Question

As per the ISA 200, state the key requirements for the auditor to obtain reasonable assurance and to express an opinion on financial statements.

Answer 1

The term "reasonable assurance" means to reduce the assurance engagement risk to a acceptably low level in the circumstances to express a positive opinion on the financial statements.

The key requirements to obtain a reasonable assurance as per ISA 200 are as below:

(i) Ethical Requirements: The auditor shall comply with fundamental principles of professional ethics which include integrity,objectivity, professional competence and due care, independence, confidentiality and professional behavior.

(ii) Professional Skepticism: The auditor shall maintain professional skepticism throughout the planning and performance of the audit. Professional skepticism is an attitude that includes a questioning mind, being alert to conditions that may indicate a fraud or error and critical perusal of evidence.

(iii) Professional Judgment : The auditor shall use his professional judgment while planning and performing an audit. This involves making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement.

(iv) Sufficient Appropriate Audit Evidence and Audit Risk: The auditor shall obtain appropriate audit evidence so as to reduce the audit risk to an acceptably low level and express an opinion thereon the financial statements. The audit evidence has to be relevant and reliable in providing support to the conclusions drawn by the auditor.

(v) Conduct of an Audit in Accordance with ISAs : An auditor shall conduct the audit in accordance with the applicable ISA's and have a thorough understanding of the standards to apply the requirements properly. In compliance of the standards has to be done in totality.