Page 131 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

3. Fair Presentation Framework: When the financial statements are prepared in accordance with a fair
presentation framework, the description of responsibilities for the financial statements in the auditor’s report
should refer to “the preparation and fair presentation of these financial statements” or “the preparation of
financial statements that give a true and fair view,” as appropriate in the circumstances.

(CNO - SA 700.240) Auditor’s Responsibilities for the Audit of the Financial Statements:
Part 1 : Objective
1. Objective: Obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error; and issue an auditor’s report that includes the auditor’s
opinion.
1A. Reasonable Assurance: Reasonable assurance is a high level of assurance, but not a guarantee that an audit
conducted in accordance with Standards on Auditing (SAs) will always detect a material misstatement when it
exists.
1B. Material: Either (i) Describe that they are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements; or
(ii) Provide a definition or description of materiality in accordance with the applicable financial reporting
framework.
1C. Misstatements: Misstatements can arise from fraud or error.
Part 2: Auditor & Audit Process
The Auditor’s Responsibilities for the Audit of the Financial Statements section of the auditor’s report
shall further:
Professional Judgement & skepticism: State that, as part of an audit in accordance with SAs, the auditor
exercises professional judgment and maintains professional skepticism throughout the audit; and
Describe an audit by stating that the auditor’s responsibilities are
- Audit Process:
- Identify and assess risks of material misstatement due to fraud or error.
- Design and perform audit procedures for identified risks.
- Obtain sufficient and appropriate audit evidence for the auditor's opinion.
- Recognize that fraud risks are higher than error risks due to potential collusion, forgery, intentional omissions,
misrepresentations, and override of internal control.
Shortcut: GIA

Going Concern:
- Conclude on the appropriateness of using the going concern accounting basis.
- Determine if material uncertainty exists that may cast doubt on the entity’s continuity.
- Highlight in auditor’s report any material uncertainty or modify opinion if disclosures are inadequate.
- Internal Control (Approach):
- Understand internal control relevant to the audit for designing appropriate audit procedures.
- Not to express an opinion on the effectiveness of internal control unless there's a specific responsibility to do
so.
- AED (3 Pillars):
- Evaluate appropriateness of accounting policies used.
- Assess reasonableness of accounting estimates and related disclosures by management.

- Fair presentation framework (If applicable):
- Evaluate the overall presentation, structure, and content of financial statements prepared with a fair
presentation framework.
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