CA- AUDITING (Inter & Final)

Nov-2022 Exams

By CA. Suresh Kumar (SK Sir) – Auditing Faculty from a decade.

POINTS TO BE KEPT IN MIND BEFORE START PREPARING AUDITING PAPER

1. Majority of the Auditing Syllabus drafted from Standards on Auditing (SAs) at CA Inter level &
at CA Final Level Other Laws and Professional Ethics Covered extra.

2. First Read & Understand SAs and then Start your Preparation. It will boost your confidence.

3. Entire Auditing Paper will be discussed based on STATUTORY Audit of COMPANIES only.
 “So, whenever you read the Subject, Audit means Only “Statutory Audit “and Auditor means
Only Statutory Auditor (Unless specifically mentioned in Material).

4. Always Management held responsibility to maintain Books of accounts and to Prepare Financial
Statements as per [Applicable Financial Reporting Framework].
 Applicable Financial Reporting Frame Work (AFRF) means Financial Statements should be
prepared based on; Accounting Standards, as per Companies Act 2013 and as per other laws and
regulations as applicable Ex: CARO 2020.

5. While Preparing Financial Statements, Management makes Implicit / Explicit Claims about the
Items shown in Fin.Statements, is Called “Assertions”, Simply called “Management Judgements”.

6. Always it is Management PRIMARY Responsibility to Prevent and Detect Fraud and Possibility of
fraudulent activities in the Organization.

7. Always Auditor’s Primary Objective / Responsibility is to Express appropriate OPINION on

Financial Statements. (i.e., whether FS are true & fair View / FS are free from Material
Misstatements)
Note: Auditor is not just express opinion but he is expected to express “appropriate” opinion.

8. Financial Statements always misted in due to two reasons. i.e., either due to error or fraud.
Note: Always while preparing read this as “Mis-statement due to error or fraud”

9. In Simple words, Materiality means wrong statements in Fin.Stmt, (i.e., major errors/ Frauds)
“having Significant impact in the economic decisions Users of Financial Statements.

10. Concept of Materiality should be seen from Auditor’s perspective, while preparing the subject.

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11. Auditor Should Comply with SAs (Standards on Auditing) whenever he conducts and independent
audit, irrespective of Size, Nature of business and whether organization is profit oriented or not.
Note: If Auditor is not maintained his Independence, then his Opinion is Invalid.

12. Auditor Always gives only “REASONABLE ASSURANCE” by expressing his Opinion in the Form of
Report (Independent Audit Report).
Note: Reasonable Assurance itself is a High Level of Assurance.

13. Auditor will NEVER expect to give ABSOLUTE ASSURANCE (100% Assurance), due to inherent
limitation of audit.
a. Time
b. Financial Reporting
c. Cost vs Benefit

14. In order to give Reasonable assurance, it is the responsibility of Auditor to obtain Sufficient
and Appropriate Audit evidence.

Note 1: Always Audit Evidence Should Satisfy TWO Conditions;

a) Sufficiency
b) Appropriateness

Note 2: If Auditor unable to get sufficient and appropriate evidence during audit then auditor
will not get REASONABLE Assurance, Hence Auditor should also express his Opinion
accordingly.

Note 3: Auditor Assurance will be always based on Audit Evidences

15. While doing audit (Planning State, Execution State & Reporting State), if auditor takes his own
decision, then it is called “Professional Judgement of Auditor”.
Note: Whenever auditor used his professional judgment (PJ) i.e, taken his own decision, it is
based on;
a) Qualification of Auditor
b) Skill of Auditor
c) Knowledge of Auditor
d) Experience of Auditor

16. Always Auditor use his Professional Judgement to Complete the audit efficiently and effectively
subject to compliance with SA and applicable Laws / Regulations.

Note: Auditor while using his PJ, he can’t violate Standards on Auditing (SA) which is mandatory
as per ICAI.

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17. While Preparing Auditing Paper CA Inter & CA Final level; Students should note the Following:
a. If auditor not executed his duties promptly at the time of audit, then it leads to Professional
misconduct of auditor (Proper Action will be taken against him by ICAI) i.e., he is, during the
course of audit
i. NOT done audit with reasonable Skill and care,
ii. NOT maintained Documentation
iii. NOT Complied with SAs issued by ICAI
iv. Negligent during audit time.
b. If any fraud existed in the Financial Statements and auditor not reported the same due to
above mentioned four reasons, then auditor is held responsible for that fraud as he is not
done his duties promptly.
c. Even after performing his duties, still if any fraud existed in the financial statements for
which auditor is not responsible.

18. Always Auditor Scope (i.e., what to do & what not to do) will be decided by Law (Statute), If
any other persons influence this scope, then it will be a restriction on scope of auditor. Auditor
should always follow scope conferred (given) by law.

19. Keep the Following key Points in Mind While preparing the Paper
a. Company (All Companies) - Regulated by ROC, SEBI in case Listed
b. Central Govt (i.e., Ministry of Corporate Affairs)
c. Practicing Chartered Accountant (Regulated by ICAI)
d. Management
e. Those Charged with Governance
f. Management Prepare Financial Statements as per Law (ASs)
g. Auditor Audits the Financial Statement as per Law (SAs)

20. Audit of Other than Companies are specially discussed in the Syllabus as per ICAI.

My best wishes to all of you

Happy Reading & Happy Learning

SK Sir Auditing Classes

e-mail: casureshkumarmaster@gmail.com

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