News Items on Auditing Topics

The introduction of securities lending and borrowing in government securities, which refers to a process where investors temporarily transfer securities to another investor in exchange for a fee or collateral. This process can help to add depth and liquidity to the market by allowing investors to borrow securities that they need for short periods of time, which can aid in efficient price discovery.

The introduction of securities lending and borrowing in government securities, which refers to a process where investors temporarily transfer securities to another investor in exchange for a fee or collateral. This process can help to add depth and liquidity to the market by allowing investors to borrow securities that they need for short periods of time, which can aid in efficient price discovery.

A standard on Quality Control (SQC) issued by the Auditing and Assurance Standards Board (AASB) for firms conducting audits, reviews of historical financial information, and other assurance and related services engagements. The SQC establishes standards and provides guidance on a firm’s responsibilities for its system of quality control. The purpose of the system is to provide reasonable assurance that the firm and its personnel comply with professional standards and regulatory and legal requirements, and that reports issued by the firm or engagement partner(s) are appropriate in the circumstances.

 In SA 810 is a standard that provides guidance to auditors when reporting on summary financial statements. Summary financial statements are a condensed version of an entity’s financial statements and contain less detail, but still provide a structured representation of an entity’s economic resources or obligations at a point in time or changes over a period. These statements are prepared by management and are based on audited financial statements that have been prepared in accordance with other SAs.

An auditing standard, SA 805, which deals with the special considerations in the application of other auditing standards (SAs) to an audit of a single financial statement or a specific element, account, or item of a financial statement. This SA applies to audits of financial statements prepared in accordance with a general or special purpose framework. If prepared in accordance with a special purpose framework, SA 8001 also applies to the audit.

An Implementation Guide that provides guidance to auditors on how to comply with reporting requirements under a specific Rule. The purpose of the guide is to help auditors meet their reporting obligations under this Rule, and it emphasizes that auditors should exercise their professional judgment when reporting on such matters.

The SRS 4410 applies specifically to “compilation engagements,” which are engagements where the practitioner helps management with financial information without providing any assurance on that information. In other words, the practitioner is not verifying the accuracy or completeness of the information, but rather is simply compiling it in a way that is consistent with generally accepted accounting principles.

The Standard on Related Services (SRS) provides guidance and standards for auditors when they undertake engagements to perform agreed-upon procedures regarding financial information. This means that the auditor is engaged by the client to perform certain procedures concerning specific financial data, such as accounts payable, accounts receivable, purchases from related parties, and sales and profits of a segment of an entity or a financial statement, such as a balance sheet or a complete set of financial statements. The auditor then issues a report of factual findings based on the specified procedures performed on the specified subject matter.

The purpose and scope of the Standard on Review Engagements (SRE) is which provides guidance on the auditor’s responsibilities when reviewing an audit client’s interim financial information. Interim financial information refers to financial statements prepared for a period that is shorter than the entity’s financial year. The auditor should perform the review in accordance with the SRE 2410, which includes updating their understanding of the entity and its environment through inquiries made during the review process. If a practitioner who is not the auditor of the entity is engaged to perform a review of interim financial information, they should follow…

The Scope of the Standard on Review Engagements (SRE) which outlines the responsibilities of a practitioner when performing a review of financial statements. The SRE 2400 outlines the practitioner’s responsibilities when engaged to perform a review of historical financial statements, when the practitioner is not the auditor of the entity’s financial statements. The SRE also defines the form and content of the practitioner’s report on the financial statements.

The Standard on Assurance Engagements (SAE) which provides guidance to practitioners who are conducting reasonable assurance engagements to report on pro forma financial information that is included in a prospectus. Pro forma financial information is a representation of how an entity’s financial position would be affected if a significant event or transaction had occurred at an earlier date.

The standard on assurance engagements undertaken by professional accountants in public practice to provide a report on the controls at a service organization that provides a service likely to be relevant to user entities’ internal control as it relates to financial reporting. This SAE 3402 applies only to assertion-based engagements that convey reasonable assurance, with the assurance conclusion worded directly in terms of the subject matter and criteria.

A Standard on Assurance Engagement (SAE) that provides guidance for auditors who are engaged to examine and report on prospective financial information. This type of information is based on assumptions about future events and possible actions by an entity and can take the form of a forecast, projection, or combination of both.

The auditing standards are a set of guidelines that auditors must follow when conducting an audit of financial statements. This SA 800 specifically deals with audits of financial statements that have been prepared using a special purpose financial reporting framework. A special purpose financial reporting framework is a framework that has been designed to meet the financial information needs of specific users. It may be a fair presentation framework, which means that it presents the financial statements fairly in accordance with the applicable financial reporting framework, or a compliance framework, which means that it meets the requirements of a specific set…

The responsibilities of auditors regarding “other information” that is included in an entity’s annual report, which refers to any financial or non-financial information (excluding financial statements and the auditor’s report) presented in a single document or a combination of documents that serve the same purpose. The objectives of the auditor in relation to other information are to consider whether there is a material inconsistency between the other information and the financial statements, and whether there is a material inconsistency between the other information and the auditor’s knowledge obtained in the audit. The auditor must respond appropriately when material inconsistencies appear to…

The Auditing standards outline the auditor’s responsibilities regarding comparative information in an audit of financial statements. Comparative information is essentially information that presents the financial results and position of an entity for one or more prior periods for comparison with the current period. The nature of the comparative information presented in an entity’s financial statements depends on the requirements of the applicable financial reporting framework.

The auditing standards that deals with additional communication in the auditor’s report when the auditor considers it necessary to draw users’ attention to a matter that is of such importance that it is fundamental to users’ understanding of the financial statements or any other matter that is relevant to users’ understanding of the audit, the auditor’s responsibilities, or the auditor’s report. This SA 706 establishes requirements and provides guidance when the auditor determines key audit matters and communicates them in the auditor’s report.

The auditing standards that are being summarized here deals with the auditor’s responsibility to issue an appropriate report when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary. In other words, this SA provides guidance on how an auditor should modify their report when they encounter significant issues or errors in the financial statements that require a modification to the opinion.

The Auditing standards for communicating key audit matters in an auditor’s report. The purpose of communicating key audit matters is to enhance transparency and provide additional information to users of financial statements about the most significant matters in the audit of the financial statements of the current period. The significance of a matter is judged by the auditor in the context of quantitative and qualitative factors, such as relative magnitude, nature, effect, and the expressed interests of intended users or recipients.

The responsibilities of auditors in forming an opinion on financial statements and issuing a report based on their audit. The SA 700 is applicable to audits of complete sets of general-purpose financial statements, which are financial statements prepared in accordance with a general-purpose framework designed to meet the common financial information needs of a wide range of users. The SA 700 aims to strike an appropriate balance between the need for consistency and comparability in auditor reporting globally and the need to increase the value of auditor reporting by making the information provided in the auditor’s report more relevant to users….

The scope of auditing standards that deals with the auditor’s responsibilities regarding the use of an individual or organization’s work in a field of expertise other than accounting or auditing when that work is used to assist the auditor in obtaining sufficient appropriate audit evidence. The SA 620 makes it clear that it does not deal with situations where the engagement team includes a member with expertise in a specialized area of accounting or auditing (which is dealt with in SA 220) or the auditor’s use of the work of an individual or organization possessing expertise in a field other than…

The auditing standards explains that the standard applies to situations where the external auditor plans to use the work of internal auditors in obtaining audit evidence, or to use internal auditors to provide direct assistance under the direction, supervision, and review of the external auditor. The standard clarifies that if an entity does not have an internal audit function, then this standard does not apply. Similarly, the standard does not apply if the responsibilities and activities of the internal audit function are not relevant to the audit or if the external auditor does not expect to use the work of the…

The purpose and scope of the Auditing standards related to the use of the work of other auditors by the principal auditor in auditing the financial information of an entity. The principal auditor is responsible for forming and expressing their opinion on the financial information, even when work is delegated to assistants or performed by other auditors or experts. However, they are entitled to rely on the work performed by others, as long as they exercise adequate skill and care and have no reason to believe otherwise. This Standard establishes standards for situations where the principal auditor uses the work…

The responsibilities of auditors in relation to the “going concern” basis of accounting, which is the assumption that a company will continue to operate for the foreseeable future. The first point made is that this Auditing standards deals with the auditor’s responsibilities in the audit of financial statements relating to going concern and the implications for the auditor’s report. The financial statements are typically prepared on the going concern basis of accounting, unless management intends to liquidate the entity or has no realistic alternative but to do so. If the going concern basis is appropriate, assets and liabilities are recorded on the…

The Auditing standards that deal with the auditor’s responsibilities related to subsequent events in an audit of financial statements. Subsequent events are events that occur between the date of the financial statements and the date of the auditor’s report that may require adjustments or disclosures in the financial statements. The SA 560 explains that financial statements may be affected by events that occur after the date of the financial statements. There are two types of subsequent events: those that provide evidence of conditions that existed at the date of the financial statements, and those that provide evidence of conditions that arose…

The auditing standards related to accounting estimates and fair value accounting estimates, and the responsibilities of auditors regarding them. SA 540 defines accounting estimates as financial statement items that cannot be measured precisely but can only be estimated. The nature and reliability of information available to management to support the making of an accounting estimate vary widely, which affects the degree of estimation uncertainty associated with accounting estimates. This estimation uncertainty affects the risks of material misstatement of accounting estimates, including their susceptibility to unintentional or intentional management bias. The further describes different examples of accounting estimates, including fair value accounting…

The auditing standards that apply when an auditor uses audit sampling in performing audit procedures. Audit sampling involves testing a subset of items within a population of audit relevance, with the goal of providing the auditor with a reasonable basis on which to draw conclusions about the entire population. The objective of audit sampling is to provide a reasonable basis for the auditor to draw conclusions about the population from which the sample is selected. To achieve this objective, the auditor must consider both sampling risk and non-sampling risk. Sampling risk is the risk that the auditor’s conclusion based on a…

The Auditing standard being discussed in the auditors how use analytical procedures during financial statement audits. Analytical procedures refer to the evaluation of financial information by analysing plausible relationships between both financial and non-financial data. This type of analysis helps auditors to obtain relevant and reliable audit evidence when using substantive analytical procedures.

The Auditing standards are a guideline that outlines the responsibilities of auditors when conducting an initial audit engagement. An initial audit engagement refers to an audit of financial statements that have not been audited before, or were audited by a different auditor in the prior period. The SA sets out the requirements for auditors to examine opening balances, which include financial statement amounts, contingencies, and commitments, that existed at the beginning of the period being audited.

The Auditing standards that provides guidance to auditors on using external confirmation procedures to obtain relevant and reliable audit evidence. External confirmation procedures involve the auditor obtaining direct written responses from third parties (known as confirming parties) in paper form, electronic form, or another medium. The purpose of this SA 505 is to help auditors design and perform external confirmation procedures to obtain relevant and reliable audit evidence.

The Scope of Auditing standards and its effective date. SA 501 deals with specific considerations by the auditor in obtaining sufficient appropriate audit evidence with respect to inventory, litigation and claims involving the entity, and segment information in an audit of financial statements. The SA 501 applies to audits of financial statements for periods beginning on or after April 1, 2010, and its objective is to enable the auditor to obtain sufficient appropriate audit evidence to evaluate the existence and condition of inventory, the completeness of litigation and claims involving the entity, and the presentation and disclosure of segment information in…

The Auditing standards provides guidance to auditors on the concept of audit evidence and the procedures to obtain sufficient appropriate evidence to support the auditor’s opinion on the financial statements. The objective of the auditor is to design and perform audit procedures that enable them to obtain evidence that is of sufficient quality and quantity to draw reasonable conclusions on which to base their opinion. The SA 500 applies to all audit evidence obtained during the audit, including evidence derived from the entity’s accounting records and information obtained from other sources. However, specific SA 500  deal with different aspects of the…

This auditing standard outlines the auditor’s responsibility for evaluating the impact of misstatements on the financial statements during an audit. Misstatements can arise from errors or fraud, and the SA 450 provides examples of how misstatements can occur, such as inaccurate data gathering or processing, omission of amounts or disclosures, incorrect accounting estimates, and inappropriate accounting policies. The SA 450 defines misstatements as a difference between reported financial statement items and the amount, classification, presentation, or disclosure required by the applicable financial reporting framework. This means that if there is a discrepancy between what is reported in the financial statements and…

The Auditing standards provide guidance on the auditor’s responsibility to obtain sufficient appropriate audit evidence in these cases, by applying SA 315 and SA 330. SA 402 specifies that the services provided by a service organization are relevant to the audit of the user entity’s financial statements if they affect certain aspects of the user entity’s information system, including classes of transactions, procedures for initiating and processing transactions, accounting records, and controls around journal entries. The extent of work required by the auditor will depend on the significance of these services to the user entity.

The Auditing standards provides guidance to auditors on their responsibilities in designing and implementing responses to the risks of material misstatement identified in a financial statement audit. The effective date of this SA 330 is for audits of financial statements for periods beginning on or after April 1, 2008. The objective of the auditor is to obtain sufficient appropriate audit evidence about the assessed risks of material misstatement by designing and implementing appropriate responses to those risks.

The concept of materiality in the context of an audit of financial statements. Materiality refers to the level at which a misstatement or omission in the financial statements could influence the economic decisions of users of those statements. The auditor’s responsibility is to apply the concept of materiality appropriately in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements.

The SA 315 is effective for audits of financial statements for periods beginning on or after April 1, 2008. The objective of the auditor is to identify and assess the risks of material misstatement, which can occur due to fraud or error, at the financial statement and assertion levels. To accomplish this objective, the auditor must have a comprehensive understanding of the entity and its environment, including its internal control. This understanding provides a basis for designing and implementing responses to the identified risks of material misstatement, which helps the auditor to reduce the risk of material misstatement to an acceptably…

This Auditing standard discusses the importance of planning an audit of financial statements and outlines the responsibilities of the auditor in this regard. The purpose of planning is to ensure that the audit is performed in an effective and efficient manner. Adequate planning can help the auditor to identify and resolve potential problems on a timely basis, devote appropriate attention to important areas of the audit, and properly organize and manage the audit engagement.

Joint audits involve the appointment of two or more auditors who work together to issue an audit report on the financial statements of an entity.

The scope and objective of the auditing standards related to the auditor’s responsibility to communicate deficiencies in internal control to those charged with governance and management. The SA 265 applies when the auditor identifies deficiencies in internal control during the audit of financial statements. The auditor is required to obtain an understanding of internal control relevant to the audit when identifying and assessing the risks of material misstatement. However, the auditor is not required to express an opinion on the effectiveness of internal control.

The Auditing standard that outlines the auditor’s responsibility to communicate with those charged with governance during an audit of financial statements. The SA applies regardless of an entity’s governance structure or size, but specific considerations apply for entities where all those charged with governance are involved in managing the entity, and for listed entities.

The Auditing standard applies to auditors who are responsible for performing an audit of financial statements, but it does not apply to other assurance engagements.

The SA 240 defines fraud as a deliberate action resulting in misstatements in financial statements. The standard distinguishes between two types of intentional misstatements relevant to the auditor: misstatements resulting from fraudulent financial reporting and misstatements resulting from misappropriation of assets.

SA 230 provides guidance to auditors on how to prepare audit documentation for an audit of financial statements. The purpose of audit documentation is to provide evidence that the audit was planned and performed in accordance with SAs and applicable legal and regulatory requirements, and to support the auditor’s basis for their conclusions about the achievement of the overall objectives of the audit.

The Accounting standards discusses a specific auditing standard, Standard on Auditing (SA) 210, which outlines the auditor’s responsibilities when agreeing to the terms of an audit engagement with management and those charged with governance. An audit engagement is an agreement between an auditor and an entity (usually a company) to conduct an audit of the entity’s financial statements.

The Standard on Auditing (SA) that provides guidance to auditors on quality control procedures for an audit of financial statements. The SA sets out the specific responsibilities of the auditor and engagement quality control reviewer in relation to quality control systems, policies, and procedures.

Ind AS are the Indian version of International Financial Reporting Standards (IFRS). The standards were developed by the Ministry of Corporate Affairs (MCA) as a way to bring India’s financial reporting in line with global best practices. They are meant to provide more consistency, transparency, and accuracy when it comes to financial statements.