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CA Final Course Advanced Auditing and Professional Ethics Study Material

Introduction

Auditing is the process of examining, reviewing, and reporting on the financial statements of an entity. The term "audit" is derived from the Latin "audire", meaning to hear (except in the context of a legal action, referring to a jury hearing evidence). Auditing has been described as a "continuous process of listening and learning".

Audits are important for many reasons. First, they ensure that all transactions reported in financial statements were actually conducted and that no errors have been made in recording them. Second, audits help companies evaluate whether internal controls are effective at preventing fraud or other forms of misstatements in their financial reports. Third, they allow investors to see how much risk various divisions or groups within an organization pose to their investment portfolios because each division/group's risk profile will be different based on its mix of assets versus liabilities; this information allows investors to make better-informed decisions about where they want their money invested."

Auditing Standard

Auditing standards are a set of rules and procedures that are used by auditors to conduct audits. They are issued by the Institute of Chartered Accountants of India (ICAI), which is a statutory body established in 1956 under an Act passed by Parliament. The ICAI also regulates the activities of chartered accountants in India through its disciplinary committees, settles disputes between members and their clients, etc.

Auditors must adhere to these standards while performing an audit so as not to compromise its integrity or effectiveness.

Statutory Audit of Companies

The statutory audit of companies is the audit of the accounts of a company by an auditor appointed by the company's shareholders. The Statutory Auditor is required to report to the shareholders on the financial statements of the company, after considering its internal control system and other matters which may affect reliability of accounting records.

The main objectives of statutory audits are:

To ensure that financial statements give true and fair view;

To provide assurance that transactions have been properly recorded;

To check whether proper accounting policies have been followed;

Audit of Public Sector Undertakings

Audit of Public Sector Undertakings (PSUs) is a statutory requirement and conducted by CAG for the purpose of ensuring transparency and accountability in PSUs.

Audit of Public Sector Undertakings (PSUs): It is a statutory requirement that all public sector undertakings submit their accounts to Comptroller and Auditor General (CAG) for audit every year.

Purpose: CAG audits are conducted for the following purposes:

o To ensure financial propriety in public sector enterprises;

o To detect frauds, irregularities, misuse of funds etc.;

o To ensure optimum utilisation of resources;

Regulatory and Legal Compliance Requirements

Regulatory and Legal Compliance Requirements are the legal requirements that an organization must comply with in order to operate legally. The following are some examples of regulatory and legal compliance requirements:

Sarbanes-Oxley Act (SOX) of 2002

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank)

Health Insurance Portability and Accountability Act (HIPAA) of 1996

Special Aspects of Audits

The Advanced Auditing and Professional Ethics Study Material consists of a total of 4 sections which are as follows:

Special Aspects of Audits (Section 1)

Regulatory and Legal Compliance Requirements (Section 2)

Special Aspects of Audits (Section 3)

Audit of Public Sector Undertakings (Section 4)

Advanced Auditing and Professional Ethics Study Material consists of a total of 4 sections which are as follows:

Section A - Internal Audit, Concurrent Audit and Revenue Audit

Internal Auditing: An overview of the concepts, techniques and tools used in internal auditing.

Concurrent Audit: An examination of the procedures involved in conducting a concurrent audit.

Revenue Auditing: The study covers an overview of revenue audits, types of revenue audits etcetera.

Section A - Internal Audit, Concurrent Audit and Revenue Audit

Internal Audit: Internal auditing is a systematic and independent examination of plans, procedures and processes of an organization to assess the adequacy of its systems, procedures and controls in achieving desired objectives.

Concurrent Audit: Concurrent Audits are performed during the course of an engagement by another auditor to ensure that both firms maintain independence and objectivity when conducting their audits.

Revenue Audit: A revenue audit examines how well an entity has complied with laws that require it to collect taxes on certain transactions or activities involving taxable goods or services provided to consumers (e.g., sales taxes), businesses (e.g., excise taxes), governments (e.g., property taxes) or other parties (e.g., import duties).

Section B - Cost Audit and Investigation

In a cost audit, the auditor verifies that the costs being charged to each account are appropriate. A cost audit is usually performed to ensure that proper controls are in place over the use and recording of company funds.

A cost investigation typically involves examining:

The accuracy of financial statements;

Whether appropriate procedures are being followed; and

Whether there are any questionable transactions or relationships between departments within an organization

Section C - Corporate Laws and Compliances

Sections C and D deal with Corporate Laws and Compliances.

Corporate laws are the rules that govern the functioning of corporations, for example:

The Companies Act, 1956

The Indian Contract Act, 1872 (amended in 2002)

Compliances are the actions that must be taken to ensure compliance with these laws. For example:

Compliance with statutory requirements such as filing returns on time, maintaining proper books of accounts etc., ensuring compliance with financial regulations like those prescribed by SEBI or any other regulatory authority

Section D - Ethics and Governance

Ethics is a set of principles that guide a person's choices and actions.

Ethics is the study of right and wrong conduct.

Ethics is a set of moral principles that govern a person's behavior.

Takeaway:

The CA Final Course Advanced Auditing and Professional Ethics Study Material consists of a total of 4 sections which are as follows:

Section A - Internal Audit, Concurrent Audit and Revenue Audit

Section B - Financial Statement Analysis and Management Accounting.

Section C - Risk Assessment, Control and Monitoring.

Section D - Ethical Standards in Practice

Conclusion

We hope you find this study material helpful. The final exam will be available after the revision period is over and it is advisable that you practice hard with these materials before attempting it.

Click This Link Advanced Auditing and Professional Ethics Study Material:-

https://drive.google.com/drive/folders/1tdUa-1cf9sUQ2tcS6KtanWPqiogZ4ih0?usp=share_link

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