Auditing Standards prescribes the norms of principles and practices, which the auditors are expected to follow in the conduct of audit. Some countries may have similar standards, but no two sets are exactly the same. There are many reasons for this. One is that different countries view and practice accounting and financial reporting in very different ways. In most cases, a country's auditing practices revolve around the needs of its government. Auditing Standards also promote uniformity in practice of all chartered accountants. In India, Auditing and Assurance Standards Board of the ICAI formulates the auditing Standards. The Institute has taken numerous steps to ensure that its members discharge their duties with due professional care, competence and sincerity. One of the steps is the establishment of the Auditing Practices Committee, or the Auditing and Assurance Standards Board, known from September, 1982. While formulating the auditing standards, the Board also takes into consideration the applicable laws, customs, usages and business environment in the country.
One of the main objectives of the Board is to issue auditing standards. Accordingly, the Board issues Statements on Standard Auditing Practices and Auditing and assurance Standards under the authority of the Council.
AS 200 - BASIC PRINCIPLES GOVERNING AN AUDIT
This Standard describes the basic principles which govern the auditor’s professional responsibilities and which should be complied with whenever an audit is carried out. For complying with these principles proper application of auditing procedures and reporting practices is necessary.
Integrity, Objectivity and Independence
The auditor should be straightforward, honest and sincere in his approach to his professional work. Objectivity means that while performing his audit work, he should not be influenced by his/her whims and fancies. Independence means auditor should not be influenced or pressurized from the clients
The auditor should respect the confidentiality of information acquired in the course of his work and should not disclose any such information to a third party without specific authority or unless there is a legal or professional duty to disclose.
Skills and Competence
The audit should be performed and the report should be prepared with due professional care by persons who have adequate training, experience and competence in auditing. The auditor requires specialized skills and competence which are acquired through a combination of general education, technical knowledge obtained through study and formal courses concluded by a qualifying examination recognized for this purpose and practical experience under proper supervision. In addition, the auditor requires a continuing awareness of developments including circulars from ICAI on accounting and auditing matters, and relevant regulations and statutory requirements.
Work Performed by Others
The auditor should carefully direct, supervise and review work delegated to assistants. The auditor should obtain reasonable assurance that work performed by other auditors or experts is adequate for his purpose.
Before starting with the audit work, the auditor has to plan the work by taking the following steps:-
* Acquiring knowledge of the client’s accounting system, policies and internal control procedures. * Establishing the expected degree of reliance to be placed on Internal control.
* Determining and programming the nature, timing, and extent of the Audit procedures to be performed.
* Coordinating the work to be performed.
The auditor should document matters which are important in providing evidence that the audit was carried out in accordance with the basic principles.
Audit conclusion and reporting
The prime duty of the auditor is to report on the financial statements of the client. The report should contain a clear written...
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