Summary of Auditing & Assurance Standards as prescribed by ICAI AAS-1 Basic Principals governing an Audit This Auditing and Assurance Standard was the first standard on auditing issued by the Institute. As the name suggests, it seeks to lie down and briefly explain the basic principles which govern the auditor’s professional responsibilities and which should be complied with whenever an audit is carried out. These principles are, namely, integrity, objectivity and independence, confidentiality, skills and competence, work performed by others, documentation, planning, audit evidence, accounting system and internal control, and, finally, audit conclusions and reporting. Effective Date: -The AAS is effective for all audits relating to accounting periods beginning on or after April 1, 1985.
AAS-2 Objective and Scope of the Audit of Financial Statements This Standard describes the overall objective and scope of the audit of general-purpose financial statements of an enterprise by an independent auditor. The Standards deals with the following important aspects of an audit: Objective of an Audit: expression of opinion, the concept of true and fair view Responsibility for Financial Statements: responsibility of the management vis-a-vis auditor Scope of Audit: factors determining scope, reliability and sufficiency of audit evidence, disclosure aspects, undiscovered material misstatements, etc. Effective Date: -The Standard is effective for all audits relating to accounting periods beginning on or after April 1, 1985.
AAS-3 Documentation Principle that the auditor should document matters which are important in providing evidence that the audit was carried out in accordance with the generally accepted auditing standards in India. The Standard explains as to what constitute working papers, need for working papers. The Standard also touches upon the following areas: Form and Content: factors affecting form and content, quantum of working papers, permanent audit file, and current audit file. Ownership and Custody of Working Papers Effective Date: -The AAS is effective for all audits relating to accounting periods beginning on or after July 1, 1985. AAS-4 (Revised) The Auditor's Responsibility to Consider Fraud and Error in an Audit of Financial Statements As the name indicates, the purpose of this AAS is to establish standards on the auditor's responsibility to consider fraud and error in an audit of financial statements. The following would give an overview of the contents of the AAS: Fraud and error and their characteristics Responsibility of those charged with governance Responsibility of management Responsibility of the auditor Indication of possible misstatement Evaluation and disposition of misstatements. Effect on auditor's report Documentation Management representations
Communication Auditor unable to complete engagement The appendices to the AAS contain examples of risk factors relating to misstatements resulting from fraud/ error, examples of modifications in auditor's procedures, and indicators of possible fraud or error. Effective Date: -The AAS is effective for all audits relating to accounting periods beginning on or after April 1, 2003. AAS-5 Audit Evidence The purpose of this AAS is to establish standards on the basic principle that the auditor should obtain sufficient appropriate audit evidence through compliance and substantive procedures to enable him to draw reasonable conclusions there from on which to base his opinion on the financial information. The AAS also explains the concept of sufficient appropriate audit evidence, factors affecting it as also the various types of assertions, internal vis-a-vis external evidence. The Standard also deals with the methods of obtaining evidence, namely, inspection, observation, inquiry and confirmation, computation and analytical review. Effective Date: -This AAS is effective for all audits relating to accounting periods beginning on or after January 1, 1989.
