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Report of Advisory Group International
Accounting and Auditing

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Module: 4
Financial Standards and Codes: Report of Advisory Group on International Accounting and Auditing

Auditing Standards

Auditing standards in India are regulated by the ICAI through the standards issued by its Auditing Practices Committee (APC), guidance notes and other pronouncements issued by it and by the exercise of disciplinary jurisdiction over its members.

The auditing standards issued by ICAI - Statements on Standard Auditing Practices (SAPS) - issued to date are given below:-

Statements on Standard Auditing Practices
1 Statement on Auditing Practices  
  Statements on Standard Auditing Practices:  
2 Basic Principles Governing an Audit SAP-1
3 Objective and Scope of the Audit of Financial Statements SAP-2
4 Documentation SAP-3
5 Fraud and Error SAP-4
6 Audit Evidence SAP-5
7 Study and Evaluation of the Accounting System and Related Internal Controls in connection with an Audit SAP-6
8 Relying Upon the Work of an Internal Auditor SAP-7
9 Audit Planning SAP-8
10 Using the Work of an Expert SAP-9
11 Using the Work of Another Auditor SAP-10
12 Representations by Management SAP-11
13 Responsibility of Joint Auditors SAP-12
14 Audit Materiality SAP-13
15 Analytical Procedures SAP-14
16 Audit Sampling SAP-15
17 Going Concern SAP-16
18 Quality control for Audit Work SAP-17
19 Audit of Accounting Estimates SAP-18
20 Subsequent Events SAP-19
21 Knowledge of the Business SAP-20

In addition to the SAPS, the ICAI has issued the following statements on auditing:-

  1. Statement on Auditing Practices.

  2. Statement on Qualifications in Auditors' Reports.

  3. Statement on the Manufacturing and other Companies (Auditor's Report) Order 1988 (Issued under Section 227(4A) of the Companies Act, 1956).

  4. Statement on Payments to Auditors for Other Services.

The SAPS are anchored on the corresponding standards issued by the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC).

It is suggested that the APC should take immediate steps to issue ISAs on the following subjects on which ASAs have not yet been issued by IFAC but for which pronouncements have been issued by AICPA:

  1. Illegal Acts by Clients.

  2. Communication with Audit Committees

  3. Interim Financial Information

The ICAI with the membership of over 100,000 of whom over 70% hold a certificate of practice is the fourth largest accounting institute in the world. Established in 1949 under an Act of Parliament, it follows in the footsteps of a profession established in this country for over 125 years. Since the enforcement of compliance with auditing standards rests solely with ICAI, the manner of compliance of auditing standards is conceptually sounder than the manner of compliance of accounting standards.

However, in practice, the quality of auditing standards and the degree of compliance will ultimately rest with the talent available with the Auditing Practices Committee (APC), the degree of support provided to it by the technical staff of the ICAI and the vigour with which the ICAI exercises its disciplinary jurisdiction on its members.


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