K.P .

B HINDUJA COLLEGE OF COMMERCE

2ND YEAR B.COM(ACCOUNTING & FINANCE) AUDIT SEMESTER 3 2010-2011

NAME
A KA SH B A R O T PR A T I C H H E D A K R I KESH J I N A N M AYU R H EG D E A N I U D D H A PA R D E S H I R SAC H I SH A H N N I H A N T SH A H S D I ESH SU TH A R N

ROLL NO
02 04 16 28 33 43 46 54

History of Auditing Standards

THE ICAI AU D I I G T N PR A C TI E S C C O M M I EE TT AUDITING & ASSURANCE STANDARDS BOARD

REVIEW EXISTING AUDITING PRACTICES

STANDARD AUDITING PRACTICES (SAPS)

WIDER PARTICIPATION

AUDITING & ASSURANCE STANDARDS (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

Introduction
Purpose Comparatives Comply

Auditors Responsibility
Audit Evidence Accounting policy Corresponding Figure Material Misstatement

Reporting
Auditors Report Auditors Opinion Appropriate disclosure Incoming auditor-additional requirement

Financial Reporting Frameworks

Users of financial statements Consistency Level of information

(AAS 26)

SA 210

TERMS OF ENGAGEMENT

Introduction
Purpose

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

Example

You have requested that we audit the balance sheet of (Name of the Company) as at 31st March, 2XXX and the related profit and loss account and the (cash flow statement) for the year ended on that date. We are pleased to confirm our acceptance and our understanding of this engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements. We will conduct our audit in accordance with the auditing standards generally accepted in India and with the requirements of the Companies Act, 1956. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 and significant estimates made by management, as well as evaluating the over financial statement presentation.

However, having regard to the test nature of an audit, persuasive rather than conclusive nature of audit evidence together with inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements of financial statements, resulting from fraud, 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 you with a separate letter concerning any material weaknesses in accounting and internal control systems which might come to our notice. The responsibility for the preparation of financial statements on a going concern basis is that of the management. The management is also

SA 260 (AAS 27)

C O M M U N I A T I N S O F A U D I M A TT E R S C O T W I H TH O SE C H A R G ED W I H T T G O V ER N A N C E

Introduction
Purpose Governance Relevant persons Matters

FORMS OF COMMUNICATION

SA 700 (AAS 28)

THE AUDITORS REPORT ON FINANCIAL STATEMENTS

INTRODUCTION
Purpose Review and Assess the Conclusion Statutory requirement Expression of opinion

BASIC ELEMENTS OF AUDITORS REPORT

Title Addressee Opening or introductory paragraph Scope paragraph(describe the nature of audit)

Opinion paragraph Date of the report Place of signature Auditors signature

Format
Opening 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 entitys 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.

Auditors Report

ILLUSTRATION: Unqualified 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 thereto4. These financial statements are the responsibility of the entitys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require 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 in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give a true and fair view in conformity with the accounting principles generally accepted in India5: (a) in the case of the Balance Sheet, of the state of affairs of .. (Name of the entity) as at 31st March 2XXX; and (b) in the case of the Profit and Loss Account, of the profit/loss for the year ended on that date. For ABC and Co., Chartered Accountants Auditors Signature (Name of Member signing the Audit Report) (Designation6) (Membership Number) Place of Signature Date

W e d i n o t o b se rve th e co u n ti g o f th e p h ysi l d n ca i ve n to ri s n e a s a t 3 1 st M a rch 2 X X X si ce th a t d a te w a s p ri r to th e n o ti e m w e w e re a p p o i te d a s a u d i rs o f .( N a m e o f th e n to e n ti ). O w i g to th e n a tu re o f th e e n ti s re co rd s, w e ty n ty w e re u n a b l to sa ti e sfy o u rse l s a s to i ve n to ry q u a n ti e s b y ve n ti o th e r a u d i p ro ce d u re s. t I o u r o p i i n a n d to th e b e st o f o u r i fo rm a ti n a n d n n o n o a cco rd i g to th e exp l n a ti n s g i n to u s, su b j ct to th e n a o ve e e ffe cts o f su ch a d j stm e n ts, i a n y , a s m i h t h a ve b e e n u f g d e te rm i e d to b e n e ce ssa ry h a d w e b e e n a b l to sa ti n e sfy o u rse l s a s to p h ysi li ve n to ry q u a n ti e s, th e fi a n ci l ve ca n ti n a

Qualified Opinion

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 entitys 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 financial statements 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 affairs of the company as at 31st March 2XXX; and (b) in the case of the Profit and Loss Account, of the profit/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

BIBLIOGRAPHY
AUDITING AND ASSURANCE

-IPCC VOL.

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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