AUDITING AND ETHICS –II

• Audit of Items of Financial Statements: - Audit of sale of Products and Services; Audit of Interest Income, Rental Income, Dividend Income, Net gain/loss on sale of Investments etc. - Audit of Purchases, Employee benefits expenses, Depreciation, Interest expense, Expenditure on Power & Fuel, Rent, Repair to building, Repair to Machinery, Insurance, Taxes, Travelling Expenses, Miscellaneous Expenses etc. - Audit of Share Capital, Reserve & Surplus, Long Term Borrowings, Trade Payables, Provisions, Short-term Borrowings & Other Current Liabilities. - Audit of Land, Buildings, Plant & Equipment, Furniture & Fixtures, Vehicles, Office Equipment, Goodwill, Brand/Trademarks, Computer Software etc. - Audit of Loan & Advances, Trade Receivable, Inventories, Cash & Cash Equivalent, Other Current Assets. Audit of Contingent Liabilities.

• Completion and Review - Meaning of Subsequent Events; - Auditor’s obligations in different situations of subsequent events. - Procedures for subsequent events. (SA 560 Subsequent Events). - Responsibilities of the Auditor with regard to Going Concern Assumption; Objectives of the Auditor regarding Going Concern. - Events or Conditions that may cast doubt about Going Concern Assumption. - Audit Procedures when events or conditions are identified (SA 570 Going Concern). Overview and - Introduction of Evaluations of Misstatements identified during the audit (SA 450). - Written Representations as Audit Evidence. - Objective of Auditor regarding Written Representation. - Management from whom Written Representations may be requested. - Written Representations about Management’s Responsibilities (SA 580 Written Representations) - Overview and Introduction of SA 260: Communication with Those Charged with Governance. - Overview and Introduction of SA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management.

• Audit Report - Forming an opinion on the Financial Statements. - Auditor’s Report- basic elements (SA 700 Forming an Opinion and Reporting on Financial Statements). - Communicating key Audit Matters in the Independent Auditor’s Report (SA 701) Types of Modified Opinion, Circumstances When a Modification to the Auditor’s Opinion is Required, Qualified, Adverse Disclaimer of Opinion (SA 705 Modification to the Opinion in the Independent Auditor’s Report). - SA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report. Nature of Comparative Information. - Corresponding Figure; Comparative Financial Statements (SA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements). - Branch audit; Joint audit; Reporting requirements under the Companies Act, 2013 including CARO.

·         Special Features of Audit of Different Type of Entities Appointment of Auditor, Audit Procedure and Audit Report in respect of different Category of Entities: Government; Local bodies; Not-for-profit organizations; Trust and Societies, Partnership Firms, Audit of different type of undertakings, i.e., Educational Institutions, Hotels, Clubs, Hospitals, etc., Basics of Limited Liability Partnerships (LLPs) Audit and Co-operative Societies Audit.

Audit of Banks Understanding of accounting system in Banks, Audit Approach, Audit of Revenue items, Special Consideration in Bank Audit with emphasis on Advances and NPAs

• Ethics and Terms of Audit Engagements - Meaning of Ethics. - Ethics is a State of Mind, Need for Professional Ethics. - Principles based approach v Rules based approach (Ethical or Legal). - The fundamental principles of Professional Ethics: Integrity; Objectivity; Professional Competence and Due care; Confidentiality; Professional Behaviour. - Independence of Auditors. - Threats to Independence: Self Interest threats; Self Review threats; Advocacy threats; Familiarity threats; Intimidation threats. - Safeguards to Independence; Professional Skepticism, Terms of Audit Engagements Preconditions for an audit; Audit Engagement. - Agreement on Audit Engagement Terms. - Terms of Engagement in Recurring Audits (SA 210 Agreeing the Terms of Audit Engagements). - Overview and Introduction of SQC 1 Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services Engagements. - Overview and Introduction of SA 220 - Quality Control for an Audit of Financial Statements).