Auditing Standards

- Hong Kong and

International
Chapter 2

2-1

Learning Objective 1
Basic structure of Hong Kong
Auditing Standards and the Issuing
Body

2-2

International Standards on
Auditing
International Standards on Auditing (ISA) are issued by
the International Federation of Accountants (______).
IFAC is the worldwide organization for the accountancy
profession, working to improve the uniformity of auditing
and related services throughout the world.
Established in 1977, IFAC has 159 member organizations
in 124 countries representing 2.5 million accountants.

International Financial Reporting Standards (IFRS) are issued

by the International Accounting Standards Board (______).
IASB is an independent standard-setter based in London
(established in 2001)
It has 15 members from USA, UK, France, Sweden,
Germany, China, Japan, etc.
2-3

International Standards on
Auditing (ISA) and HK Standards
on Auditing (HKSA)
Hong Kong Standards on Auditing is issued by HKICPA
HKSAs correspond closely to International Standards on
Auditing (ISA)

Basic structure of HKSA

HKSA200-299 General Principles and Responsibilities
HKSA300-499 Risk Assessment and Response to Assessed
Risks
HKSA500-599 Audit Evidence
HKSA600-699 Using the Work of Others
HKSA700-799 Audit Conclusions and Reporting
HKSA800-899 Specialized Areas

2-4

Learning Objective 2
HKSA 200
Overall objective of an
independent auditor, and
Conduct of an audit

2-5

2-6

HKSA 200
Overall Objectives of the Independent
Auditor and the Conduct of an Audit
Overall
Objective of
an Audit

Requirement on
Conduct of an
Audit

Obtain
reasona Express
Ethical
ble
an
Requireassuranc opinion
ments
e Integrity Objectivity/
Professional competence
and due care/
Confidentiality/
Professional behavior /
Independence

Professional
Skepticism
Professional
Judgment
Obtain
sufficient
appropriate
audit evidence
Follow HKSAs
2-7

HKSA 200
Overall Objectives of the
Independent Auditor
Overall Objective of the Auditor
1. To ______ _______ ________ about whether
the financial statements as a whole are free
from material misstatements, whether due to
fraud or error,
1. thereby enabling the auditor to ______ ___
_______ on whether the financial statements
are prepared, in all material respects, in
accordance with an applicable financial
reporting framework (i.e. US GAAP, HK GAAP,
etc.)
2-8

HKSA 200
Conduct of an Audit in Accordance
with HKSA

Requirements on Auditor Conduct

1.Comply with relevant ethical requirements (in
HKICPAs Code of Ethics)

Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behavior
Independence

2.Exercise professional skepticism

3.Exercise professional judgment
4.Obtain sufficient appropriate audit evidence
5.Comply with HKSAs (i.e., follow the detailed
guidelines)
2-9

Professional Skepticism and

Professional Judgment
Professional Skepticism
An attitude that includes a ___________ mind, being
_____ to conditions which may indicate possible
misstatement due to error or fraud, and a _________
assessment of audit evidence.
audit evidence that contradicts each other
limited access to accounting staf
Professional Judgment
The application of relevant training, knowledge
and experience in making informed decisions
about the courses of action that are appropriate in
the circumstances of the audit engagement.
professional judgment can be evaluated based
2 - 10
on whether the judgment reached reflects a

Sufficient and Appropriate Audit

Evidence
To obtain reasonable assurance, the auditor shall
obtain sufficient appropriate audit evidence to
reduce audit risk to an acceptably low level and
thereby enable the auditor to draw reasonable
conclusions .
This can only be achieved with sufficient
professional skepticism and professional
judgement
Sufficiency: _____________
Appropriateness: _________ (relevance and
reliability)
2 - 11

The HKSA and ISA all

represent the __________
requirements, not the
highest or the ideal.

2 - 12