AUDITING STANDARDS DAY 2 SESSION NO.1 (THEORY)

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AUDITING STANDARDSDAY 2 SESSION NO.1 (THEORY)
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Introduction

• Audit Mandate -
• CAGs (DPC) Act 1971 prescribes functions, duties
  and powers of SAI
• Audit Mandate includes Audit of
• Receipt and Expenditure from
• Consolidated Fund

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Introduction (contd.)

• Contingency Fund and Public Accounts
• Trading, Manufacturing, Profit and Loss Account
  and Balance Sheet
• Accounts of Stores and Stock
• Government Companies
• Statutory Corporations
• Authorities and Bodies substantially financed
• Grants and Loans for specific purposes

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Audit Objectives

• To safeguard the financial interests of the
  Government
• Uphold and promote public accountability
• Sound and economical financial practices
• Audit assists Parliament/Legislatures in
  exercising financial control through
• PACs/PUCs

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Scope of Audit

• Includes
• Performance Audit
• Regularity Audit
• Financial Audit
• Compliance Audit

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Basic Postulates

• Audit must exercise his best judgement in
  determining -
• audit procedure
• basis of forming opinion
• contents of his report
• due professional care
• independence

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Auditing standards can be broadly grouped under

• 1 General Standards
• 2 Operational Standards
• 3 Reporting Standards

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General Standards

• A Professional
• B Manuals and Instructions
• C Quality Assurance

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General Standards - Professional

• Qualification
• Training
• Auditor should develop proper insight

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General Standards

• Quality Assurance
• Appropriate internal control system to ensure
  quality of work

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Operational Audit Standards

• Audit Planning
• Financial Statement Audit
• Regularity and Legal Audit
• Performance Audit (VFM Audit)

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Operational Standards -Audit Planning

• Audit should be properly guided
• directed and
• supervised
• sufficient understanding of the internal control
  system of the auditee organisation

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Operational Standards - Financial Statements
Audit

• Financial Statements are accurate and complete
• True and fair view
• prepared based on generally accepted accounting
  principles
• sufficient disclosure

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Operational Standards -Performance Audit

• Achievement of physical and financial goals and
  targets
• social and economic objects
• utilisation of resources as per projected outlay
• cases of overpayment, losses, avoidable, excess
  or infructuous expenditure due to improper
  planning

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Operational Standards -Performance Audit
(contd..)

• Delays in completion
• overstaffing

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Operational Audit Standards(contd)

• Audit of Receipts
• Audit of Government Companies
• Auditing in EDP Environment
• Audit Evidence
• (i) Sufficiency
• (ii) Relevance
• (iii) Competence

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Reporting Standards

• Field Audit Report -
• Observations and conclusions in an appropriate
  form
• Contents should be easy to understand
• Report should be complete

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Reporting Standards (contd)

• Accurate
• Convincing
• Clarity
• Concise
• Follow up of Audit Reports

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Reporting Standards (contd)

• Report should be free from vagueness or ambiguity
• relevant information
• supported by audit evidence
• timeliness

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Reporting Standards (contd)

• Follow up of Audit reports
• Adequate
• Prompt
• Proper

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Session Summary

• In this session we discussed
• INTOSAI Auditing Standards
• CAGs DPC Act
• Auditing Standards