Summary of ISA 200 - Lecture notes 1 PDF

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Auditing and assurance...

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Summary of ISA 200

200 series: General principles and responsibilities ISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing Objectives of the auditor [11]: 

To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.



To express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.



To report on the financial statements, and communicate as required by the ISAs, in accordance with the auditor's findings.

Responsibilities of management [A2]: 

Preparation of the financial statements in accordance with the applicable financial reporting framework, including their fair presentation.



Internal control necessary to enable preparation of financial statements that are free from material misstatement, whether due to fraud or error.



To provide the auditor with: o

Access to all information relevant to the preparation of the financial statements

o

Unrestricted access to persons from within the entity from whom the auditor determines it necessary to obtain evidence.

Risk: 

Audit: the risk of issuing an inappropriate opinion. [13c]



Inherent: the susceptibility of an assertion about a class of transaction (e.g. revenue) or account balance (e.g. receivables) to material misstatement before the consideration of any related internal controls. [13ni]



Control: the risk that material misstatement will not be prevented, detected or corrected by entity's internal control. [13nii]



Detection: the risk that audit procedures do not detect material misstatements. [13e]

An auditor must perform the audit with professional scepticism: an attitude that includes a questioning mind, being alert to conditions which indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence. [13l] Inherent limitations of audit [A47]: Audit evidence is persuasive rather than conclusive because of: 

The nature of financial reporting



The nature of audit procedures



The need to conduct audit a within reasonable time and at reasonable cost....