PSA 200

Reflection Paper

The auditing profession holds a critical role in ensuring the integrity and credibility of
financial reporting. Philippine Standards on Auditing (PSA) 200, as one of the foundational
standards in auditing, sets the tone for auditors as they navigate the complexities of their
responsibilities in conducting financial statement audits in the country.

Titled "Overall Objectives of the Independent Auditor and the Conduct of an Audit in
Accordance with Philippine Standards on Auditing," PSA 200 outlines the fundamental
principles that underpin the auditor's role in providing assurance on financial statements, thus
ensuring the reliability and integrity of financial reporting. In this paper, I will delve into the
key aspects of PSA 200, its significance in the auditing process, and its impact on ensuring
the quality and reliability of financial statements.

At its core, PSA 200 outlines the primary objective of an auditor which is to obtain
reasonable assurance about whether financial statements are free from material misstatement.
From assessing and addressing the risk of material misstatements, whether due to fraud or
error, to designing and implementing audit procedures tailored to the specifics of the
engagement, these objectives guide auditors in providing assurance as to accuracy and
correctness of the entity’s financial records. This objective goes beyond mere compliance;
such that it is about instilling confidence in stakeholders that the information they rely upon
is not just accurate but has been rigorously examined by an independent and skilled
professional.

One of the key principles embedded in PSA 200 is the concept of professional
skepticism. The standard recognizes the dynamic and ever-evolving nature of business
environments and acknowledges the need for auditors to approach their work with a
questioning mindset, critically evaluating audit evidence, and remaining vigilant to the
potential for management bias or fraudulent activities. This principle underscores the
importance of their role as guardians of financial integrity, ensuring that the information
presented in financial statements is a true reflection of an organization's financial health.

Similarly, the principle of independence is also stressed in PSA 200, highlighting the
importance of auditors maintaining an unbiased opinion and avoiding conflicts of interest.
This commitment to skepticism and independence contributes to the integrity of the audit
process, ensuring that auditors do not merely accept information at face value but actively
seek out evidence to support their conclusions in a manner that is rooted to providing fair and
accurate reports.

The standard also emphasizes the indispensable role of professional judgment in

auditing. Recognizing the dynamic nature of business environments, auditors are encouraged
to exercise their judgment throughout the audit process. This flexibility allows auditors to
adapt to unique challenges and changing conditions, ultimately enhancing the effectiveness of
the audit.

Professional judgement is pivotal in navigating the challenges of materiality and risk

assessment without compromising the consistency expected from professional audits. In
conjunction with this, effective communication is a significant part of the audit process. PSA
200 recognizes the importance of transparent and open communication between auditors,
management, and those charged with governance. Building strong channels of
communication ensures a collaborative approach to the audit process, fostering trust and
understanding among all stakeholders.

PSA 200 is not an isolated document; it is intricately woven into the fabric of ISAs. It
serves as a conduit, seamlessly connecting auditors to a globally recognized set of standards.
The principles embedded within this standard harmonize the diverse practices across
jurisdictions, ensuring a common language and methodology and thus fostering consistency,
and elevating the credibility of the profession on a global scale.

In conclusion, PSA 200 plays a pivotal role in shaping the landscape of financial
transparency in the Philippines. Its emphasis on objectives, general principles, and the
exercise of professional judgment equips auditors with the tools needed to navigate the
complexities of the audit environment. The objectives outlined in PSA 200 resonate as a
commitment to the public interest, upholding the integrity of financial reporting, and
reinforcing trust in the audit profession.