Page 190 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
(CNO SRE 2400.100) Agreeing to the Terms of Engagement (SA 210)
Terms of the engagement: The practitioner shall agree to the terms of the engagement with the management
or those charged with governance prior to performing the engagement and record these in an engagement letter
or other suitable form.
Recurring Engagements: On recurring review engagements, the practitioner shall assess if changes in
engagement acceptance considerations necessitate a revision of terms or a reminder to management about
existing terms.
Change in Terms: The practitioner shall not agree to a change in the engagement terms without a reasonable
justification.
If terms are altered during the engagement, both the practitioner and management or governance must agree
and document the new terms.
Change to Non-assurance Engagement: Before completing the review, if there's a request to change the
engagement to a non-assurance type, the practitioner must determine its justification.

(CNO SRE 2400.120) Overview of performing the review engagement after its acceptance in accordance
with SRE 2400
(Shortcut: MUDAA technique)
Determine Materiality: Determine materiality for financial statements as a whole.
Understanding Entity and Framework: Obtain understanding of entity and applicable financial reporting
framework to identify areas of possible material misstatements.
Design and Perform Procedures: Design and perform "Inquiry" and "Analytical procedures".
Address Specific Circumstances: Perform procedures to address specific circumstances.
Additional Procedures: Perform other procedures, if necessary, in circumstances.
i) Determine Materiality (SA 320)
Determine and Apply Materiality: The practitioner shall determine materiality for the financial statements as
a whole and apply this materiality in designing the procedures and in evaluating the results obtained from those
procedures.
Same Judgment: The practitioner’s judgment about what is material in relation to the financial statements as a
whole is the same regardless of the level of assurance obtained by a practitioner as the basis for expressing the
conclusion on the financial statements.
Revising Materiality: The practitioner shall revise materiality for the financial statements as a whole in the event
of becoming aware of any information during the review that would have caused the practitioner to have
determined a different amount initially.
(ii) Understanding Entity and Framework (SA 315)
Understanding Entity and Environment: The practitioner shall obtain an understanding of the entity and its
environment.
Understanding Financial Reporting Framework: And the applicable financial reporting framework to
identify areas in the financial statements.
Identifying Likely Misstatements: Where material misstatements are likely to arise and thereby provide a basis
for designing procedures to address those areas.
(iii) Design and Perform Procedures
1. Inquiry and Analytical Procedures: In obtaining sufficient appropriate evidence as the basis for a conclusion
on the financial statements as a whole, the practitioner shall design and perform inquiry and analytical
procedures.

2. Other Procedures: The circumstances of review engagements vary widely and, accordingly, there may be
circumstances where the practitioner may consider it effective or efficient to design and perform other
procedures.

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