An overview of Auditing Standards

1. An overview of Auditing Standards 13 July 2012

2. What is the primary economic reason for an audit? An audit will cost our company Millions of ₹!! What’s the point?

3. What is the primary economic reason for an audit? A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest!! An audit will cost our company Millions of ₹!! What’s the point? Professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer!!

4. Objective of an assurance engagement Assurance engagements are designed to enhance the degree of confidence of the intended users, other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria

5. evidence What does an auditor do? accumulates and evaluates auditor to determine correspondence between established criteria management assertions

6. evidence Users What does an auditor do? accumulates and evaluates auditor to determine correspondence between established criteria management assertions then communicates results to

7. Structure of Standards issued by AASB Chartered Accountants Act, 1949, Code of Ethics Standards on Quality Control Related Services Assurance Engagements Framework – A E Audits and reviews Other engagements Standards on Related Services Standards on Assurance Engagements Standards on Auditing Standards on Review Engagements Statements / Guidance Note / Technical Guides / GC’s

8. Audits and reviews of historical financial information • General principles and responsibilities • Risk assessment and response to assessed risks • Audit evidence • Using work of others • Audit conclusions and reporting • Specialized areas • Standards on review engagements • Guidance Notes

9. Structure of professional standards Governing factor - Professional Judgement

10. Fundamental principles – Professional accountant • Independence ---- client and its management • Integrity • Objectivity • Professional competency and due care • Confidentiality • Professional behavior Am I a prudent Practitioner? Professional Skepticism

11. Auditor’s independence Independence of mind - not being affected by influences to compromise professional judgment, to act with integrity, and exercise objectivity and professional skepticism. Independence in appearance: — avoidance of facts and circumstances that are so significant, a reasonable and informed third party, having knowledge of all relevant information, including any safeguards applied, would reasonably conclude a firm’s, or a member of the assurance team’s, integrity, objectivity or professional skepticism had been compromised.

12. Threats and safeguards to comply with the fundamental principles

13. Key elements of a system of quality control • leadership responsibility for quality within the firm • ethical requirements • client acceptance and reacceptance policies • human resources • engagement performance • monitoring

14. General principles and responsibilities • Overall objectives of the independent auditor and the conduct of an audit in accordance with standards on auditing • Agreeing the terms of audit engagements • Quality control for an audit of financial statements • Audit documentation • The auditor’s responsibilities relating to fraud in an audit of financial statements • Consideration of laws and regulations in an audit of financial statements • Communicating deficiencies in internal control to those charged with governance and management • Responsibility of joint auditors

15. Risk assessment and response to assessed risks • Planning an audit of financial statements • Identifying and assessing the risks of material misstatement through understanding the entity and its environment • Materiality in planning and performing an audit • The Auditor’s responses to assessed risks • Audit considerations relating to an entity using a service organization • Evaluation of misstatements identified during the audit

16. Audit evidence • Related parties • Subsequent events • Going concern • Written representations • Using the Work of Another Auditor • Using The Work of Internal Auditors • Using the Work of an Auditor’s Expert • Audit evidence • Audit evidence—Specific Considerations for Selected Items • External confirmations • Initial audit engagements – Opening Balances • Analytical procedures • Audit sampling • Auditing accounting estimates, including fair value accounting estimates, and related disclosures

17. Audit conclusions and reporting • forming an opinion and reporting on financial statements • modifications to the opinion in the independent auditor’s report • emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report • corresponding figures and comparative financial statements • the auditor’s responsibility in relation to other information in documents containing audited financial statements

18. Specialized areas • Audits of financial statements prepared in accordance with special purpose frameworks • Audits of single financial statements and specific elements, accounts or items of a financial statement • Engagements to report on summary financial statements *******

19. Thank You one of the most exciting things about our profession is that, our work and our choices how to perform our work --- can make an immense difference to an enormous number of people……. it is our duty as regulators, as auditors to do everything we can to make sure that investments in companies are vouchsafed by the best audits and auditors…..it is our duty to protect our investors. After all they are also our citizens…..