Objective
To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report with the auditor's opinion.
Key requirements
- Compliance with relevant ethical requirements, including independence (ICAI Code of Ethics)
- Professional skepticism throughout the engagement
- Application of professional judgement
- Sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
- Conduct in accordance with the SAs
Typical procedures
- Document the firm's independence assessment at acceptance
- Apply skepticism flags — where management's explanations are inconsistent with evidence
- Form a basis for opinion via evidence accumulation per SAs 300-700
Common pitfalls
- Over-reliance on management representations as the sole source of evidence
- Treating "no exception found" as adequate when sample sizes are too small
- Skipping documentation of professional-judgement calls
SA 220SA 230SA 230