CSAS-1: AUDITING STANDARD ON AUDIT ENGAGEMENT

1. The auditor needs to be appointed as per the relevant act, rules, regulations etc or in the manner
prescribed by the Appointing Authority
2. The auditor shall submit a certificate to the Appointing Authority confirming his/her eligibility for
appointment.
3. The auditor shall obtain an Engagement letter along with the copy of resolution passed ,if any by
the Appointing Authority & communicate his/her acceptance.
4. The Audit Engagement Letter shall inter alia contain the following:

The objective and scope of Audit

The responsibilities of the Auditor and the Auditee
Written representations provided and/or to be provided by the Management to
the Auditor, including particulars of the Predecessor or Previous Auditor
The Period within which the audit report shall be submitted by the Auditor along
with milestones, if any.
The commercial terms regarding audit fees and reimbursement of out of pocket
expenses in connection with the audit
Limitations of Audit, If any.

5. The auditor shall communicate in writing to the previous auditor, if any, before accepting the audit
engagement.
6. The auditor shall make sure he/she adheres to the limits of number of audits set by the law or ICSI
from time to time
7. The auditor shall not have substantial conflict of interest in the auditee. Any other conflict of
interest shall be disclosed before accepting the audit engagement.
8. The auditor shall maintain confidentiality and should not disclose information acquired during the
audit unless he is authorized by the auditee or by an obligation of law.
 CSAS-2 : AUDITING STANDARD ON AUDIT PROCESS AND DOCUMENTATION

1. The auditor shall make an audit plan as per the terms of Audit Engagement
2. An audit plan should contain the following including but not limited to :

identification of broad audit areas

Seeking previous audit findings and observations from the Management and the Predecessor or
Previous Auditor, in case of change of Auditor
Determination of subject matters and audit areas requiring special attention, when considered
necessary
Risk Assessment and Materiality
Audit technique
Allocation of audit resources for the audit
Preparation of audit schedule.

3. The audit should be carried out in a timely, efficient & effective manner and the auditor must display
professional scepticism while carrying out the audit.
4. Risk assessment of the Auditee with respect to and connected/relevant to the Audit Engagement shall be done
considering industrial & business environment, organisational ,structural and compliance requirements.
5. The Auditor shall evaluate high risk areas and activities of the Auditee relating to:
a. Internal control systems and processes of the Auditee for adherence to the constitutional
documents, applicable laws, acts, rules, regulations and standards
b. Transparency, prudence and probity
c. Changes or Attrition in the compliance team and frequency of such changes and attrition.
6. The Auditor shall obtain sufficient information about the Auditee that is relevant for conduct of audit and
forming an opinion and its expression.
7. The Auditor shall verify compliance with applicable laws, act, rules, regulations and standards & deviation, if any,
shall be recorded.
8. The Auditor shall obtain complete, relevant and necessary evidence to support the opinion.
9. The process of gathering and evaluating evidence shall continue until the Auditor is satisfied that sufficient and
appropriate evidence exists to provide a basis for formation of the Audit Opinion.
10. The Auditor shall obtain confirmations from third party/parties wherever required, with respect to information
which is related to such party/parties.
11. While evaluating evidence, if the Auditor finds that Audit Evidence is conflicting, the Auditor shall assess the
extent and credibility of conflicting evidence in order to reach a conclusion or collect more evidence to resolve
the conflict.
12. The Auditor shall adequately document the Audit Evidence in working papers, including the basis and extent of
planning, work performed and the findings of audit.
13. Audit Documents shall take place throughout the audit process. Working papers shall be complete and
appropriately detailed to provide a clear trail of the audit. Audit Documentation shall be properly indexed,
referenced with and supplemented by the set of working papers.
14. The Auditor shall also document discussions with the Management with respect to significant matters in respect
of which written record is not available.
15. The Auditor shall have proper systems & procedures in place for retention of the documents. The documents
should be collated within 45 days from the date of signing the Audit Report. It shall be maintained in either
physical or electronic form for 8 years from the date of signing the Audit Report.
 CSAS-3 : AUDITING STANDARD ON FORMING OF OPINION

1). While forming an opinion, the Auditor shall consider the principle of Materiality and adhere to the
principles of completeness, objectivity, timeliness, & contradictory process.
2.) The Auditor shall adhere to generally accepted precedence and practices in relation to forming of an
opinion as may be available from historical perspective of any kind of audit .
3). The Auditor shall adhere to the following while forming an opinion based on Third Party reports or opinions:

a) The Auditor shall indicate the fact of use of Third Party report or opinion and shall also
record the circumstances necessitating the use of third party report or opinion
b) The Auditor shall indicate the fact if Third Party report or opinion is provided by the
Auditee
c) The Auditor shall consider the important findings/ observation of Third Party
d) The Auditor shall, if necessary and feasible, carry out a supplemental test to check veracity
of the Third Party

4). The form of opinion shall be either an unmodified opinion or a modified opinion . Unmodified opinion
is to be provided when the records are found to be free from misstatements, maintained as per applicable
laws and the auditee is in compliance with all the applicable laws .
Modified opinion is to be given in the following circumstances:
o based on the Audit Evidence obtained, there is non-compliance with the applicable laws in terms of
timelines or process; or
o based on the Audit Evidence obtained, the Records as a whole are not free from Misstatement or
are not maintained in accordance with applicable laws; or
o he is unable to obtain sufficient and appropriate Audit Evidence to conclude that there is due
compliance with the applicable laws in terms of timelines and process; or
o He/she is unable to obtain sufficient and appropriate Audit Evidence to conclude that the Records
as a whole are free from Misstatement; or are maintained in accordance with applicable laws.

5). If the Auditee imposes limitation on the scope of audit and auditor feels that it will impair his ability to
provide a conclusive opinion about the records, then the auditor shall request the Appointing Authority to
remove the limitations. If such limitation aren’t removed , then the auditor shall determine whether he
would be able to obtain sufficient and appropriate evidence .
6). The Audit Report shall include a section known as Auditor’s Responsibility. It shall contain the
statements provided in CSAS-3.
7). The report shall be addressed to the Appointing Authority unless otherwise specified in the Audit
Engagement Letter or provided in the applicable law. Where specific formats are prescribed, those formats
shall be followed for reporting.
8). Signature block shall mention the name of the audit firm along with the registration number, if any, the
name of the Auditor, certificate of practice number, the membership number of the Auditor, specifying
whether associate or fellow member, as applicable. The Auditor shall clearly mention date and place of
signing the report, in case report is signed by two different persons on different dates or different places;
same shall be mentioned in the report
 CSAS-4 Auditing Standard on Secretarial Audit

CHECKLIST
1. Shall adhere to the other three auditing standards i.e. CSAS 1 – CSAS 3.
2. Shall identify and segregate all the laws that are applicable to the Auditee.
3. Shall identify events/corporate actions that took place during the audit period. Theidentification
shall be made by reviewing the following:

S Particulars Remarks
r
n
o
1 Website of the regulators Check the websites of Regulators such as
MCA portal, SEBI portal, Income Tax
Portal , etc.
2 Website of the Auditee
3 Statutory Records Check the records incl. books & papers of
the Auditee to find out details of
corporate actions that took place during
the review period.
4 Interaction with the Management Conduct discussions with the
Management of the Auditee

4. The Auditor shall verify all event and calendar based compliances from the Records of the Auditee,
database or website of the regulators and other relevant sources.
5. The Auditor shall verify that the composition of the Board of Directors is as per the Companies Act,
SEBI(LODR) Regulations , any other Act as applicable to the auditee :
SR No PARTICULARS REMARKS

1 Composition of BOD as per CA,2013
Section 149 of the Companies Act, 2013 requires
thatevery company shall have a minimum number
of :
3 directors in the case of a public company,
2 directors in the case of a private company,
1 director in the case of a One Person Company.

At least one woman director shall be appointed

inevery listed company .

All listed public companies should have at least 1/3

rdof the total number of directors as independent
directors

Every other public company having paid up share

capital of ₹ 100 crores or more or turnover of ₹ 300
crores or more as on the last date of audited
financialstatements, shall appoint least one woman
director.

-The maximum number of directorships, including

anyalternate directorship a person can hold, is 20.(
However the maximum limit for directorships in
public
co or private co which is a subsidiary of such public

2 Composition of BOD as per SEBI LODR
co,is 10)
The composition of the board of directors of the
listedentity shall be as follows; Board of Directors
shall have
an optimum combination of executive and
non-
executive directors with at least 1 woman director
and not less than fifty percent of the board of
directors shallcomprise of non-executive directors.
Where the chairperson of the board of directors is a
non-executive director, at least one-third of the
board of directors shall comprise of independent
directors and where the listed entity does not have a
regular non- executive chairperson, at least half of
the board of directors shall comprise of independent
directors.
However where the non-executive chairperson is a
promoter of the listed entity or is related to any
promoter or person occupying management
positions at the level of board of director or at one
level below the Board of Directors, at least half of the
board of directors of the listed entity shall consist of
Independent Directors (ID).
The board of directors of the top 1000 listed entities
(with effect from April 1, 2019) and the top 2000
listed entities (with effect from April 1, 2020) shall
comprise of not less than six directors.
6. The Auditor shall make sure all Board Processes is as per the applicable laws
7. The Auditor shall verify that all the required Committees as per SEBI (LODR ) Regulations &
Companies Act, 2013 are formed . Following are the Committees as per Companies Act & SEBI
(LODR):
Particulars Audit Committee Nomination Stakeholders Corporate Social
Committee Committee Responsibility
Committee
Applicability All Listed Companies, All Listed All Listed Net worth > 500
Companies, Companies, and crore rupees
For Public Company, for other
For Public Company, companies whose Turnover > 1000
Paid up capital ≥ 10 crore rupees
Number of
crore or Paid up capital ≥ 10
shareholders or
crore or Net profit > 5
debenture holders
Turnover ≥ 100 crore crore rupees
≥ 1000
Turnover ≥ 100 crore
or
or
Loans or Borrowings > 50
crore Loans or Borrowings
> 50 crore

Members Atleast 3 directors Atleast 3 Non- Atleast 3 directors Atleast 3 directors

executive directors
For Private
companies ≥ 2

Independent For Listed Entity [Atleast For Listed Entity and No such condition Atleast 1
Directors two-third] other companies is required

For other [Atleast 50%]

companies[[Majority of the
total number of members]

Chairperson For Listed Entity Independent Director Non-executive No such Condition

[Independent director] and shall not chair and can be
any other committee Independent
Director or not

Presence at AGM Chairperson Chairperson may be Chairperson No such Condition

present
Act, Section and Companies Act 2013, Companies Act Companies Act Companies Act
Rules 2013, 2013, 2013,
Section 177,
Section 178, Section 178(5), Section 135,
Companies (Meetings of
Boards and its Powers) Companies Companies Companies
Rules 2014, (Meetings of Boards (Meetings of (Corporate Social
and its Powers) Boards and its Responsibility
SEBI (LODR) Regulations Rules 2014, Powers) Rules Policy ) Rules
2015 2014, 2014,
SEBI (LODR)
Regulations 2015 SEBI (LODR) Not mandatory
Regulations 2015 under SEBI
(LODR)
Regulations

Non Applicability For Unlisted Public For Unlisted Public No such Criteria No such Criteria
Company Company

[Joint Venture, Joint Venture,

Wholly Owned Subsidiary, Wholly Owned

and Dormant Company] Subsidiary, and
Dormant Company]

Number Of For Listed Entity For Listed Entity For Listed Entity As desirable to
Meetings serve its purpose
[Atleast 4 meetings in a [Atleast once in a [Atleast once in a
year and gap between two year] year]
meetings should be more
than 120 days] For other Companies For other
Companies
For other Companies [As desirable to
serve it Purpose] [As desirable to
[As desirable to serve it serve it Purpose]
Purpose]

Quorum For Listed Entity For Listed Entity As decided by As Decided by

BOD BOD
[2 members or one-third of [2 members or one-
total members whichever third of total
is greater with minimum 2 members whichever
independent directors] is greater with
minimum 1
For other Companies independent
 [As decided by BOD] directors]

For other Companies

[As decided by BOD]

Particulars Risk Management Committee

Applicability Top 500 Listed Entities

Members Board of Directors and Senior executives and majority consist of Board Members

Independent No such Criteria

Directors
Chairperson Shall be member of BOD

Presence at No such condition

AGM
Act, Section and SEBI (LODR) Regulations, 2015,
Rules
There is no requirement for formation of risk management committee under Companies Act,
2013

Non Other than Top 500 Listed Companies

Applicability
Number Of For Listed Entities
Meetings
[Atleast once in a year]

Quorum As decided by BOD

8. The Auditor should report fraud if detected as per the provisions of Section 143 of the Companies Act, 2013.