SA 200 is the opening standard of the ICAI Standards on Auditing. It says what an audit is for: to give the reader reasonable assurance that the financial statements are free from material misstatement, whether from fraud or error, and to report on them. Every other standard is a way of meeting these two objectives.
Last reviewed: 17 October 2026. Facts checked. We ran web searches on SA 200 and read the summaries that came back: ICAI regional council training notes (EIRC, WIRC) and an ICAI virtual classroom chart on SA 200 to SA 330. We could not open the final ICAI text of SA 200, and the searches did not return its wording on professional scepticism, so the scepticism section below describes the idea in general terms and quotes no paragraph. Check the standard itself before you cite a paragraph in a working paper or an opinion.
The two objectives in plain words
SA 200 sets two objectives for the auditor.
- Get reasonable assurance. The auditor works to be reasonably sure that the financial statements as a whole are free from material misstatement, whether it arises from fraud or from error.
- Report. The auditor reports on the financial statements, and communicates as the standards require, in line with what the audit found.
That is the whole purpose. An audit does not certify that the books are perfect, and it does not promise that every fraud will be found. It is built to support one opinion.
What "reasonable assurance" does and does not mean
Reasonable assurance is a high level of assurance. It is not absolute assurance. The study material we read puts it this way: audit evidence is persuasive rather than conclusive.
Three things keep it from being absolute.
- Testing, not checking everything. Auditors usually test samples. A sample can miss a misstatement that a full check would have caught.
- Limits inside the systems. Controls can be bypassed, and people can collude.
- Judgement. Estimates, valuations and going concern calls involve opinion on both sides.
So a clean opinion tells the reader that the auditor did enough work to be reasonably confident, not that the figures are exact. When a client says "but you audited it, how was this missed?", this is the conversation to have. See our post on management override of controls for one limit that no sample size removes.
Materiality: the word hiding in "material misstatement"
Misstatements matter to the opinion only if they are material. In the notes we read, materiality is applied at two points: when planning and performing the audit, and when judging the effect of the misstatements found. We cover the thresholds in audit materiality explained.
Ethics comes first
SA 200 expects the auditor to comply with the relevant ethical requirements. In India that points to the ICAI Code of Ethics, with its principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Independence is part of this. An auditor who is not independent cannot meet the objectives however good the testing is. For the current edition and its AI-related clauses, see our post on the 13th edition of the Code.
Scepticism and judgement
The standard asks the auditor to plan and perform the audit with professional scepticism and to use professional judgement. In practice, scepticism means a questioning mind: not assuming management is dishonest, not assuming it is honest, and asking for evidence either way. We did not find the wording of the paragraph in our sources, so use the standard for any quote.
Scepticism shows up in small habits.
- Asking for the underlying document, not a summary of it.
- Noticing when an answer is smooth but the evidence is thin.
- Re-checking an area when a later finding contradicts an earlier comfort.
- Writing down the reasoning for a judgement, not just the conclusion. Our post on audit documentation explains how.
How SA 200 fits with the other standards
Think of SA 200 as the frame and the later standards as the steps.
| Objective in SA 200 | Where the work is done |
|---|---|
| Reasonable assurance | Risk assessment (SA 315), responses to risk (SA 330), evidence (SA 500) |
| Material misstatement from fraud | SA 240 |
| Report | SA 700 and the related reporting standards |
| Ethics and independence | ICAI Code of Ethics, quality management standards |
| Communication | SA 260, SA 265 |
The practical test is simple. When a standard feels like paperwork, ask which SA 200 objective it supports. If you cannot answer, the procedure may not be needed. If the answer is clear, the procedure belongs in the file. For the risk side, read the audit risk model.
Frequently Asked Questions
What is SA 200 in auditing?
It is the Standard on Auditing that sets the overall objectives of the independent auditor and explains the nature and scope of an audit.
What is reasonable assurance?
A high level of assurance, but not absolute. Audit evidence is persuasive rather than conclusive, so some risk of an undetected misstatement always remains.
Does SA 200 say the auditor must find all frauds?
No. It asks for reasonable assurance that the statements are free from material misstatement, whether from fraud or error. That is not a guarantee against every fraud.
Is SA 200 about ethics?
In part. It expects the auditor to follow the relevant ethical requirements, which in India means the ICAI Code of Ethics.
Do small audits also follow SA 200?
The Standards on Auditing apply to audits generally. Scale changes how much work is needed, not the objectives. Check the standard for any scaling guidance.
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Last reviewed: 17 October 2026. Facts checked. Opened: web search results and ICAI regional council training summaries on SA 200; our own site posts. Could not open: the final ICAI text of SA 200. Check wording and paragraph numbers there.
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error