Page 17 - CA Inter Audit PARAM

CA Ravi Taori
comes to ensuring the reliability of financial statements? Also explain, why auditor can provide only
reasonable, rather than absolute, assurance that the financial statements are free from material
misstatement due to fraud or error in the context of the given situation?"

OR

“The purpose of an audit is to enhance the degree of confidence of intended users in the financial
statements. This is achieved by the expression of an opinion by the auditor on whether the financial
statements are prepared, in all material respects, in accordance with an applicable financial reporting
framework.”. Explain stating the objectives of audit as per SA 200.

OR

The purpose of an audit is to enhance the degree of confidence of intended users in the financial
statements. Explain stating the objectives of audit as per SA 200.

OR
CA N is the auditor of SR Ltd. The auditor expressed his opinion on the financial statements without
ascertaining as to whether the financial statements as a whole were free from material misstatements or
not. In your opinion, whether CA N has complied with objectives of audit considering the applicability of
relevant SA?
Answer

➢ Overall Objective
As per SA-200 “Overall Objectives of the Independent Auditor”, in conducting auditor
financial statements, the overall objectives of the auditor are:
• To obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, thereby
enabling the auditor to express an opinion on whether the financial statements are
prepared, in all material respects, in accordance with an applicable financial
reporting framework; and
• To report on the financial statements, and communicate as required by the SAs, in
accordance with the auditor’s findings.

➢ The purpose of an audit is to enhance the degree of confidence of intended users in the financial
statements. An audit conducted in accordance with SAs and relevant ethical requirements enables
the auditor to form that opinion.

➢ Law extends objectives
In some cases, however, the applicable laws and regulations may require auditors to provide
opinions on other specific matters, such as the effectiveness of internal control, or the consistency
of a separate management report with the financial statements. While the SAs include
requirements and guidance in relation to such matters to the extent that they are relevant to
forming an opinion on the financial statements, the auditor would be required to undertake further
work if the auditor had additional responsibilities to provide such opinions.
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