International Standards on Auditing: ISA200 - Overall Objectives of the Independent Auditor

What is the meaning of Financial statements?

Financial Statements is “a structured representation of historical financial information, including related notes, intended to communicate an entity’s economic resources or obligations at a point in time or the changes therein for a period of time in accordance with a financial reporting framework”.

 

What is Audit Risk?

“The risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated”

 

What is Detection risk in an audit of financial statements?

Detection risk is “the risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material, either individually or when aggregated with other misstatements”

 

What is Professional skepticism?

“An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence”

 

What is the purpose of conducting an Audit in Accordance with ISAs?

“The ISAs provide the standards for the auditor’s work in fulfilling the overall objectives of the auditor”

 

What should the auditor do if an objective in a relevant ISA cannot be achieved in an audit of financial statements?

If an objective in an ISA relevant to the audit cannot be achieved the auditor shall evaluate whether it prevents the auditor from achieving the overall objectives of the auditor and thereby requirements of other ISAs. The auditor has to see whether it requires the auditor to modify the auditor’s opinion or withdraw from the engagement. Failure to achieve an objective is a significant matter requiring documentation in accordance with ISA 230.

 

(Note: The author is the partner of AK & Partners Auditors and Chartered Accountants, one of the leading auditing firms in qatar. Contact: 33106154)