Overview of Standards on Auditing, Standards on Review engagement

Summary of Standards on Auditing: Standards on Auditing are likewise a tool to increase the charge structure. The customer will ultimately identify the efforts that go in concluding the audit, nevertheless small it might be. In a highly managed service environment of a few of the western nations, we observe that the space in fee structure is not as materially different in between big firms against exclusive organisation for comparable sized organisations. This is mainly due to evidencing of these audit procedure to the client as well.

While it is true that the degree of depth in application of SAs to numerous sizes of customers will vary materially, it is needed that the auditor must have on its records a proof that he has actually brought the audit based on the suitable SAs. Lastly the term “Audit” indicates the auditor has actually used particular approved procedure to arrive at the conclusion. These procedures are absolutely nothing but SAs.

In order to help with easy application of these requirements, every audit file must contain the list of these SAs and remarks of signatory against each whether the requirement is applied. This will instill the essential discipline among the staff members and even the signatories of the audit declarations.

Let us initially understand the total structure of the auditing requirements.

The whole structure of SAs is divided as under:

I. Standard on Quality Assurance (SQC)

There is only one standard in this classification. This requirement is more on the audit quality viewpoint. This standard demands every company or an individual who undertake the audit to have documented policies on:

• Leadership obligations for quality within the firm: The head of the organisation is accountable for advancement quality practices & promote the culture of audit quality.
• Ethical Requirements: Independence to carry out audit is needed to be developed.
• Human Resources— Engaging of right manpower is vital in establishing that the audit performance is as per professional standards to enable the company or engagement partner to release reports
• Engagement Efficiency– This needs evidencing instruction to team members, evaluation of audit by assistants, assessments acquired during the course of audit, distinction of viewpoint, if any and how is that dealt with.
  

  II. Standards on Auditing

  These are applicable to any audit engagement. The standards are categorised as under:

  General concepts & Duties	SA 200 to SA 299
  Threat evaluation & Reaction to the examined threats	SA 300 to SA 499
  Audit Proof	SA 500 to SA 599
  Utilizing work of others	SA 600 to SA 699
  Audit conclusions & Reporting	SA 700 to SA 799
  Specialised Locations (Information offered listed below	SA 800 to SA 899

  III. Standards on Review engagements (SREs)

  An auditor carries out review projects. These standards need to be applied throughout evaluation. There are two such particular SREs. The names are noted below:

  • Evaluation of historical monetary statements SRE 2400
  • Evaluation of interim monetary declaration by independent auditor

  IV. Assurance Engagements Besides Audits or Reviews of Historic Financial Information (SAEs)

  There are certain particular projects undertaken by a chartered accountant of guarantee nature aside from audit or review. There are three particular topic SAEs

  1. Assessment of potential financial info (SAE 3400): “Prospective monetary info” indicates financial information based on assumptions about occasions that might occur in the future and possible actions by an entity. It is highly subjective in nature and its preparation needs the exercise of significant judgment. Potential financial information can be in the kind of a projection, a projection, or a combination of both.

  2. Assurance report on controls at service organisation (SAE 3402): This is an equivalent of SA402 Throughout the course of audit, auditor is required to make sure that the provider has enough controls to ensure the appropriate details for audit conclusion. He might conduct the assurance himself or may need other expert firm to provide that assurance. If the task is conducted by another company, this SAE is applied.

  3. Assurance on monetary information offered in prospectus (SAE 3420)

  V. Standards on Related Services (SRS)

  1. Concurred upon treatments (AUP) SRS 4400— Sometimes management requires auditor to perform the audit checks to ensure the accuracy of the declarations prepared by them. These are specific checks and involve just accurate reporting without any assurance

  2. Collection engagement SRS 4410 Specialists are engaged to assist the management to put together and put the data in order.

  VI. Assistance notes (GN):

  Besides SAs, ICAI has actually also issued guidance notes that assist specialists to proof the appropriate conduct of audit. These are specific to the topic. A few of the important GNs every expert should have (as appropriate tasks are typically undertaken by the majority of the expert) are as under:

  • a) GN on Bank audit
  • b) GN of CARO reporting
  • c) GN on Combination of financial statements
  • d) GN on special function reports (Certificates): In my viewpoint, it is important to have this as certificates are typically released by all the experts. This enumerates the format in which certificates must be released.

  Lastly, it is needed to keep a list of SAs in our audit paperwork file to guarantee its compliance. The quick on each standards is given listed below which can be used as a referral list for each audit/ task undertaken.

  Must

  • Accounting Concepts
  • Professional Opportunities For CA
  • IFRS– What is IFRS?