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WELCOME

TO
A
WELCOME

TALK
ON
AUDITING
STANDARDS
INTRODUCTION
• Audit Mandate -
• CAG’s (DPC) Act 1971 prescribes functions, duties
and powers of SAI
• Audit Mandate includes Audit of
• Receipt and
• Expenditure from Consolidated Fund
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
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
Audit objectives
(contd…)
• Executive Governments and not Audit is
responsible for enforcing economy and efficiency
in expenditure
• Scope of Audit
• Term includes financial as well as performance
audit
Auditing Standards
• Prescribe the norms of principles and practices
which the Auditors are expected to follow in the
conduct of Audit
• Basic postulates
• General Standards
• Field Standards
• Reporting Standards
1. Basic Postulates
• Basic assumptions,logical principles and
requirements to help in developing auditing
standards and serve the auditors in forming their
opinion and reports
• Auditing standards shall be complied with by the
auditors in all matters that are deemed material
• Auditor shall apply their own judgement to the
diverse situations that arise in the course of
Government auditing relating to
Basic Postulates
• There shall be an accountability process in
operation
• Govt shall be responsible for establishment,
development and enforcement of adequate
information, control, evaluation and reporting
systems within the Government to facilitate the
accountability process
Basic Postulates
• Appropriate authorities in Govt shall ensure the
promulgation of acceptable accounting standards
for financial reporting and disclosure that are
relevant to the needs of the Govt and that result
in true and fair presentation of financial position
and results of operations
Basic Postulates
(contd….)
• The Govt shall establish an adequate system of
internal control to minimise the risk of errors and
irregularities
• Govt shall ensure cooperation of auditable entities
in providing access to all relevant data,
information and documents necessary for audit
• All audit activities shall be consistent with the audit
mandate of the CAG Of India

• Audit shall avoid conflict of interest between


auditor and the auditable entity
Basic Postulates
(contd….)
• Audit to bring to light the failures, system
weaknesses deficiencies and circumstances
leading to infructuous expenditure
• SAI needs to maintain its independence and
objectivity.
Basic Postulates
(contd….)
• An auditor has right to inspect any office of
accounts of the Union or of a State and to require
any document relevant to the transaction
• Audit to maintain confidentiality regarding audit
matters and the information obtained
Basic Postulates
(contd….)
• The term `Audit` includes
• Financial Audit
• Regularity Audit
• Performance Audit
• SAI should work towards improving techniques for
auditing the validity of performance measures
2 GENERAL
STANDARDS
• The general auditing standards describe the qualifications
of the auditor and the auditing institution.The standards
common to both are:
• The auditor and audit institutions must be independent
• Possess the required professional competence
Exercise due care and concern in complying with these
standards particularly in planning , gathering analyzing
evidence, reporting conclusions & recommendations
GENERAL STANDARDS
• General auditing standards for the audit institutions
are they should adopt procedure to
• Recruit personnel with suitable qualifications
• Develop and train employees
• prepare manuals and other guidance notes
General
Standards
• Support the skills and experience available within
the audit institutions and identify the skills that
are absent
• Review the efficiency and effectiveness of internal
standards and procedures
General
Standards
• General Standards for the auditor and the audit
institutions include
• Independence from the legislature
• Independence from the executive
• Independence from the audited entity
General
Standards
• Competence
• The auditor and the SAI must possess the required
competence
• The audit department should equip itself with the
full range of up-to-date audit methodologies,
including systems based techniques
General Standards
• Due care: Due care in specifying, gathering and
evaluating evidence and in reporting findings,
conclusions and recommendations
• Quality control: Audit institutions to establish a
system of quality control to provide assurance that
the institute and its personnel comply with
standards.
• Document its quality control policies and
procedures and communicate them to its personnel
General Standards
• Standards with ethical significance:
• The auditor and SAI should be independent and
should avoid conflicts of interest with the audited
entity on matters that may impair their
independence materially
General Standards
• The auditor should at all times maintain absolute
integrity and devotion to duty
• Auditor should not disclose information obtained in
the auditing process to third parties, either orally or
in writing
3. FIELD STANDARDS

• The purpose of field standards is to establish the


criteria or overall framework for the purposeful,
systematic and balanced steps or actions that the
auditor has to follow
• The Auditor should plan the audit in a manner
which ensures that an audit of high quality is
carried out in an economic, efficient and effective
way and in a timely manner
FIELD STANDARDS

• The planning steps normally included in an audit


are:
• Collect information about the audited entity and
its organisation in order to assess the risk and to
determine materiality
FIELD STANDARDS
• Define the objective and scope of audit
• undertake preliminary analysis to determine the
approach to be adopted and the nature and extent
of enquiries to be made later
• Highlight special problems foreseen when planning
the audit
• prepare a budget and a schedule for the audit
FIELD STANDARDS
• Familiarize the audited entity about the scope,
objectives and the assessment criteria of the audit
and discuss with them as necessary
• Supervision and Review
• The work of the audit staff at each level and audit
phase should be properly supervised during audit
and a senior member of the audit staff should
review documented work
FIELD STANDARDS
• Study and Evaluation of Internal Control
• The auditor, in determining the extent and scope of
the audit should study and evaluate the reliability
of Internal control
• Compliance with applicable laws,rules and
regulations
• Audit Evidence: Competent, relevant and
reasonable evidence should be obtained to support
the auditor`s judgement and conclusions
FIELD STANDARDS
• The auditor to ascertain whether:
• Financial Statements are accurate and complete
• True and fair view
• prepared based on generally accepted accounting
principles
• sufficient disclosure
FIELD STANDARDS
• 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
4. Reporting Standards
Field Audit Report -
Observations and conclusions in an
appropriate form
Contents should be easy to understand
Report should be complete
Reporting Standards
(contd…)
Accurate
Convincing
Clarity
Concise
Follow up of Audit Reports
Reporting Standards
(contd…)
• Report should be free from vagueness or
ambiguity
• relevant information
• supported by audit evidence
• timeliness
Reporting Standards
(contd…)
• Follow up of Audit reports
• Adequate
• Prompt and
• Proper follow up action by the entity on the light
of audit conclusions will enhance the
effectiveness of audit and prompt public
accountability
Reporting Standards
(contd…)
• The form and content of audit opinion and report
• Title
• Signature and date
• Objectives and scope
• Completeness
• Addressee
Reporting Standards
(contd…)
• Identification of subject matter
• Legal basis
• Compliance with standards
• Timeliness
Thank
You