Standards on Auditing (CA Inter – Q&A; Format)
What is SA 200 – Overall Objectives of the Independent Auditor?
- Objective: Obtain reasonable assurance FS are free from material misstatement.
- Comply with ethical requirements (independence, integrity).
- Express opinion whether FS show true & fair view.
What is SA 210 – Agreeing the Terms of Audit Engagements?
- Objective: Establish clear terms of engagement with client.
- Engagement letter defines scope, objectives, management responsibilities.
- Prevents misunderstandings between auditor & client.
What is SA 220 – Quality Control for Audit of FS?
- Objective: Maintain quality of audit work.
- Engagement partner responsible for direction, supervision & review.
- Ensure compliance with SQC 1 (Standards on Quality Control).
What is SA 230 – Audit Documentation?
- Objective: Properly document audit work performed.
- Working papers provide evidence of auditor’s work & conclusions.
- Helps supervision, review & future reference.
What is SA 240 – Auditor’s Responsibilities Relating to Fraud?
- Objective: Identify and assess risks of fraud in FS.
- Maintain professional skepticism throughout.
- Distinguish between fraud (intentional) & error (unintentional).
What is SA 250 – Consideration of Laws and Regulations?
- Objective: Ensure FS comply with laws & regulations.
- Auditor not responsible for legal compliance, but must identify material non-compliance.
- Report significant non-compliance to TCWG (Those Charged With Governance).
What is SA 260 – Communication with Those Charged with
Governance?
- Objective: Establish effective 2-way communication.
- Discuss audit scope, responsibilities & significant findings.
- Promotes transparency between auditor & management.
What is SA 265 – Communicating Deficiencies in Internal Control?
- Objective: Inform management & TCWG of weaknesses in internal control.
- Report significant deficiencies identified during audit.
- Helps entity improve control environment.
What is SA 299 – Joint Audit of FS?
- Objective: Lay down principles when more than one auditor is appointed.
- Joint auditors divide work and are jointly/severally responsible.
- Report should be signed jointly by all auditors.
What is SA 300 – Planning an Audit?
- Objective: Plan audit effectively & efficiently.
- Prepare audit strategy & audit plan.
- Proper planning reduces audit risk.
What is SA 315 – Identifying and Assessing Risk of Material
Misstatement?
- Objective: Understand entity & environment to identify risks.
- Includes internal control system.
- Helps auditor design appropriate responses.
What is SA 320 – Materiality in Planning and Performing Audit?
- Objective: Apply concept of materiality in audit.
- Material misstatements influence decisions of users.
- Used in planning, execution & evaluation.
What is SA 330 – Auditor’s Response to Assessed Risk?
- Objective: Design and implement audit procedures to address risks.
- Includes test of controls & substantive procedures.
- Response depends on risk severity.
What is SA 402 – Audit Considerations when Entity Uses Service
Organization?
- Objective: Consider impact of outsourcing (ex: payroll processing).
- Auditor must evaluate controls at service organization.
- May use service auditor’s report.
What is SA 450 – Evaluation of Misstatements?
- Objective: Evaluate effect of identified misstatements.
- Distinguish between material & immaterial.
- Request management to correct material misstatements.
What is SA 500 – Audit Evidence?
- Objective: Obtain sufficient & appropriate evidence to form opinion.
- Evidence must be reliable & relevant.
- Sources: inspection, observation, confirmation, recalculation, etc.
What is SA 501 – Audit Evidence – Specific Considerations?
- Objective: Guidance for inventory, litigation, segment information.
- Physical verification of inventory.
- Seek confirmation from legal advisors.
What is SA 505 – External Confirmations?
- Objective: Use third-party confirmations (ex: debtors, banks).
- Confirms existence, accuracy, and rights/obligations.
- More reliable than internal evidence.
What is SA 510 – Initial Audit Engagements – Opening Balances?
- Objective: Ensure opening balances do not misstate current FS.
- Examine predecessor auditor’s report.
- Perform audit procedures on opening balances.
What is SA 520 – Analytical Procedures?
- Objective: Use analytical review to identify unusual trends.
- Compare ratios, trends, budgets, expectations.
- Applied at planning & final review stage.
What is SA 530 – Audit Sampling?
- Objective: Apply audit procedures to less than 100% population.
- Ensures each item has equal chance of selection.
- Helps auditor form conclusion on entire population.
What is SA 540 – Auditing Accounting Estimates?
- Objective: Verify accuracy of estimates like depreciation, provisions.
- Check reasonableness & management assumptions.
- Ensure disclosures are adequate.
What is SA 550 – Related Parties?
- Objective: Identify & disclose related party transactions.
- Risk of fraud/manipulation higher.
- Ensure disclosures as per AS/Ind AS.
What is SA 560 – Subsequent Events?
- Objective: Consider events occurring after balance sheet date.
- Adjusting events – provide further evidence.
- Non-adjusting – require disclosure only.
What is SA 570 – Going Concern?
- Objective: Evaluate entity’s ability to continue for foreseeable future.
- Look for indicators of financial distress.
- If uncertainty exists, disclose in report.
What is SA 580 – Written Representations?
- Objective: Obtain written confirmation from management.
- Covers management responsibility & disclosures.
- Does not substitute other audit evidence.
What is SA 600 – Using Work of Another Auditor?
- Objective: Reliance on branch/component auditor.
- Principal auditor must ensure adequate work performed.
- Report should state reliance on other auditor.
What is SA 610 – Using Work of Internal Auditors?
- Objective: Consider reliance on internal audit work.
- Evaluate competence & objectivity of internal auditors.
- External auditor remains responsible for opinion.
What is SA 620 – Using Work of Auditor’s Expert?
- Objective: Consider reliance on expert (valuer, actuary).
- Evaluate competence & independence of expert.
- Responsibility for opinion remains with auditor.
What is SA 700 – Forming an Opinion & Reporting?
- Objective: Express opinion on FS.
- Report must state true & fair view.
- Include opinion, basis, and key responsibilities.
What is SA 701 – Communicating Key Audit Matters?
- Objective: Enhance transparency of auditor’s report.
- KAM = matters of most significance.
- Helps users understand areas of judgment.
What is SA 705 – Modifications to Opinion?
- Objective: Guide when FS not free from material misstatement.
- Types: Qualified, Adverse, Disclaimer.
- Depends on materiality & pervasiveness.
What is SA 706 – Emphasis of Matter & Other Matter Paragraphs?
- Objective: Draw attention to important disclosures.
- EOM – refers to note in FS.
- OM – refers to matters outside FS but relevant.
What is SA 710 – Comparative Information?
- Objective: Ensure consistency with prior period FS.
- Comparatives must be audited.
- Report if inconsistencies found.
What is SA 720 – Auditor’s Responsibilities Relating to Other
Information?
- Objective: Consider information other than FS (ex: annual report).
- Check consistency with audited FS.
- Report material inconsistencies.
