Question

Explain what is meant by “Carrying an audit in compliance with International Standards of Auditing (ISAs)”

Answer 1

Introduction to International Standards on Auditing

International Standards on Auditing (ISA) refer to professional standards dealing with the responsibilities of the independent auditor while conducting the financial audit of financial info. These standards are issued by International Federation of Accountants (IFAC) through the International Auditing and Assurance Standards Board (IAASB). The ISAs include requirements and objectives along with application and other explanatory material. The auditor is obligatory to have knowledge about the whole text of an ISA, counting its application and other explanatory material, to be aware of the objectives and to apply the requirements aptly.

List of the Standards

The key standards issued by the ISA include:

• Respective responsibilities
• Audit planning
• Internal control
• Audit evidence
• Using work of other experts
• Audit conclusions and audit report
• Specialized areas

Structure of ISAs

Every ISA is structured in individual sections as:

• Introduction

Introductory material can include the purpose, scope, and subject matter of the ISA, as well as the responsibilities of the auditor and others in context in which the ISA is established.

• Objective

Every ISA consists of as clear statement about the objective of the auditor in the audit area addressed by that ISA.

• Definitions

For higher understanding of the ISAs, pertinent terms are delineated in each ISA.

• Requirements

Every objective is shored up by clearly stated requirements. Requirements are always expressed by the phrase “the auditor shall.”

• Application and other explanatory material

The application and other explanatory material explains more exactly what is meant by a requirement or is intended to cover, or includes examples of procedures that can be appropriate under certain circumstances.

Objectives of the ISA

The ISA objectives are two-fold:

• Analyzing the comparability of national accounting as well as auditing standards with international standards, determine the degree with which applicable auditing and accounting standards are complied, and analyze strengths and weaknesses of the institutional framework in sustaining high-quality financial reporting.
• Assist the country in developing and implementing a country action plan for improvement of institutional capacity with a view of strengthening the corporate financial reporting system of the country.

List of ISAs

• ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing
• ISA 210, Agreeing the Terms of Audit Engagements
• ISA 220, Quality Control for an Audit of Financial Statements
• ISA 230, Audit Documentation
• ISA 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements
• ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements
• ISA 260, Communication with Those Charged with Governance
• ISA 265, Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
• ISA 300, Planning an Audit of Financial Statements
• ISA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment
• ISA 320, Materiality in Planning and Performing an Audit
• ISA 330, The Auditor's Responses to Assessed Risks
• ISA 402, Audit Considerations Relating to an Entity Using a Service Organization
• ISA 450, Evaluation of Misstatements Identified during the Audit
• ISA 500, Audit Evidence
• ISA 501, Audit Evidence-Specific Considerations for Selected Items
• ISA 505, External Confirmations
• ISA 510, Initial Audit Engagements-Opening Balances
• ISA 520, Analytical Procedures
• ISA 530, Audit Sampling
• ISA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures
• ISA 550, Related Parties
• ISA 560, Subsequent Events
• ISA 570, Going Concern
• ISA 580, Written Representations
• ISA 600, Special Considerations-Audits of Group Financial Statements (Including the Work of Component Auditors)
• ISA 610, Using the Work of Internal Auditors
• ISA 620, Using the Work of an Auditor's Expert
• ISA 700, Forming an Opinion and Reporting on Financial Statements
• ISA 705, Modifications to the Opinion in the Independent Auditor's Report
• ISA 706, Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report
• ISA 710, Comparative Information-Corresponding Figures and Comparative Financial Statements
• ISA 720, The Auditor's Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
• ISA 800, Special Considerations-Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
• ISA 805, Special Considerations-Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement
• ISA 810, Engagements to Report on Summary Financial Statements
• International Standard on Quality Control (ISQC) 1, Quality Controls for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagemen