Page 22 - CA Inter Audit PARAM

CA Ravi Taori
➢ Derived from Code of Ethics:
Relevant ethical requirements ordinarily comprise the Code of Ethics issued by the Institute
of Chartered Accountants of India.
The Code establishes the following as the fundamental principles of professional ethics
relevant to the auditor when conducting an audit of financial statements and provides a
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conceptual framework for applying those principles; (O-C BI) - Office of CBI
• Objectivity;
• Confidentiality; and
• Professional Competence and due care;
• Professional Behaviour.
• Integrity;
➢ Independence:
In the case of an audit engagement it is in the public interest and, therefore, required by
the Code of Ethics, that the auditor be independent of the entity subject to the audit.
The Code describes independence as comprising both independence of mind and
independence in appearance. The auditor’s independence from the entity safeguards the
auditor’s ability to form an audit Overall Objectives of the Independent Auditor opinion
without being affected by influences that might compromise that opinion.
Independence enhances the auditor’s ability to act with integrity, to be objective and to
maintain an attitude of professional skepticism.

QNO Integrity Vs Objectivity Old Course-- (SM21)
200.24 Bhaskar CNO SA200.100
“Integrity’” and “Objectivity” are among the fundamental principles of professional ethics relevant to an

auditor enshrined in IESBA code. Distinguish between the two.
Answer The principle of “Integrity” requires auditor to be straight forward and honest in all professional and
business relationships. It implies fair dealing and truthfulness. It effectively means that he shall not be
associated with reports, returns communications or other information which he believes contains a
materially false or misleading statement; contains statements or information provided recklessly or omits
required information where such omission could be misleading.

The principle of objectivity requires auditor not to compromise professional judgment because of bias,
conflict of interest or undue influence of others.

Hence, integrity requires auditor to be involved in fair dealing and truthfulness with client and not be
associated with materially false or misleading statements, reports, returns or communications. However,
objectivity requires auditor not to compromise professional judgment because of bias, conflict of interest or
undue influence of others.

QNO Professional Skepticism Old Course –
200.25 Bhaskar CNO SA200.120 (P16M/M16M/N16R/N18R/N20R/N19E/N22R/N23M)
The auditor is responsible for maintaining an attitude of professional Skepticism throughout the audit. Do
you agree with the statement?
Or

The auditor shall plan and perform an audit with professional Skepticism recognizing that circumstances
may exist that cause the financial statement to be materially misstated. Discuss any four examples of
professional skepticism.
Answer ➢ What is Professional Scepticism?
Definition
• Professional scepticism: - An attitude that includes a questioning mind, being alert to
conditions which may indicate possible misstatement due to error or fraud, and a critical
assessment of audit evidence.
(Some examples which are against professional scepticism,
o Only because last time there were no problems, blindly relying on management,
internal controls system.
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