Overall objectives of an auditor

  1. To obtain reasonable assurance as to the financial statements are free from material misstatements due to fraud or error.
  2. To express an opinion on FS
  3. To report whether FS are prepared as per the FRF.
  4. To enhance the confidence of users of FS.

Ethical Requirements of an auditor



Skill and Competence



Using the work of others

Professional Behaviour

Audit Planning

Audit Evidence


Internal Control and Accounting System


Limitations of an audit

  1. Complex internal Control
  2. Undetected fraud
  3. Audit is done on test check basis
  4. Audit evidence is persuasive rather than conclusive
  5. Audit is judgemental in nature

Responsibility of management

  1. Safeguarding of assets
  2. Preparation of Financial Statement
  3. Maintaining of book of accounts
  4. Compliance of laws and regulations
  5. Design and Implement internal controls
  6. Providing all information and explanations to the auditor

Risk of misstatement arises at 2 levels

  1. Financial Statement Level
  • Balance Sheet
  • Profit & Loss A/c
  • Cash Flow Statement
  1. Assertion level
  • D- Disclosure
  • O-Ownership
  • O- Occurrence
  • R-Rights
  • V-Valuation
  • O-Obligation
  • C-Completeness
  • E-Existence

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