The ICAI Standards on Auditing issued by the Auditing and Assurance Standards Board, deemed prescribed under Section 143(10) of the Companies Act 2013.
Q1.1What is SA 200 and why does it matter?+
SA 200 sets the overall objectives of the independent auditor and the conduct of an audit in accordance with the SAs. It establishes professional skepticism, professional judgement, ethical requirements, and the audit risk model as foundational concepts.
Q1.2What is professional skepticism under SA 200?+
An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to fraud or error, and a critical assessment of audit evidence. Required throughout the audit.
Q1.3What must the engagement letter cover under SA 210?+
Objective and scope of audit, responsibilities of auditor, responsibilities of management, identification of applicable financial reporting framework, expected form and content of reports, agreed fee or basis of fee.
Q1.4What is SA 230 documentation requirement?+
Audit documentation must be sufficient to enable an experienced auditor with no previous connection with the audit to understand the nature, timing, extent of procedures performed, results, evidence obtained, and significant matters arising. Final file assembly within 60 days of audit report date.
Q1.5What is the SA 240 presumption regarding revenue?+
SA 240 para 26 — Revenue recognition is presumed to be a fraud risk in every audit. The auditor must specifically design audit responses to address this risk, even if the conclusion is that the presumption is rebutted in the circumstances.
Q1.6How many journal entries should I test under SA 240?+
SA 240 para 33 requires testing journal entries throughout the period (not just year-end) using risk-based criteria — unusual accounts, period-end timing, unusual users, round amounts, no support documentation. Tools like CORAA test all journal entries automatically rather than sampling.
Q1.7What does SA 250 require regarding laws and regulations?+
The auditor must obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the FS, and perform specified audit procedures for other laws and regulations that may have a material indirect effect.
Q1.8When must I communicate with TCWG under SA 260?+
Significant findings from the audit, including audit approach, control deficiencies, uncorrected misstatements, modification of opinion, going concern issues, and difficulties encountered. Communication must be timely and adequately documented.
Q1.9What is the SA 265 reporting threshold?+
Significant deficiencies in internal control identified during the audit must be communicated in writing to TCWG on a timely basis. "Significant" means a deficiency or combination of deficiencies that, in the auditor's professional judgement, is of sufficient importance to merit attention.
Q1.10What is the difference between audit strategy and audit plan (SA 300)?+
Audit strategy is the overall approach — scope, timing, direction. Audit plan is more detailed — specific procedures, sample sizes, staff allocation. Strategy informs the plan; plan implements the strategy.
Q1.11What is SA 315 (Revised 2020)?+
The risk-assessment standard. Requires the auditor to identify and assess risks of material misstatement at the FS and assertion level. The 2020 revision strengthened the IT environment and ITGC understanding requirements, and the concept of "significant risks".
Q1.12What are "significant risks" under SA 315?+
Risks that, in the auditor's judgement, require special audit consideration. Examples — risk of fraud, complex non-routine transactions, related-party transactions, subjective estimates with high estimation uncertainty. Significant risks require specific substantive procedures.
Q1.13What is SA 320 materiality?+
The threshold above which misstatements (individually or in aggregate) could reasonably be expected to influence the economic decisions of users. Set at planning, revised during audit if circumstances change, and used to evaluate the effects of identified misstatements.
Q1.14What is the typical PBT-based materiality benchmark?+
For profitable companies, 5% of profit before tax is the most-cited anchor in ICAI implementation guidance. Some firms use 5-10% range for stable unlisted profitable companies. For listed, 5% is the conservative norm.
Q1.15What is performance materiality?+
A lower amount than overall materiality, set to reduce the probability that the aggregate of undetected and uncorrected misstatements exceeds overall materiality. Typical range — 60-75% of overall materiality.
Q1.16What is the SA 330 link to risk assessment?+
SA 330 — the auditor designs and performs further audit procedures whose nature, timing, and extent are based on, and responsive to, the assessed risks of material misstatement identified under SA 315. Significant risks require substantive procedures specifically responsive.
Q1.17What is SA 402 about?+
Audit considerations when the entity uses a service organisation (e.g., payroll processor, cloud hosting). The auditor obtains understanding of services provided, considers controls at the service organisation, and may rely on a SOC 1 / Type 2 report (SAE 3402).
Q1.18What is the difference between SA 450 evaluation of misstatements and SA 320 materiality?+
SA 320 sets the threshold; SA 450 evaluates whether identified misstatements (individually or in aggregate) exceed it. SA 450 also requires consideration of qualitative factors — even individually-small misstatements may be material in context.
Q1.19How does SA 500 define "audit evidence"?+
Information used by the auditor in arriving at the conclusions on which the audit opinion is based. Includes information from accounting records and other sources. Must be sufficient (quantity) and appropriate (quality — relevance + reliability).
Q1.20What is the SA 501 inventory verification rule?+
When inventory is material, the auditor must attend physical inventory counting unless impracticable, observe management's counting procedures, inspect inventory, and perform test counts. For inventory under custody of third party — obtain confirmation directly from the third party.
Q1.21What is the SA 505 external confirmation hierarchy?+
Positive confirmation > negative confirmation > inferred response. Positive — confirming party explicitly confirms or disputes. Negative — only responds if disagrees (weaker evidence). Used for bank balances, debtors, creditors, legal counsel.
Q1.22What is the SA 510 opening balance requirement?+
For a first-year audit (or where the prior auditor was unable to perform sufficient procedures), the auditor must obtain sufficient appropriate audit evidence about whether opening balances contain misstatements that affect current FS, and whether accounting policies have been consistently applied.
Q1.23What is the SA 520 analytical procedure requirement?+
Analytical procedures are required at the planning stage (preliminary AP under SA 315), as substantive AP for some assertions (SA 520), and at the overall review stage near audit completion. Useful for identifying unusual fluctuations and assessing reasonableness.
Q1.24How does SA 530 sampling work?+
Apply audit procedures to less than 100% of items in a population so that all sampling units have a chance of selection. Statistical (MUS, classical variables) or non-statistical sampling. Sample size depends on confidence level, tolerable misstatement, expected misstatement.
Q1.25What is SA 540 about?+
Auditing accounting estimates and related disclosures, including fair value measurements. Requires the auditor to obtain understanding of how management makes estimates, evaluate inherent risk, and test the reasonableness of management's estimate (or develop an independent point estimate / range).
Q1.26How are related party transactions audited (SA 550)?+
Identify related parties, evaluate the entity's controls over identification and disclosure, perform procedures responsive to the assessed risk, and test that RPTs are disclosed in accordance with the FRF. Common audit failing — accepting management assertions on arm's-length pricing without independent test.
Q1.27What does SA 560 cover?+
Subsequent events — events occurring between the date of the FS and the date of the auditor's report, and facts that become known to the auditor after the date of the auditor's report. Adjusting events (conditions existed at BS date) and non-adjusting events handled differently.
Q1.28What does SA 570 require for going concern?+
Evaluate management's assessment for at least 12 months from the date of the FS. Identify events / conditions that may cast significant doubt. If material uncertainty exists, include a separate "Material Uncertainty Related to Going Concern" section in the audit report.
Q1.29When is a written representation under SA 580 dated?+
Same date as the audit report (or as close to it as practicable). Covers period audited and material that requires representation per other SAs. Failure to obtain WR is a scope limitation.
Q1.30When does SA 600 apply?+
Audit of group / consolidated FS where component auditors audit individual subsidiaries. The principal auditor uses component auditor work, but takes responsibility for the overall opinion. Component auditor instructions documented; review of component work scaled to component risk.
Q1.31What is the SA 610 link to internal audit?+
Auditor may use the work of the internal audit function (or internal audit team direct assistance) if evaluation confirms competence, objectivity and systematic approach. Cannot fully replace external audit — only used to obtain evidence.
Q1.32When do I engage an auditor's expert under SA 620?+
When the audit team lacks the expertise needed in a specialised area (e.g., actuarial for gratuity / pension; engineering for asset valuation; legal for contract interpretation; IT security for digital assets). Expert's competence, objectivity and work scope documented.
Q1.33What is the difference between an unmodified and unqualified opinion (SA 700)?+
Same thing — "unmodified" is the SA 700 (Revised) terminology; "unqualified" is the older / colloquial terminology. Both mean "clean" opinion — FS give a true and fair view in all material respects per the applicable framework.
Q1.34What is a Key Audit Matter under SA 701?+
Matters that, in the auditor's judgement, were of most significance in the audit of the FS of the current period. Selected from matters communicated to TCWG. Mandatory for listed entities; described in the auditor's report with reasons and audit approach.
Q1.35When is a qualified opinion issued (SA 705)?+
When (a) misstatements individually or in aggregate are material but NOT pervasive to the FS; OR (b) the auditor is unable to obtain sufficient appropriate evidence on which to base the opinion, but the possible effects of undetected misstatements could be material but not pervasive.
Q1.36When is an adverse opinion issued?+
When misstatements, individually or in aggregate, are both material AND pervasive to the FS. Pervasive = not confined to specific elements / accounts; could substantially impair the FS as a whole.
Q1.37When is a disclaimer of opinion issued?+
When the auditor is unable to obtain sufficient appropriate audit evidence AND the possible effects of undetected misstatements could be material AND pervasive. The auditor cannot form an opinion.
Q1.38What is the difference between EOM and Other Matter paragraph (SA 706)?+
EOM (Emphasis of Matter) — refers to a matter appropriately presented in the FS that, in the auditor's judgement, is of such importance that it is fundamental to users' understanding. Other Matter — refers to a matter other than those presented in the FS that, in the auditor's judgement, is relevant to users' understanding of the audit.
Q1.39What is SA 720 about?+
Auditor's responsibilities relating to other information included in the entity's annual report that contains the audited FS — typically the Director's Report and MD&A. The auditor reads the other information and considers whether there is a material inconsistency or misstatement.
Q1.40How can AI help with SA compliance?+
AI assistants like CORAA operationalise SAs as code — SA 230 documentation as immutable audit trail, SA 240 JE testing on full population (not sample), SA 320 materiality with the locked memo, SA 530 sampling with formula + seed printed per working paper, SA 700 with UDIN-gated sign-off.
