• Introduction• Objective of a Review Engagement• General Principles of a Review Engagement• Scope of a Review• Moderate Assurance• Terms of Engagement• Planning• Work Performed by Others• Documentation• Procedures and Evidence• Conclusions and Reporting• Effective Date• Appendices

262 MPVijayKumarFCA

PurposeofSRE2400Establishstandards&provideguidance

ReviewofFinancialStatements

Practitioner’sprofessionalresponsibilities

Form&contentofreviewreport

Nottheauditoroftheentity

Ifauditorperformsreviewofinterimfinancialinformation,applySRE2410

263 MPVijayKumarFCA

ObjectiveofaReviewEngagementEnablethepractitioner

ToState

OnbasisofProcedures

Attention

BelieveFSarenotprepared

inallmaterialrespectsinaccordancewith

applicableFRF

NEGATIVEASSURANCE

264 MPVijayKumarFCA

GeneralPrinciples• ComplywithICAICodeofEthics.• ConductreviewinaccordancewiththisSRE.• Exerciseprofessionalskepticismwhile:

• Planningreview.• Performingreview.

• Obtainsufficientappropriateevidence:• Forexpressingnegativeassurance.• Primarilythroughinquiry&analyticalprocedures.

265 MPVijayKumarFCA

ScopeofReview• ReferstoReviewproceduresdeemednecessaryincircumstancestoachieveobjectivesofreview.

• Proceduresshouldbedeterminedhavingregardtorequirementsof:

• ThisSRE.

• Relevantprofessionalbodies.

• Legislation&regulation.

• Termsofengagement.

• Reportingrequirements.

266 MPVijayKumarFCA

TermsofEngagement• AgreeToE withtheclient:

• Engagementletter.

• Othersuitableformofcontract.

• Sendtoclientanengagementletterdocumentingkeytermsofappointment:

• Confirmspractitioner’sacceptanceofappointment.

• Avoidsmisunderstandingsreg.objectives&scope.

• Clarifiespractitioner’sresponsibility.

• Assistsinplanningthereview.

• ClarifiesFormofreporttobeissued.

267 MPVijayKumarFCA

RevisedSRE2400Engagementsto

ReviewHistorical FinancialStatements

EffectiveforReviewsofFSforperiodsbeginningonorafterApril1,2016

268 MPVijayKumarFCA

AttheOutset...• ThereisnoconceptualchangeinrevisedSRE2400• ContinuestoapplytopractitionerswhoareNOT statutoryauditorsofclient,iftheyundertake:

• Reviewoffullhistorical financialstatements• Reviewofinterimfinancialstatements/information

269 MPVijayKumarFCA

NeedforRevision....• Makingclearthedistinguishingfeaturesofareviewengagement

• Promoteclarityamongusersaboutthenatureofreview

270 MPVijayKumarFCA

EnhancedGuidance/Updations

271 MPVijayKumarFCA

LimitedAssurance.....TermintroducedinrevisedSRE2400

• InlinewithconceptsofreasonablevslimitedassuranceinFrameworkforAssuranceEngagements

• Helpsbetterexplainnatureofareviewengagement

§ Applicationoflimitedproceduresvisavisafullfledgedaudit

• Normally,limitedtoinquiriesandanalyticalprocedures

272 MPVijayKumarFCA

SufficientAppropriateEvidence(SAE)• Existingconcept

• Reiteratedinvariousparastohighlightthat:

• SAEisimportantforreachingbasisofconclusionandreportasenvisagedbytheStandard

• Evidencegatheringisasmuchanessentialelementofareviewengagement

• Reviewisnota“procedurebased”(or“checkbox”)engagement

273 MPVijayKumarFCA

PerformingtheReviewEngagementReiterates:• Considerationandroleofprofessionaljudgmentwrt whatotherprocedurestouse

• Inadditiontoanalyticalprocedures/inquiry,incaseswheresoconsiderednecessarybythepractitioner

• Importanceofcohesionbetweenknowledgeofentity&itsenvironment,FRF&professionaljudgment

• Todesign&performprocedurestofocusonareaswherematerialmisstatementsarelikelytoarise

• Todesign&performotherprocedures,whererequired

274 MPVijayKumarFCA

Reporting• ElementsbroughtinlinewithSA700.Includes:

• Introduction• Management’sResponsibility• Practitioner’sResponsibility• Descriptionofreview&itslimitations• Conclusions

• ConceptsbroughtinfromSA705&SA706:• Modificationto“conclusions”• EmphasisofMatter• OtherMatters

• MannerofReporting• Nochange,same“Negative”Reporting

• “Nothinghascometoourattention........”

275 MPVijayKumarFCA

OtherRevisions• Expresslyincludednow:

• Donotacceptreviewengagementifnotsatisfiedthatreviewwouldbeappropriateinthecircumstances

• Engagementpartnerto

– possesscompetenceinassuranceskillsandtechniques,&competenceinfinancialreporting,appropriatetothecircumstances

– Takeresponsibilityforengagementteam–collectivelyhavecompetence&capabilities

276 MPVijayKumarFCA

ObjectivesofthePractitioner

ObtainLIMITEDAssurance

Report&Communicate

FSarefreeofMaterialMisstatement OnFSasawhole

Inquiry AnalyticalProcedures

277 MPVijayKumarFCA

SRE2410ReviewofInterimFinancialInformation

PerformedbytheIndependentAuditoroftheEntity

EffectiveforreviewsofinterimfinancialinformationforperiodsbeginningonorafterApril1,2010

278 MPVijayKumarFCA

OverviewofSRE2410• Introduction• General Principles of a Review of IFI• Objective of an Engagement to Review IFI• Agreeing the Terms of the Engagement• Procedures for a Review of IFI• Evaluation of Misstatements• Management Representations• Auditor’s Responsibility for Accompanying Information• Communication• Reporting the Nature, Extent & Results of Review of IFI• Documentation• Effective date• Appendices

279 MPVijayKumarFCA

InterimFinancialInformation• Financialinformation:

• Prepared&presentedinaccordancewithapplicablefinancialreportingframework.

• Compriseseitheracompleteorcondensedsetoffinancialstatements.

• Foraperiodthatisshorterthanentity’sFY.

280 MPVijayKumarFCA

SREApplicationMatrix

ReviewofFinancialStatements

ReviewofInterimFinInfo

Independentauditor SRE2400 SRE2410Otherpractitioner SRE2400 SRE2400

Why separate SRE 2410 for Independent Auditors?

• For audit engagements, independent auditor would have obtainedunderstanding of entity and its environment including internal control.

• For reviewing IFI he updates this understanding through inquiry &analytical procedures.

• Other practitioner does not ordinarily have the same level of understanding.• Need for different inquiries & procedures

281 MPVijayKumarFCA

GeneralPrinciplesofReviewofIFI• ComplywithethicalrequirementsapplicabletoauditofannualFSofentity.

• Implementqualitycontrolproceduresapplicabletoindividualengagement.

• Plan&performengagementwithattitudeofprofessionalskepticism.

282 MPVijayKumarFCA

ObjectiveofEngagementtoReviewIFI• Enable auditor to express a conclusion whether

• On the basis of the review

• Anything has come to auditor’s attention

• That causes auditor to believe

• That IFI is not prepared in all material respectsin accordance with applicable FRF.

283 MPVijayKumarFCA

AgreeingtheTermsofEngagement• Auditor&clientshouldagreeonToE.

• ToE ordinarilyrecordedinengagementletter.

• Helpsavoidsmisunderstandingswrt:• natureofengagement.• objectiveandscopeofreview.• management’sresponsibilities.• auditor’sresponsibilities.• assuranceobtained.• natureandformofreport.

284 MPVijayKumarFCA

SAE3400TheExaminationofProspectiveFinancial

Information(PFI)

Effectiveinrelationtoreportsonprojections/forecastsissuedonorafterApril1,2007

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Introduction- I• Establishesstandardsonengagementstoexamineandreporton:

• PFI• examinationproceduresforbestestimateandhypotheticalassumptions

• PFIcanbeintheformof:• forecastor• projectionor• combinationofboth.

• NotapplicabletoexaminationofPFIexpressedingeneralornarrativeterms.

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Introduction- II• Obtain sufficient appropriate evidence on:

• reasonableness of management’s best-estimateassumptions.

• hypothetical assumptions are consistent withthe purposes of information.

• PFI prepared properly on basis of assumptions.

• properly presented and adequate disclosure ofall material assumptions.

• consistent with historical financial statements.

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AcceptanceofEngagement• Beforeacceptingengagementconsider:

• theintendeduseoftheinformation.

• information- generalorlimiteddistribution.

• thenatureoftheassumptions,i.e.best-estimatesorhypotheticalassumptions.

• theelementstobeincludedininformation.

• theperiodcoveredbyinformation.

• Notacceptorwithdrawfromengagementif:• Assumptionsareclearlyunrealistic.

• BelievesthatPFIwillbeinappropriateforitsintendeduse.

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KnowledgeofBusiness• Obtain sufficient level of knowledge of business toevaluate all significant assumptions:

• internal controls over the system used to prepare PFI.

• documentation supporting management’s assumptions.

• extent to which statistical, mathematical and computer-assisted techniques used.

• methods used to develop and apply assumptions.

• accuracy of PFI prepared in prior periods.

• Consider the extent to which reliance on the entity’shistorical financial information is justified.

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PeriodCovered• ConsidertheperiodoftimecoveredbyPFI:

• moreLength- AssumptionsMoreSpeculative.

• notextendbeyondthetimeforwhichmanagementhasreasonablebasisforassumptions.

• RelevantFactors:

• operatingcycle.

• degreeofreliabilityofassumptions.

• needsofuserslike,preparedinconnectionwithapplicationforloanorforissueofsecurities.

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ExaminationProcedures- IFactorsindeterminationofnature,timing,extentofexaminationprocedures:

• knowledgeobtainedduringpreviousengagements.

• management’scompetence.

• likelihoodofmaterialmisstatement.

• extenttowhichPFIisaffectedbythemanagement’sjudgment.

• sourcesofinformation.

• stabilityofentity’sbusiness.

• engagementteam’sexperience.

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ExaminationProcedures- II• Whenhypotheticalassumptionsused:

• allsignificantassumptionstakenintoconsideration.• consistentwithpurposeandrealistic.

• Focusonareassensitivetovariationandmaterial.

• Ifengagementforindividualcomponent,considerinterrelationshipofothercomponents.

• ObtainwrittenrepresentationsfromMgt.regarding:• intendeduseofPFI.• completenessofsignificantassumptions.• mgt’s acceptanceofresponsibilityforPFI.

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PresentationandDisclosure• Considerrequirementsofstatutes,regulationsandprofessionalpronouncements.

• Alsoconsiderwhether:• presentationisinformativeandnotmisleading.• accountingpoliciesandassumptionsareclearlydisclosedinnotestoPFI.

• dateofpreparationisproperlydisclosed.• basisofestablishingpointsinarangeisclearlyindicated.

• adequacyofdisclosureifanychangeintheaccountingpolicy.

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Documentation• Documentmattersimportantinprovidingevidence:

• TosupporthisreportonexaminationofPFI;and

• thatsuchexaminationwascarriedoutinaccordancewiththisSAE.

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Reporting- I• ThereportoftheAuditorshouldcontainthefollowing:

• titleandAddressee.• identificationoftheprospectivefinancialinformation.• referencetoapplicableStandardsonAuditing.• managementresponsibilities.• whenapplicable,areferencetopurposeand/orrestricteddistribution.

• statementthatexaminationproceduresincludedexamination,onatestbasis.

• statementofnegativeassurance.• opinionwhetherPFIproperlypreparedonbasisofassumptionsandpresentedinaccordancewithrelevantfinancialreportingframework.

• appropriatecaveatsconcerningachievabilityofresults.• dateofreport,PlaceofsignatureandSignature.

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Reporting- II1. Qualified/Adverse opinionorwithdrawfromengagement,if

auditorbelievesthat:

• presentationanddisclosureofthePFIisnotadequate.

2. Adverseopinionorwithdrawfromengagement,ifauditorbelievesthat:

• oneormoresignificantassumptionsdonotprovideareasonablebasisforthePFI

3. Disclaimer ofopinionorwithdrawfromengagement,if:

• examinationisaffectedbyconditionsthatprecludeapplicationofprocedure(s)considerednecessaryincircumstances.

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SAE3402AssuranceReportsonControlsat

AServiceOrganisation

Effectiveforserviceauditors’assurancereportscoveringperiodsbeginningonorafter1stApril,2011

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OverviewofSAE3402• Introduction• Objectives• Definitions• Requirements

• FrameworkforAssuranceEngagements

• Ethicalrequirements

• Management&TCWG

• Acceptance&continuance

• Assessingsuitabilityofcriteria

• Materiality

• ObtainingunderstandingofSO’ssystem

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OverviewofSAE3402(contd.)• Obtainingevidenceredescription

• Obtainingevidenceredesignofcontrols

• Obtainingevidencereoperatingeffectivenessofcontrols

• Workofinternalauditfunction

• Writtenrepresentations

• Otherinformation

• Subsequentevents

• Documentation

• PreparingSA’sassurancereport

• Othercommunicationresponsibilities

• Applicationguidance(onaboveaspects)• Appendices

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Introduction• ReportforusebyUEandUA

• OncontrolsatSO

• ProvidesaservicetoUE

• ThatserviceislikelytoberelevanttoUE’sICFR• Matterofprofessionaljudgment

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SAE3402dealsONLYwith….• Assertion-basedengagements

• Reasonableassurance

• Assuranceconclusionwordeddirectlyintermsofsubjectmatter&criteria

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ApplicabilityofSAE3402

• Appliesonlyifinrespectofsuitabledesignofcontrols,SOis:

• Responsible• Otherwisemakesanassertion

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DoesNotApplyto……….• ReportingonwhethercontrolsatSOoperatedasdescribed

• ReportingonlyoncontrolsatSOotherthanthoserelatedtoaservicerelatedtoUE’sICFR

• ReportingonUE’stransactionbalancesmaintainedbySO

• AUPreportoncontrolsatSO

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SOAuditor’sObjectivesObtainreasonableassurance

DescriptionofsystemasgivenbySO

Report

Controlobjectiveswereachieved

Throughoutspecifiedperiod

Fairlypresentsthesystem

Asdesigned&implemented

Controlsrelatedtocontrolobjectives

Suitablydesigned

Controlsoperatedeffectively

Toprovidereasonableassurance

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SAE3420AssuranceEngagementstoReportontheCompilationofPro

FormaFinancialInformationIncludedinaProspectus

EffectiveforassurancereportsdatedonorafterApril1,2016

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ScopeofSAE3420• Reasonable assurance engagements to report of Proforma financial information (PFI)

• As prepared by a responsible party (Client)

• To be included in a prospectus

• Applies where such reporting is:

• Required by securities laws

• Generally accepted practice

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Whatis“PFI”?

• Financialinformationshowntogetherwithadjustmentstoillustratetheimpactofanevent/transactiononunadjustedfinancialinformation

• Asiftheeventhadoccurredorthetransactionhadbeenundertakenatanearlierdateselectedforpurposesoftheillustration.

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Whatis“ApplicableCriteria”

• CriteriausedbyclientwhencompilingPFI

• Maybeestablishedbylaw/regulation,etc

• Ifnotsoestablished,developedbyclient

• PFItobeaccompaniedbyadequatedisclosuresregardingcriteria

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Whatis“ProFormaAdjustments”?

AdjustmentstoUnadjustedFinancialInfo

Illustratetheimpactofasignificanteventor

transaction

NecessaryforPFItobecompiledonbasisconsistentwithapplicableFRF

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ResponsibilityforPFI

Preparation/Compilation

• Client

Reportingthereon

• Practitioner

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PurposeofPFIincludedinProspectus• Illustrateimpactofsignificantevent/transactiononunadjustedinformation

• PFIdoesnotrepresententity’sactualfinancialposition,financialperformanceorcashflows

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PFICompilationProcessofClient

Presentsproforma infowithaccompanyingdisclosures

Makesproforma adjustments

Extractsunadjustedfinancialinfofromsource

Identifiessourceofunadjustedinfotobeused

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NatureofAssuranceExpressedbyPractitioner

ReasonableAssuranceunderSAE3420

AssesswhethercriteriausedincompilingPFIprovidesreasonablebasisforpresentingsignificanteffectsdirectlyattributabletoevent

Obtainsufficientappropriateevidence:• Relatedproformaadjustmentsgiveappropriateeffecttothosecriteria

• Resultingproformacolumnreflectsproperapplicationofthoseadjustmentstounadjustedfinancialinfo

Practitioner does not:• Update/reissueanyearlierreports/opinionsonanyhistoricalfinancialinfousedincompilingPFI

• Perform an audit or review of the financial info used in compiling PFI

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SRS4400EngagementstoPerformAgreed- uponProcedures

regardingFinancialInformation

EffectiveforallagreeduponproceduresengagementsbeginningonorafterApril1,2004

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Introduction• Establishesstandardsonauditor’sprofessionalresponsibilitieswithregardto:

• performAgreed-uponProcedures(AUP)onFinancialInformation(FI).

• form&ContentofreportofAUPengagements.

• Reportoffactualfindingsbasedon:

• specifiedproceduresperformedonspecifiedsubjectmatterofspecialelements,accountsoritemsofFS.

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Objectives

• Tocarryoutproceduresofauditnaturetowhichtheauditor,theentityandanyappropriatethirdpartieshaveagreed;and

• Toreportonfactualfindings.

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GeneralPrinciples• ComplywithCodeofEthicsissuedbyICAI.

• Wheretheauditorisnotindependent:• astatementtothateffectshouldbemadeinreportoffactualfindings.

• ConductAUPengagementinaccordancewith:• thisSRS;and• termsofengagement.

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DefiningTermsofEngagement-I• Ensurethatthereisclearunderstandingofagreedprocedures,conditionsofengagementwith:

• representativesofentity.• otherspecifiedpartieswhowillreceivecopiesofreport.

• Mattersagreedincludes:• natureofengagement.• statedpurposeforengagement.• identificationofFItowhichAUPapplied.• nature,timingandextentofspecificprocedurestobeapplied.

• limitationsondistributionofreport.

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DefiningTermsofEngagement-II

• Sendengagementletter:• listingofprocedurestobeperformed.• restrictionsondistributionofreport.

• IfAUPbetweenregulator/industryrepresentatives,thenauditormaynotbeabletodiscussprocedureswithallpartieswhowillreceivereport.

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PlanningandDocumentation

• Plantheworksothataneffectiveengagementwillbeperformed.

• Documentmatterswhichareimportantinprovidingevidence:

• tosupportthereportoffactualfindings.

• thatengagementwascarriedoutinaccordancewiththisSRSandtermsofengagement.

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ProceduresandEvidence

• PerformAUPandusetheevidenceobtainedasbasisforreportoffactualfindings.

• Proceduresappliedinclude:• Inquiryandanalysis

• Re-computation,comparisonandotherclericalaccuracychecks

• Observation

• Inspection

• obtainingconfirmations

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Reporting- I

• Describethepurposeandagreed-uponproceduresofengagement.

• Reportoffactualfindingsshouldcontain:• TitleandAddressee.• IdentificationofspecificFI/non-FItowhichAUPhavebeenapplied.

• Statementthatproceduresperformedwerethoseagreeduponwithrecipient.

• StatementthatengagementperformedinaccordancewithStandardsapplicabletoAUPengagements.

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Reporting- II• IdentificationofthepurposeofAUP.• ListingofspecificAUPperformed.• Descriptionoffactualfindingsincludingsufficientdetailsoferrorsandexceptionsfound.

• Statementthatproceduresperformeddonotconstituteeitheranauditorareviewandassuch,noassuranceisexpressed.

• Statementthathadtheauditorperformedadditionalprocedures,auditorreview,othermattersmighthavecometolight.

• Statementthatreportisrestrictedtospecifiedparties.• Statementthatreportdoesnotextendtoentity’sFStakenasawhole.• Dateofreport.• Placeofsignature.• Auditor’ssignature

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REVISEDSRS4410COMPILATIONENGAGEMENTS

EffectiveforcompilationengagementsundertakenafterMarch31,2016

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OverviewofSRS4410(R)• Introduction• Objective• Definitions• Requirements&Application

• ConductofcompilationengagementasperSRS4410• Ethicalrequirements• Professionaljudgement• Engagementlevelqualitycontrol• Engagementacceptance&continuance• CommunicationwithTCWGandmanagement• Performingtheengagement• Documentation• Practitioner’sreport

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COMPILATIONENGAGEMENT

REPORTSasrequiredbythisSRS

InaccordancewithanAPPLICABLEfinancialreportingFramework(FRF)

ASSISTmanagementinpreparation&presentationoffinancialinformationoftheentity

PractitionerappliesACCOUNTING&FINANCIALREPORTING Expertise

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BasicPremiseofCompilationEngagements

Notanassuranceengagement• norequirementtoverifyaccuracy&completenessofinfoprovidedbymanagement

• norequirementtogatherevidencetoexpressauditopinion/reviewconclusion

Managementretainsresponsibilityfor• financialinfo• basisonwhichitisprepared&presented

SRS4410doesnot:• imposeresponsibilityonmgt/TCWG

• overrideL&Rwrtresponsibilityofmgt/TCWG

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ValueofCompilationEngagement

Compilationperformed

inaccordancewithSRS4410

Applicationofexpertise

inaccounting&financialreporting

CompliancewithStandards• includesethicalstandards

Clearcommunicationofnature&extentof

practitioner’sinvolvement

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ApplyingSRS4410– Conditions

Practitionerengagedtocompile

HISTORICALfinancialinformation

ProvideaREPORTforengagementinaccordancewithSRS

4410

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Iflaws&RegulationsdonotmandateSRS4410– Considerations

FinancialinformationrequiredbyL&R?• Requiredtobepubliclyfiled?

Externalpartieslikelytoassociatepractitioner’snamewithfinancialinfo?• Riskthatlevelofassociationwillbemisunderstood

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CompliancewithSQC1• Appliestofirmwrt itscompilationengagements

• BUT,deficiencyinfirm’sQCsystemdoesnotnecessarilymean:

• Engagementnotcarriedoutinaccordancewithprofessionalstandardsandlegal&regulatoryrequirements

OR

• Practitioner’sreportwasnotappropriate

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Practitioner’sGuidetoAuditof

SmallEntities

PLEASE REFER TO ICAI PUBLICATION

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Personal1slide

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Mytakeonwindsofchange?• Datais connectedfromthesourcetotheledgerviacloud-basedapplications. Accounting

is morphingintowhateconomists call "interactionjobs", wheretechnicalknowledgeis assumedand highervalueisappliedtoaperson'sabilitytointeractwithinternalandexternal clients,identifyproblems,comeupwithalternativesolutions,determinewhichareaffordableatthis pointintime andcommunicateandinfluenceto deliver an outcome.

• Thesuccessfulaccountantsofthefuturewillbestrongcommunicators,possessgreaterITskillscombinedwithstrategicvisionandtheywillbedevotedtoongoingprofessionaldevelopment.Globalisation isthefutureofaccountingasmoreandmorebusinessesrequirereal-timemanufacturingandinformation,mobilemarketingandonlinetools,includingthecloud,toexpandtheircustomerbaseinternationally.Thusaccounting,auditingandfinanceprofessionalswithknowledgeofinternationalstandardsandregulationswillthrive.

• ICAIisgearedtothisrealityand30overseaschaptersofICAIisatestimonyapartfromembracingInternationalaccountingandassurancestandards. IndianCharteredAccountants,thankstotherigoroustrainingandenviableforwardlookingcurriculum,possessrightinsightsandforesight toovercomechallengesandmakethebestuseoftheopportunities.

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M P Vijay Kumar [email protected]

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