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Introduction to AUDITING AND ASSURANCE STANDARDS in India

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Floraison India Compliances Private Limited is a Bangalore-based business consulting


organization. As a company which provides integrated consulting services, we partner our
clients from the stage of inception to assist them in successfully commencing their
operations and further hand-hold them to run their company efficiently.
At Floraison, we strive to cultivate strong relationships with our clients by providing them
with solutions, which cater to their precise requirements. Customizability is therefore the
essence of all the services provided by us. We believe true success is not just fulfilling our
clients' requirements, but exceeding their expectations. And, to be successful, we work as
an cohesive team all the way, using the best of tools and methodologies.
Floraison is a member of:
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Bangalore Chamber of Industry and Commerce
Indo-German Chamber of Commerce
For more information on the company, Please visit us at www.floraison.in

Introduction to AUDITING AND ASSURANCE STANDARDS in India

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Disclaimer
This publication is a product of Floraison India Compliances Private Limited. The items contained herein are provided for
general information purposes only. Floraison strives to maintain up-to-date information from its own and other reliable
sources; however, no responsibility is accepted for any errors and/or omissions or results of any actions based upon this
information, without consulting Floraison first. Though all efforts have been made to ensure the accuracy of the content,
the same should not be construed as a statement of law or used for any legal purposes. The information is for reference
purposes only and should not be dealt with as advice.

Introduction to AUDITING AND ASSURANCE STANDARDS in India

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Introduction to AUDITING AND ASSURANCE STANDARDS in India

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Auditing An Introduction

About Auditing and Assurance Standards in India

Applicability of Auditing and Assurance Standards

Procedures for Issuing the Statements on Standard Auditing Practices

Introduction to AUDITING AND ASSURANCE STANDARDS in India

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Auditing is defined as a systematic process of objectively obtaining and evaluating evidence


regarding assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and communicating the
results to interested users, through an audit report. Auditing standards represent a
codification of the best practices of the profession, which already exist. The objective of
such standards is to help chartered accountants in proper and optimum discharge of their
profession duties. They also promote uniformity in practice as also comparability.

In India, the Auditing and Assurance Standards Board (AASB), previously known as the
Auditing Practices Committee (APC), forms a part of the Institute of Chartered Accountants
of India (ICAI). The Board allows the participation of representatives of various segments of
the society and interest groups, such as, regulators, industry and academics, in order to
ensure lucidity and transparency in its functioning.

Main functions of the AASB

To review the existing


auditing practices in India

To develop Auditing and


Assurance Standards (AAS)

The ICAI is a member of the International Federation of Accountants (IFAC) and is


committed to work towards the implementation of the guidelines issued by the latter. The
auditing and assurance standards thus issued require for a member to examine whether the
transactions of an enterprise have been executed within the frame work of the set standards
of financial propriety.
In an attempt to amalgamate the standards issued by the IFAC and the practicing standards
followed in India, the AASB considers the following factors while formulating the AAS in
India:
4 Due consideration to the international auditing guidelines issued by the IFAC
4 Integration of the international auditing guidelines to the extent possible in the light of
the conditions and practices prevailing in India.
4 Consideration of the applicable laws, customs, usages and business environment in
India.
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Introduction to AUDITING AND ASSURANCE STANDARDS in India

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The Auditing and Assurance Standards will apply whenever an independent audit is carried
out i.e., in the independent examination of the financial information of any entity, whether
profit oriented or not, and irrespective of its size, or legal form (unless specified otherwise)
when such an examination is conducted with a view to expressing an opinion thereon. While
discharging the attest function, it is the duty of an accountant to ensure that the Auditing
and Assurance Standards are followed in the audit of financial information covered by the
audit reports, since all the standards issued are mandatory.
The Council of the ICAI has issued following 34 AAS's so far. The title of each
statement and the date from which it came into effect is given below:

Sl. No.

Effective Date

Auditing And Assurance Standards

AAS-1

(April 1, 1985)

Basic Principles Governing an Audit

AAS-2

(April 1, 1985)

Objective and Scope of the Audit of Financial Statements

AAS-3

(July 1, 1985)

Documentation

AAS-4

(April 1, 1985)

AAS-5

(January 1,
1989)

Auditors Responsibility to consider Fraud and Error in


An Audit of Financial Statements

Audit Evidence

AAS-6

( April 1,2002)

Risk Assessments and Internal Control

AAS-7

(April 1, 1989)

Relying upon the work of an Internal Auditor

AAS-8

(April 1, 1989)

Audit Planning

AAS-9

(April 1, 1991)

Using the Work of an Expert

AAS-10

( April 1,2002)

Using the Work of Another Auditor

AAS-11

(April 1, 1995)

Representations by Management

AAS-12

(April 1, 1996)

Responsibility of Joint Auditors

AAS-13

(April 1, 1996)

Audit Materiality
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Introduction to AUDITING AND ASSURANCE STANDARDS in India

S. No.

Effective Date

Auditing And Assurance Standards

AAS-14

(April 1, 1997)

Analytical Procedures

AAS-15

(April 1,1998)

Audit Sampling

AAS-16

(April 1, 1999)

Going Concern

AAS-17

(April 1, 1999)

Quality Control for Audit Work

AAS-18

(April 1, 2000)

Audit of Accounting Estimates

AAS-19

(April 1, 2000)

Subsequent Events

AAS-20

(April 1, 2000)

Knowledge of the Business

AAS-21

(July 1, 2001)

AAS-22

(July 1, 2001)

Initial Engagements Opening Balances

AAS-23

(April 1, 2001)

Related Parties

AAS-24

(April 1, 2003)

AAS-25

(April 1, 2003)

Comparatives

AAS-26

(April 1, 2003)

Terms of Audit Engagements

AAS-27

(April 1, 2003)

AAS-28

(April 1, 2003)

AAS-29

(April 1, 2003)

AAS-30

(April 1, 2003)

External Confirmations

AAS-31

(April 1, 2004)

Engagements to Compile Financial Information

AAS-32

(April 1, 2004)

AAS-33

(April 1, 2005)

AAS-34

(April 1, 2005)

Consideration of Laws and Regulations in an Audit of


Financial Statements

Audit Considerations Relating to Entities Using Service


Organisations

Communications of Audit Matters to those charged


With Governance
The Auditors Report on Financial Statements
Auditing in a Computer Information Systems
Environment

Engagements to Perform Agreed-upon Procedures


Regarding Financial Information
Engagements to Review Financial Statements
Audit Evidence Additional Consideration for
Specific Items

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Introduction to AUDITING AND ASSURANCE STANDARDS in India

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Broadly, the following procedure is adopted for the formulation of Auditing and
Assurance Standards :-

The AASB determines the broad areas in which the AAS need to be
formulated and the priority in regard to the selection therefore.

In the preparation of AASs, the AASB is assisted by study groups to


consider specific subjects. In the formation of study groups, provision is
made for participation of cross section members of the Institute.

On the basis of the work of the study groups, an exposure draft of


the proposed AAS is prepared by the Board and issued for
comments by members of the Institute.

After taking into consideration the comments received, the draft


of the Proposed AAS is finalized by the AASB and submitted to
the Council of the Institute.

The Council of the Institute will consider the final draft of the proposed
AAS, and if necessary, modify the same in consultation with the AASB.
The AAS is issued under the authority of the council.

-4-

Credits: Ankesh Jain

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Floraison India Compliances Pvt. Ltd.,


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