Audit

AUDITING NOTES
BY HEMAPRIYA. S
IMPORTANT SA (STANDARDS OF AUDITING) TO
REMEMBER
• SA 200 – BASIC PRINCIPALS OF GOVERNING AUDIT
• SA 320 – MATERIALITY IN PLANNING AND PERFORMING AN AUDIT
• SA 700 – FORMING AN OPINION AND REPORTING ONN FINANCIAL STATEMENTS
• SA 750 – MODIFIED AUDIT REPORT
• SA 600 – USING THE WORK OF ANOTHER AUDITOR
• SA 299 – RESPONSIBILITY OF JOINT AUDITOR’
• SA 265 – REPORT THE DEFICIENCIES
• SA 300 – AUDIT PROGRAMME
• SA 230 – AUDIT WORKING PAPERS
AUDIT PROGRAM
• An audit program is a set of directions that the auditor and its team members need to follow for the proper execution of the
audit. After preparing an audit plan, the auditor allocates the work and prepares a program which contains steps that the audit
team needs to follow while conducting an audit. Thus, an auditor prepares a program that contains detailed information about
various steps and audit procedures to be followed by the audit.
• An audit program provides a basic plan for the audit team regarding the entity’s business, its size, how to conduct the audit,
allocation of work among team members and the estimation of time within which it should complete the work.
• It contains details regarding the relevancy of evidence, materiality level, risk tolerance, measure of the sufficiency of the
evidence. Thus, programs enhance the accountability of the audit team and its members for the work performed by them.
ADVANTAGES OF AUDIT PROGRAM
• An audit program helps in ensuring that all-important areas are considered while conducting the audit.
• An audit program helps an auditor in the allocation of work among its team members according to their
skills and competency.
• It enhances the accountability of audit team members towards work performed by them
• An audit program also reduces the scope for misunderstanding among team members regarding the
performance of audit work.
• It helps the auditor in checking the status of audit work, its progress, how much it is left for performance
while conducting the audit.
• Auditor prepares audit working papers which contains a record of various audit procedure applied
which serves as evidence against the charge of negligence.
AUDIT EVIDENCE
• An audit is a systematic independent examination of financial statements, records, documents
with an objective to express an opinion on the financial statements of an entity whether they
are giving a true and fair view or not. Auditor expresses his opinion (whether the financial
statements of an entity are giving a true and fair view or not) on the basis of audit evidence
collected by him.
• An auditor applies various audit procedure to obtain audit evidence which enables him to
form an opinion whether the financial statements of an entity are free from material
misstatement and state a true and fair view or not.
• Audit Evidence is the information that the auditor uses in arriving at a conclusion on the basis
of which he forms his opinion.
AUDIT ENGAGEMENT
• An audit engagement is an arrangement that an auditor has with a client to perform an audit
of the client's accounting records and financial statements. The term usually applies to the
contractual arrangement between the two parties, rather than the full set of auditing tasks
that the auditor will perform. To create an engagement, the two parties meet to discuss the
services needed by the client. The parties then agree on the services to be provided, along
with a price and the period during which the audit will be conducted. This information is
stated in an engagement letter, which is prepared by the auditor and sent to the client. If the
client agrees with the terms of the letter, a person authorized to do so signs the letter and
returns a copy to the auditor. By doing so, the parties indicate that an audit engagement has
been initiated. This letter is useful for setting the expectations of both parties to the
arrangement.
AUDIT DOCUMENTATION
• Audit documentation is a detailed account of procedures, evidence, and conclusions
collected during an audit. It includes working papers, checklists, and memos that support
the evidence gathered and the auditor’s findings. The primary purpose of audit
documentation is meticulously document the planning, execution, and supervision of
an audit. Additionally, the importance of audit documentation is in the groundwork it lays
for future audits.
AUDIT NOTE BOOK
• Audit Notebook is a diary for auditors to record observations, errors, doubtful queries,
explanations, and clarifications to be received from the clients. The audit notebook is a
register maintained by the audit staff to record important points observed, errors,
doubtful queries, explanations, and clarifications to be received from the clients.
AUDIT EVIDENCE
• Auditing evidence is the information collected for review of a company's financial transactions, internal
control practices, and other items necessary for the certification of financial statements by an auditor
• Auditing evidence is the information collected by an auditor to ascertain the accuracy and compliance of
a company's financial statements.
• The auditing evidence is meant to support the company's claims made in the financial statements and
their adherence to the accounting laws of their legal jurisdiction.
• Examples of auditing evidence include bank accounts, management accounts, payrolls, bank statements,
invoices, and receipts.
• Good auditing evidence should be sufficient, reliable, provided from an appropriate source, and relevant
to the audit at hand.

Audit

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AUDITING NOTES

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