Miscellaneous Topics for Audit Revision

Important Sections

Sec. 138
Internal Audit
Sec. 139
Appointment of Auditors
Sec. 140
Removal, Resignation of auditor and giving of Special Notice
Sec. 141
Eligibility, qualification and disqualifications of auditors
Sec. 142
Remuneration of Auditors
Sec. 143
Powers and Duties of Auditors and Auditing Standards
Sec. 144
Auditor not to render certain Services
Sec. 145
Auditor to sign Audit Reports etc.
Sec. 146
Auditor to attend General Meetings
Sec. 147
Punishment for contravention
Sec. 148
Central Government to specify audit of items of cost of certain companies
Sec. 149
Minimum Maximum Directors, Independent Director, Resident Director, Woman Director.
Sec. 177
Audit Committee
Sec. 204
Secretarial Audit

Applicability of Internal Audit

1. Listed Companies
2. Public Company with Turnover of Min Rs. 200 Cr
3. Public Company with Paid up share capital of Min Rs. 50 Cr
4. Public Company with Outstanding deposits of Min Rs. 25 Cr
5. Public Company with Bank/PFI Borrowings of Min Rs. 100 Cr
6. Private Company with Turnover of Min Rs. 200 Cr
7. Private Company with Bank/PFI Borrowings of Min Rs. 100 Cr

List of Standards on Auditing

List of Different Standards Issued by AASB in India

Standards on Quality Control (SQCs)

 SQC 1, Quality Control for Firms that Perform Audit and Reviews of Historical Financial
Information, and other Assurance and Related Services Engagements

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Audits and Reviews of Historical Financial Information
 100-199 Introductory Matters

 200-299 General Principles and Responsibilities

• SA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance
with Standards on Auditing
• SA 210, Agreeing the Terms of Audit Engagements
• SA 220, Quality Control for an Audit of Financial Statements
• SA 230, Audit Documentation
• SA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
• SA 250, Consideration of Laws and Regulations in an Audit of Financial Statements
• SA 260, Communication with Those Charged with Governance
• SA 265, Communicating Deficiencies in Internal Control to Those Charged with Governance and
Management
• SA 299, Joint Audit of Financial Statements

 300-499 Risk Assessment and Response to Assessed Risks

• SA 300, Planning an Audit of Financial Statements
• SA 315, Identifying and Assessing the Risks of Material Misstatement Through Understanding the
Entity and Its Environment
• SA 320, Materiality in Planning and Performing an Audit
• SA 330, The Auditor’s Responses to Assessed Risks
• SA 402, Audit Considerations Relating to an Entity Using a Service Organisation
• SA 450, Evaluation of Misstatements Identified During the Audit

 500-599 Audit Evidence

• SA 500, Audit Evidence
• SA 501, Audit Evidence-Specific Considerations for Selected Items
• SA 505, External Confirmations
• SA 510, Initial Audit Engagements – Opening Balances
• SA 520, Analytical Procedures
• SA 530, Audit Sampling
• SA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related
Disclosures
• SA 550, Related Parties
• SA 560, Subsequent Events
• SA 570, Going Concern
• SA 580, Written Representations

 600-699 Using Work of Others

• SA 600, Using the Work of Another Auditor
• SA 610, Using the Work of Internal Auditors
• SA 620, Using the Work of an Auditor’s Expert

 700-799 Audit Conclusions and Reporting

• SA 700, Forming an Opinion and Reporting on Financial Statements
• SA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
• SA 705, Modifications 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
• SA 710, Comparative Information—Corresponding Figures and Comparative Financial Statements
• SA 720, The Auditor’s Responsibilities Relating to Other Information

 800-899 Specialized Areas

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• SA 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with
Special Purpose Frameworks
• SA 805, Special Considerations—Audits of Single Financial Statements and Specific Elements,
Accounts or Items of a Financial Statement
• SA 810, Engagements to Report on Summary Financial Statements

 2000-2699 Standards on Review Engagements (SREs)

• SRE 2400, Engagements to Review Historical Financial Statements
• SRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the
Entity

Assurance Engagements Other Than Audits or Reviews of Historical Financial Information

 3000-3699 Standards on Assurance Engagements (SAEs)
 3000-3399 Applicable to All Assurance Engagements

 3400-3699 Subject Specific Standards

• SAE 3400 The Examination of Prospective Financial Information
• SAE 3402, Assurance Reports on Controls at a Service Organisation
• SAE 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information Included in a Prospectus

Related Services
 4000-4699 Standards on Related Services (SRSs)
• SRS 4400 “Engagements to Perform Agreed-upon Procedures Regarding Financial Information”
• SRS 4410 (Revised), Compilation Engagements

Concept of Grouping Schedule

Grouping Schedules or clusters of related ledger account heads under specified account groups and
sub-groups are prepared before aggregated financial numbers are carried forward to Income
Statement, Balance Sheet, and Notes to Accounts. Example:

Concept of Audit Trail

Audit trail may be defined as the documents, records relating to transactions that enables an auditor
to trace the transactions from the source documents to the summarised total in accounting reports.

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For the financial year commencing on or after the 1st day of April, 2022, 2023, every company which
uses accounting software for maintaining its books of account, shall use only such accounting software
which has a feature of recording audit trail of each and every transaction, creating an edit log of each
change made in books of account along with the date when such changes were made and ensuring
that the audit trail cannot be disabled. In simple words, the expectation is to maintain the edit log of
every transition right from recording to tracking the changes that may take place.

National Financial Reporting Authority (NFRA)

The ‘National Advisory Committee on Accounting Standards’ (NACAS) was replaced by the National
Financial Reporting Authority (NFRA) under the new Companies Act of 2013. The National Financial
Reporting Authority (NFRA) is a quasi-judicial organisation that oversees accounting and auditing
issues.

The body will comprise of one Chairman who will be an eminent individual with competence in
accounting, auditing, finance, or law as Chairperson. In addition, there can be a maximum of 15
members.

NFRA’s Role in Auditing

A. Recommending Auditing Standards
B. Monitoring and Enforcing Compliance with Auditing Standards
C. Power to Investigate

Functions and Duties of NFRA

(i) Recommend accounting and auditing policies and standards for approval by the CG.
(ii) Monitor and enforce compliance with accounting standards and auditing standards;
(iii) Oversee the quality of service of the professions
(iv) Perform other prescribed functions and duties

Format to write Answers of Special Audit

For Special Organisation like School, Hotel etc

1. Preliminary Verification
2. Items of Verification
a. Income
b. Expenses
c. Asset
d. Liabilities

For special item like Inventory, Salary

1. Documents to be asked for
2. Items to be checked

Company Law topics needed in Audit

1. Dividend 123, 124, 127
2. Share Capital-Alteration 61, Bonus Shares 65, Splitting, re-issue of forfeited shares
3. Debentures 71