Core concepts
- 01Audit: independent examination of financial statements to express opinion on true & fair view.
- 02Inherent limitations: judgment, sampling, internal control weaknesses, time/cost.
- 03Reasonable assurance — not absolute.
- 04Standards on Auditing (SAs) issued by ICAI under authority of Companies Act.
- 05SA 200: Overall Objectives — independence, professional skepticism, professional judgment.
Flowchart summary
Audit Framework | Engagement -> Planning -> Risk Assessment | Testing of Controls + Substantive Procedures | Conclusion -> Reporting (SA 700 series)
Exam-critical pointers
- ⭐Distinguish audit from investigation, accounting, review.
- ⭐True & fair view — judgmental; auditor expresses opinion only.
- ⭐SA 240 — auditor's responsibility relating to fraud in financial statements.
- ⭐Companies Act Sec 143(12) — reporting fraud to Central Govt if amount > ₹1 crore.
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