Scope of this SA.
This Standard on Auditing (SA) establishes the overall objectives of independent auditor when conducting an audit of financial statements in accordance with SA’s and requirements that the auditor should posses in order to achieve those objectives.
Overall Objectives of the Auditor
In conducting an audit of financial statements, the overall objectives of the auditor are:
1) To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and
2) To report on the financial statements, and communicate as required by the SAs, in accordance with the auditor’s findings.
Ethical Requirements Relating to an Audit of Financial Statements
The auditor shall comply with relevant ethical requirements, including those pertaining to independence
1) Integrity:- requires an accountant to be straightforward and honest in all professional and business relationships. Integrity implies fair dealing and truthfulness
2) Objectivity:- requires an accountant not to compromise professional or business judgment because of bias, conflict of interest or undue influence of others
3) Professional competence and due care:- Attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organization receives competent professional service
4) Confidentiality:- confidentiality of information acquired as a result of professional and employment relationships
5) Professional behaviour:- requires an accountant to comply with relevant laws and regulations and avoid any conduct that accountant knows or should know might discredit the profession
Professional Skepticism
Professional Skepticisim:- Professional Skepticism is an attitude that includes
1) questioning mind
2) being alert to Conditions which may indicate possible misstatement due to error or fraud, and
3) critical assessment of audit evidence
The auditor shall plan and perform an audit with professional skepticism recognising that circumstances may exist that cause the financial statements to be materially misstated
Professional Judgment
The application of relevant training, knowledge and experience, within the context provided by auditing, accounting and ethical standards, in making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement.
The auditor shall exercise professional judgment in planning and performing an audit of financial statements.
Complying with SAs Relevant to the Audit
1) The auditor shall comply with all SAs relevant to the audit.
2) The auditor shall have an understanding of the entire text of an SA, including its application and other explanatory material.
3) The auditor shall not represent compliance with SAs in the auditor’s report unless the auditor has complied with the requirements of this SA and all other SAs relevant to the audit.
To achieve the overall objectives of the auditor, the auditor shall use the objectives stated in relevant SAs in planning and performing the audit, having regard to the interrelationships among the SAs
If an objective in a relevant SA cannot be achieved, the auditor shall evaluate whether this prevents the auditor from achieving the overall objectives of the auditor and thereby requires the auditor, in accordance with the SAs, to modify the auditor’s opinion or withdraw from the engagement.
key requirements of an independent auditor are integrity, objectivity, Professional competence and due care, Confidentiality, Professional behaviour
basic principles of governing an audit under SA 200 are integrity, objectivity, Professional competence and due care, Confidentiality, Professional behaviour