Audit PPT

K.P .B HINDUJA COLLEGE OF COMMERCE

2ND YEAR B.COM(ACCOUNTING & FINANCE)

AUDITSEMESTER 3

2010-2011

NAME ROLL NOAKASH BAROT 02

PRATIK CHHEDA 04

RINKESH JAIN 16

MAYUR HEGDE 28

ANIRUDDHA PARDESHI 33

SACHIN SHAH 43

NISHANT SHAH 46

DINESH SUTHAR 54

History of Auditing StandardsTHE ICAI

AUDITING PRACTICESCOMMITTEE

REVIEW EXISTING AUDITING PRACTICES

STANDARD AUDITING PRACTICES (SAPS)

AUDITING & ASSURANCE STANDARDS BOARD

WIDER PARTICIPATION

AUDITING & ASSURANCESTANDARDS (AASS)

AUDITING & ASSURANCE STANDARDS

STANDARDS ON QUALITY CONTROL

STANDARD ON AUDITING(SAS)

STANDARD ASSURANCE ENGAGEMENTS(SAES)

STANDARDS ON REVIEW ENGAGEMENTS(SRES)

STANDARDS ON RELATED SERVICES (SRSS)

SA 710 (AAS 25)

COMPARATIVES

IntroductionPurpose

Comparatives Comply

Auditor’s ResponsibilityAudit Evidence

Accounting policy

Corresponding Figure

Material Misstatement

ReportingAuditors Report

Auditors Opinion

Appropriate disclosure

Incoming auditor-additional requirement

Financial Reporting FrameworksUsers of financial statements

Consistency

Level of information

SA 210 (AAS 26)

TERMS OF ENGAGEMENT

IntroductionPurpose

Objective and scope of an audit

Audit engagement letter

General terms including in audit engagement

Objectives

Management responsibilities

Scope and nature of the audit

Auditor component

Recurring audits

Acceptance of change in engagement

Lower level of assurance

Need for the service

Change in circumstances

Avoid confusion

ExampleYou have requested that we audit the balance sheet of (Name of theCompany) as at 31st March, 2XXX and the related profit and loss accountand the (cash flow statement) for the year ended on that date. We arepleased to confirm our acceptance and our understanding of thisengagement by means of this letter. Our audit will be conducted with theobjective of our expressing an opinion on the financial statements.We will conduct our audit in accordance with the auditing standards generallyaccepted in India and with the requirements of the Companies Act, 1956.Those Standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatements. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallfinancial statement presentation.

However, having regard to the test nature of an audit, persuasive rather thanconclusive nature of audit evidence together with inherent limitations of anyaccounting and internal control system, there is an unavoidable risk thateven some material misstatements of financial statements, resulting fromfraud, and to a lesser extent error, if either exists, may remain undetected.In addition to our report on the financial statements, we expect to provide youwith a separate letter concerning any material weaknesses in accounting andinternal control systems which might come to our notice.The responsibility for the preparation of financial statements on a goingconcern basis is that of the management. The management is alsoresponsible for selection and consistent application of appropriate accountingpolicies, including implementation of applicable accounting standards along

SA 260 (AAS 27)

COMMUNICATIONS OF AUDIT MATTERS WITH THOSE CHARGED

WITH GOVERNANCE

IntroductionPurpose

Governance

Relevant persons

Matters

FORMS OF COMMUNICATIONFactors

size, operating structure, legal

structurenature

on-going contact

periodic meetings

SA 700 (AAS 28)

THE AUDITOR’S REPORT ON FINANCIAL STATEMENTS

INTRODUCTIONPurpose

Review and Assess the Conclusion

Statutory requirement

Expression of opinion

BASIC ELEMENTS OF AUDITOR’S REPORTTitle

Addressee

Opening or introductory paragraph

Scope paragraph(describe the nature of audit)

Opinion paragraph

Date of the report

Place of signature

Auditor’s signature

FormatOpening and introductory paragraph: “We have audited the attached balance

sheet of XYZ Ltd Co. as at 31st March,2010 and also the profit and loss account for the year ended on that date annexed thereto.

These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on financial statements based on our audit.”

Scope Paragraph“We conducted our audit in accordance with

the auditing standards generally accepted in India. Those standards Required that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures and the financial statements. An audit also includes assessing the accounting principles use and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that audit provides reasonable basis for our opinion.”

Opinion paragraph “In our of opinion and to the best of our

information and according to explanations given to us, the financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:1) In the case of balance sheet , of the state of affairs of the XYZ LTD Co. as at 31st March,2010; and 2) In case of the profit and loss account, of the profit/loss for the year ended 31st March,2010.”

Auditor’s Report

Type of Opinions

Unqualified Opinion

Qualified Opinion

Adverse Opinion

ILLUSTRATION: Unqualified OpinionWe have audited the attached Balance Sheet of ..…...(Name of the entity) as at 31st March 2XXX and also theProfit and Loss Account for the year ended on that dateannexed thereto4. These financial statements are theresponsibility of the entity’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assurancewhether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

In our opinion and to the best of our information and accordingto the explanations given to us, the financial statements give atrue and fair view in conformity with the accounting principlesgenerally accepted in India5:(a) in the case of the Balance Sheet, of the state ofaffairs of ……….. (Name of the entity) as at 31st

March 2XXX; and(b) in the case of the Profit and Loss Account, of theprofit/loss for the year ended on that date.

For ABC and Co.,Chartered AccountantsAuditor’s Signature(Name of Member signing the Audit Report)(Designation6)

(Membership Number)Place of SignatureDate

Qualified OpinionWe did not observe the counting of the physical inventoriesas at 31st March 2XXX since that date was prior to the timewe were appointed as auditors of ………….(Name of theentity). Owing to the nature of the entity’s records, we wereunable to satisfy ourselves as to inventory quantities byother audit procedures.In our opinion and to the best of our information andaccording to the explanations given to us, subject to theeffects of such adjustments, if any, as might have beendetermined to be necessary had we been able to satisfyourselves as to physical inventory quantities, the financialstatements give a ………….

Adverse Opinion“We have audited the attached Balance Sheet of ……….(Name of the entity), as at 31st March 2XXX, and also the Profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with .…….. In our opinion and to the best of our information and according to the explanations given to us, because of the effects of the matters discussed in the preceding paragraph(s), the financialstatements do not give a true and fair view in conformity with the accounting principles generally accepted in India:(a) in the case of the Balance Sheet, of the state of affairsof the company as at 31st March 2XXX; and(b) in the case of the Profit and Loss Account, of theprofit/loss for the year ended on that date.

CIRUMSTANCES THAT MAY RESULT IN OTHER THAN AN UNQUALIFIED OPINION

Limitation on scope

Disagreement with the management

Disagreement on the accounting policies-inadequate disclosure

CONCLUSION

BIBLIOGRAPHYAUDITING AND ASSURANCE

-IPCC VOL. 2

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ACKNOWLEDGEMENT We are thankful to Prof. Praful Vithlani for

giving us such a nice topic to work on. We being a amateur to this topic, by doing research for this presentation we have really gained a ample amount of knowledge.

THANK YOU