AUDITING AND ETHICS -I

• Nature, Objective and Scope of Audit: Auditing Concepts: Origin of Auditing, Meaning of Audit, Need for Audit (Benefits of Audit), Objective of the Audit, Scope of Audit, External Audit engagements, Qualities of Auditor. - Inherent Limitations of an Audit; Relationship of auditing with other disciplines. (SA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing).

Audit Strategy, Audit Planning and Audit Program: (SA 300 Planning an Audit of Financial statements) - Auditor’s responsibility to plan an audit of financial statements. Benefits of audit planning. - Planning is a continual and iterative process. - Discussion of elements of planning with the entity’s management. Involvement of Key Engagement Team Members in planning the audit. Preliminary engagement activities. - The auditor’s consideration of client continuance and ethical requirements. Planning activities. - Establishing an overall audit strategy- Assistance for the auditor. Development of audit plan. - Documenting the overall audit strategy and audit plan; Audit program. - Development of Audit Plan and Program.

• Risk Assessment and Internal Control: - Audit Risk. - Risk of Material Misstatement, Inherent Risk and Control Risk, Detection Risk. - Sampling and Non-Sampling Risk. - Concept of Materiality, Materiality in Planning and Performing an Audit. - Auditor’s responsibility to apply the concept of materiality. Auditor’s determination of materiality is a matter of professional judgement. Materiality and Audit Risk. - Application of materiality in planning and performing the audit. Concept of Performance materiality. - Determining materiality and performance materiality when planning the audit. - Use of Benchmarks in determining materiality for the financial statements as a whole. Materiality level or levels for particular classes of transactions, account balances or disclosures. - Revision in materiality as the audit progresses. Documenting the Materiality. (SA 320 Materiality in Planning and Performing an Audit). - Identifying and Assessing the Risk of Material Misstatement, Risk Assessment procedures. - Understanding the entity and its environment; internal control. - Documenting the Risks. - Evaluation of internal control system. - Testing of Internal control; Internal Control and IT Environment (SA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment). Digital Audit: Key features, Impact of IT related Risks, Impact on Controls, Internal Financial Controls as per Regulatory requirements, Types of Controls, Audit approach, Understanding and documenting Automated environment, Testing methods, data analytics for audit, assessing and reporting audit findings. Overview and Introduction: The Auditor’s Responses to Assessed Risks-SA 330.

• Audit Evidence: - Meaning of Audit Evidence. - Relevance and Reliability of audit evidence; Sufficient appropriate audit evidence, Meaning of Assertions. - Assertions contained in the Financial Statements. Source of audit evidence. - Test of controls. - Substantive Procedures- Test of details and Substantive analytical procedures, Audit procedures for obtaining audit evidence. - Evaluation of Audit Evidence (SA 500 Audit Evidence), Audit Trail. (Using the work of Internal Auditors – SA 610) - Internal audit function. External Auditor’s Responsibility for the audit, evaluating the internal audit function. - Basics of Internal Financial Control and reporting requirements. Distinction between Internal Financial Control and Internal Control over Financial Reporting. - Audit Sampling: (SA 530 Audit Sampling). Meaning of Audit Sampling. - Designing an audit sample; Types of sampling (Approaches to Sampling). - Sample Size and selection of items for testing; Sample selection method. - Obtaining evidence of existence of inventory; Audit procedure to identify litigation & claims, obtaining evidence regarding the presentation and disclosure of segment information (SA 501 Audit Evidence - Specific Considerations for Selected Items); External confirmation procedures. Management’s refusal to allow the auditor to send a confirmation request; Negative Confirmations(SA 505 External Confirmations); Audit evidence about opening balances; Accounting policies relating to opening balances; Reporting with regard to opening balances (SA 510 Initial Audit Engagements-Opening Balances). - Meaning of Related Party; Nature of Related Party Relationships & Transactions; Understanding the Entity’s Related Party Relationships & Transactions (SA 550 Related Parties). - Analytical Procedures. - Meaning, nature, purpose and timing of analytical procedures; Substantive analytical procedures. - Designing and performing analytical procedures prior to Audit. - Investigating the results of analytical procedures (SA 520 Analytical Procedures).

• Audit Documentation - Concept of Audit Documentation. - Nature & Purpose of Audit Documentation; Form, Content & Extent of Audit Documentation. Completion Memorandum. - Ownership and custody of Audit Documentation (SA 230 Audit Documentation).