MODULE 1

Introduction to Audit Introduction to Audit

An audit is a systematic examination and verification of a company’s financial records,
transactions, and operations. The primary goal is to ensure the accuracy and integrity of
financial statements and to assess the effectiveness of internal controls. Audits can be
conducted internally by employees of the organization or externally by independent
auditors.
Types of Audits
 Internal Audit: Conducted by the company’s own staff or an internal audit
department. It focuses on evaluating internal controls, risk management, and
governance processes.
 External Audit: Performed by independent auditors from outside the organization. It
provides an unbiased opinion on the financial statements.
 Compliance Audit: Ensures that the company complies with external laws and
regulations.
 Operational Audit: Assesses the efficiency and effectiveness of operations.
Audit of LedgersAuditing ledgers is a fundamental part of the audit process, involving a
detailed examination of a company’s financial records. The goal is to ensure the accuracy
and completeness of financial transactions and to confirm that the financial statements
present a true and fair view of the company’s financial position.
many auditors perform this procedure but fail to consider its effect on their audit strategy.
after unusual transactions are investigated and any errors are corrected by proposed journal
entries, the auditor has obtained significant, substantive evidence that relevant
assertions for many account balances are reasonable. acceptable evidence obtained from
this risk assessment procedure, along with evidence from other risk assessment procedures,
may enable the auditor to reduce the assessed level of risk of material misstatement from a
high level and thereby reduce the extent of evidence desired from detailed tests of balances

General Considerations,
1. Accuracy and Completeness:
 Verify that all transactions are recorded accurately.
 Ensure that all necessary entries are included in the ledgers.
2. Consistency:
 Confirm that accounting policies are applied consistently across periods.
 Ensure uniformity in classification and presentation.
3. Cut-off Procedures:
  Check that transactions are recorded in the correct accounting period.
 Review end-of-period adjustments for appropriateness.
4. Authorization:
 Verify that all transactions are authorized by the appropriate personnel.
 Check for proper documentation of approvals.
5. Classification:
 Ensure that transactions are classified correctly in the ledgers.
 Review account classifications for accuracy.
6. Documentation:
 Verify the existence and adequacy of supporting documents for all ledger
entries.
 Ensure proper filing and storage of documentation.
7. Reconciliation:
 Reconcile ledger balances with subsidiary records and external statements.
 Investigate and resolve any discrepancies.

Scrutiny of Ledgers of Assets,

Ledger scrutiny is an essential part of all audit procedures, including vouching and posting.
Whether it’s an internal audit or statutory audit, all clients, including private and public
companies, require ledger scrutiny. It’s essential to conduct a ledger scrutiny regardless of
whether the accounts are maintained manually, using Tally, SAP, or customized accounting
software. Whenever there’s a ledger, such as a stock ledger, accounts ledger, DRS, CRS, or
expense ledger, scrutinizing the ledger is necessary.
Imp
Reconciliation of Opening and Closing Balance: To ensure that the balance includes only
entries pertaining to the said account and that every amount in the balance is identifiable
with the account, it’s necessary to reconcile the opening and closing balance in a particular
ledger account.
2. Journal Entries in the Account: It’s essential to trace the journal entries in the account,
including transfers to and fro, and to ascertain the reasons for passing a journal voucher. The
transaction flow of the journal entries to the various accounts should be verified for a
specific account. It’s also necessary to verify the necessity of passing the journal voucher for
a particular transaction.
3. Characteristics of the Account: Before beginning the scrutiny of a particular account, it’s
necessary to write down and understand all the specific characteristics of that account. For
example, the ledger account of electricity expenses has monthly bills to be posted, and the
payment if paid against the particular bill, including provision for the last month.
4. Transactions Nearest to the Head of the Account: For accounts such as repairs and
maintenance, which have features of major and minor repairs, it’s necessary to understand
which head the account should be nearest to.
5. Combo Ledger Accounts: For combo ledger accounts, such as repairs and maintenance,
it’s essential to understand the specific characteristics of different types of transactions.

Personal and Revenue Accounts

Ledgers of Personal Accounts
1. Accounts Payable Ledger:
 Vendor Balances: Verify the accuracy of balances owed to suppliers.
 Confirmation: Confirm balances with major suppliers.
 Aging Reports: Review aging reports and assess the timeliness of payments.
 Recording of Transactions: Ensure proper recording of purchases, returns, and
allowances.
2. Employee Advances and Loans Ledger:
 Accuracy: Verify the accuracy of advances and loans given to employees.
 Authorization: Ensure proper authorization and documentation of advances
and loans.
 Repayment Schedules: Review repayment schedules and outstanding
balances.
Ledgers of Revenue Accounts
1. Sales Ledger:
 Accuracy and Completeness: Verify the accuracy and completeness of sales
transactions.
 Cut-off Procedures: Ensure proper cut-off procedures are followed.
 Sales Recognition: Check for consistency in sales recognition policies.
 Returns and Allowances: Review the recording of sales returns and
allowances.
 2. Service Revenue Ledger:
 Accuracy and Completeness: Verify the accuracy and completeness of service
revenue transactions.
 Cut-off Procedures: Ensure proper cut-off procedures are followed.
 Revenue Recognition: Check for consistency in revenue recognition policies.

MODULE 2
Standards on Quality Control- Leadership
responsibilities for quality within the firm,
1. Setting the Tone at the Top
 Commitment to Quality: Firm leaders must visibly and consistently demonstrate their
commitment to quality. This involves making quality a priority in decision-making and
resource allocation.
 Ethical Culture: Promote a culture of integrity, objectivity, and professional behavior.
Leaders should lead by example, adhering to ethical guidelines and encouraging the
same from all staff members.
2. Establishing and Implementing Quality Control Policies
 Quality Control System: Develop a comprehensive system of quality control that
includes policies and procedures designed to ensure all audit engagements comply
with professional standards and regulatory requirements.
 Policy Communication: Clearly document these policies and procedures and
effectively communicate them to all employees to ensure understanding and
adherence.
3. Assigning Responsibility for Quality Control
 Quality Control Leadership: Designate experienced and competent individuals to
oversee the quality control system. These individuals should have the authority and
resources necessary to fulfill their responsibilities.
 Accountability Mechanisms: Ensure that all staff members, especially those in
leadership roles, are held accountable for the quality of their work. Implement
mechanisms to monitor and enforce accountability.
4. Providing Adequate Resources for Quality
 Training and Development: Invest in continuous professional development and
training programs to keep staff updated on the latest auditing standards, techniques,
and industry developments.
  Tools and Technology: Allocate resources for advanced tools and technologies that
enhance audit quality, such as data analytics software and automated audit systems.
5. Maintaining Ethical Standards and Independence
 Ethical Guidelines: Establish and enforce strict ethical guidelines that promote
integrity, objectivity, and professional conduct.
 Independence Policies: Implement robust policies to ensure the firm and its
employees maintain independence from audit clients, thereby avoiding conflicts of
interest.
6. Managing Client Acceptance and Continuance
 Risk Assessment: Implement a thorough process for assessing the risks associated
with potential and existing clients. Evaluate factors such as the client’s integrity,
financial stability, and complexity of operations.
 Decision Documentation: Document the decision-making process for accepting or
continuing client relationships to ensure transparency and accountability.
7. Supervising and Reviewing Audit Engagements
 Engagement Supervision: Ensure that audit engagements are supervised
appropriately by experienced professionals. Supervision should include regular
reviews and consultations to address complex issues.
 Quality Reviews: Implement a system of reviews at various stages of the audit
engagement to ensure compliance with quality standards and identify areas for
improvement.
8. Ongoing Monitoring and Continuous Improvement
 Continuous Monitoring: Regularly monitor the effectiveness of the firm’s quality
control system through internal reviews and assessments. Use feedback from these
reviews to make necessary improvements.
 Responding to Inspections: Participate in external inspections conducted by
regulatory bodies and professional organizations. Promptly address any deficiencies
identified during these inspections.
9. Encouraging a Culture of Learning and Improvement
 Feedback Mechanisms: Establish mechanisms for obtaining feedback from staff and
clients on the quality of audit and assurance services. Use this feedback to identify
areas for improvement and implement changes.
 Continuous Improvement: Foster a culture that encourages continuous learning and
improvement. Encourage staff to stay updated with industry trends and best
practices and to seek opportunities for professional growth.
Ethical Requirements,
1.Integrity
 Honesty and Truthfulness: Auditors must be straightforward and honest in all
professional and business relationships. They should not be associated with reports,
returns, communications, or other information where they believe that the
information contains a materially false or misleading statement.
 Transparency: Maintain openness and transparency in all dealings, ensuring that
clients, stakeholders, and regulatory bodies have a clear understanding of the audit
process and findings.
2. Objectivity
 Impartiality: Auditors must not allow bias, conflicts of interest, or undue influence of
others to override their professional or business judgments. They should remain
objective and impartial throughout the audit process.
 Avoiding Conflicts of Interest: Implement policies to identify, disclose, and manage
any conflicts of interest. Auditors should refrain from engaging in any activities or
relationships that could impair their objectivity.
3. Professional Competence and Due Care
 Continuous Learning: Auditors should maintain their professional knowledge and
skills at the level required to ensure that clients receive competent professional
service. This includes staying up-to-date with developments in the field of auditing
and accounting.
 Diligence: Exercise due care by acting diligently and in accordance with applicable
technical and professional standards when providing audit services.
4. Confidentiality
 Protecting Information: Auditors must respect the confidentiality of information
acquired during the course of their work. They should not disclose such information
to third parties without proper and specific authority, unless there is a legal or
professional right or duty to disclose.
 Preventing Unauthorized Access: Implement procedures to prevent unauthorized
access to client information and ensure that all data is securely stored and managed.
5. Professional Behavior
 Compliance with Laws and Regulations: Auditors should comply with relevant laws
and regulations and avoid any action that discredits the profession.
 Reputation of the Profession: Maintain the good reputation of the profession by
behaving in a manner that upholds the values and principles of ethical conduct.
6. Independence
  Independence in Fact and Appearance: Auditors must be independent in both fact
and appearance. This means they should not only be free from any actual conflicts of
interest but also avoid situations that might appear to impair their objectivity to an
informed third party.
 Independence Policies: Implement and enforce policies that ensure the
independence of auditors. This includes regular assessments of relationships and
activities that could threaten independence.

Acceptance and Continuance of client relationship,

The acceptance and continuance of client relationships is a critical aspect of ensuring the
quality and integrity of audit and assurance services. This process involves evaluating
potential and existing clients to assess the risks associated with the engagement and to
determine whether the firm can effectively and ethically serve the client.
1. Client Evaluation
 Integrity and Reputation: Assess the integrity and reputation of the client’s
management and key stakeholders. This includes reviewing the client’s history, public
perception, and any involvement in legal or regulatory issues.
 Financial Stability: Evaluate the financial health and stability of the client. Consider
financial statements, credit reports, and other financial information to understand
the client’s solvency and viability.
 Business Practices: Review the client’s business practices and industry. Identify any
potential ethical or legal issues, including compliance with relevant laws and
regulations.
2. Risk Assessment
 Engagement Risks: Identify and evaluate risks associated with the engagement, such
as the complexity of the client’s operations, the potential for material misstatements,
and the likelihood of fraud.
 Resource Requirements: Determine if the firm has the necessary expertise,
resources, and capacity to effectively manage the engagement.
 Conflicts of Interest: Assess potential conflicts of interest that may impair the firm’s
independence and objectivity.
3. Decision Making
 Acceptance Criteria: Establish clear criteria for accepting new clients and continuing
existing client relationships. This should include a risk assessment framework and
thresholds for acceptable levels of risk.
  Approval Process: Implement a formal approval process for accepting new clients
and continuing existing relationships. This process should involve senior
management and, where appropriate, the firm’s risk management committee.
4. Documentation
 Record Keeping: Maintain thorough documentation of the client acceptance and
continuance process. This includes records of evaluations, risk assessments, and
decisions made.
 Transparency: Ensure that the documentation provides a clear rationale for accepting
or continuing a client relationship, including any conditions or safeguards put in place
to mitigate identified risks.
Steps
1. Preliminary Engagement Activities
 Initial Inquiry: Conduct an initial inquiry to gather basic information about the
potential client. This may include discussions with the client, reviewing publicly
available information, and obtaining references.
 Preliminary Risk Assessment: Perform a preliminary risk assessment to identify any
immediate concerns or red flags.
2. Detailed Evaluation
 Management Integrity: Evaluate the integrity of the client’s management. This
includes background checks, reviewing the client’s governance structure, and
assessing management’s commitment to ethical practices.
 Financial Analysis: Conduct a detailed analysis of the client’s financial statements and
financial health. Identify any significant trends, anomalies, or concerns.
 Business Operations: Understand the client’s business operations, industry, and
market position. Identify any unique risks or challenges associated with the client’s
business model.
3. Risk Assessment and Mitigation
 Engagement Risk Factors: Identify specific risk factors associated with the
engagement, such as high transaction volumes, complex financial instruments, or
significant regulatory scrutiny.
 Risk Mitigation Strategies: Develop strategies to mitigate identified risks. This may
include additional audit procedures, increased supervision, or the involvement of
specialists.
4. Approval and Documentation
 Decision Making: Make a formal decision to accept or decline the client. This decision
should be based on a thorough evaluation and risk assessment.
  Documenting the Decision: Document the decision-making process, including the
rationale for the decision and any conditions or safeguards imposed.
5. Continuous Monitoring
 Ongoing Evaluation: Continuously monitor the client relationship to identify any
changes in risk factors or circumstances. This includes regular updates to the client’s
risk assessment and periodic reviews of the client’s financial and operational status.
 Annual Review: Conduct an annual review of all client relationships to determine
whether to continue the engagement. This review should consider any changes in
the client’s risk profile, financial health, and compliance with ethical and regulatory
standards

*Human Resources, Engagement, Performance, Monitoring*

International Standard on Review Engagements 2400 scope-
1. Objective of the Engagement
 The primary objective of a review engagement under SRE 2400 is to enable the
practitioner to express a conclusion on whether, based on the procedures performed
and the evidence obtained, anything has come to their attention that causes them to
believe that the financial statements are not prepared, in all material respects, in
accordance with the applicable financial reporting framework.
 Unlike audits, which provide reasonable assurance, review engagements
provide limited assurance. This means the practitioner’s conclusion is based on a
lower level of evidence.
2. Level of Assurance
 The practitioner provides limited assurance rather than the higher level of assurance
provided by an audit.
 The review involves performing primarily inquiry and analytical procedures rather
than the more extensive testing of audit procedures. The scope is therefore less
detailed and less exhaustive than in an audit engagement.
3. Nature of Procedures
 The procedures performed are generally limited to:
 Inquiries of management and others within the entity who have financial and
accounting responsibilities.
 Analytical procedures applied to financial data to identify trends,
relationships, or anomalies.
  In contrast to audits, there is minimal verification of documents or records unless
specific concerns arise during the engagement. Substantive testing is generally not
performed.
4. Areas Covered by the Engagement
 Historical financial information: The review focuses on financial statements of prior
periods (historical financial statements) prepared by management.
 The review aims to ensure that these financial statements are fairly presented in
accordance with the applicable financial reporting framework, but not to the extent
of detailed verification of each transaction.
5. Reporting Requirements
 The practitioner issues a report based on their findings. The report includes a
conclusion that, based on the review, the financial statements appear to be free from
material misstatement, or alternatively, it highlights any issues that need to be
addressed.
 The report emphasizes that a review provides only limited assurance, explaining the
nature of the work performed and the limitations of the scope compared to an audit.
6. Applicability
 SRE 2400 is applied in contexts where stakeholders require some level of assurance
about the financial statements but do not require a full audit.
 It is commonly used in smaller entities or less complex situations where an audit is
not mandated by law or regulation.
7. Ethical and Independence Requirements
 Practitioners performing a review must adhere to applicable ethical requirements,
including independence, confidentiality, and professional behavior, as required by
the relevant code of ethics.
8. Limitations of the Engagement
 The scope of the review does not extend to detailed internal control testing, fraud
detection activities, or significant substantive testing of transactions.
 Due to the limited scope of procedures, there is a risk that material misstatements
may not be detected, unlike in an audit where more extensive procedures would
reduce such a risk.
Obj
1. Providing Limited Assurance
 The central objective of a review engagement under SRE 2400 is to allow the
practitioner to express a limited assurance conclusion. This means the practitioner is
 tasked with determining whether, based on the review procedures performed,
anything has come to their attention that suggests the financial statements are not
prepared, in all material respects, in accordance with the applicable financial
reporting framework.
 This limited assurance is provided through inquiry and analytical procedures, which
offer a lower level of assurance compared to an audit.
2. Identifying Material Misstatements
 The review aims to determine whether there are any material misstatements in the
financial statements. A material misstatement could arise from errors, omissions, or
non-compliance with the financial reporting framework that would affect users’
understanding of the financial statements.
 Although the review procedures are less extensive than an audit, the practitioner still
seeks to identify potential areas where material misstatements could exist and assess
whether they affect the overall presentation of the financial statements.
3. Ensuring Adherence to Applicable Financial Reporting Framework
 The review engagement ensures that the financial statements are prepared in
accordance with the applicable financial reporting framework (e.g., IFRS, GAAP). The
practitioner evaluates whether the financial statements comply with the rules and
standards that are in force, focusing on whether they are appropriately prepared and
presented.
 The objective is not to provide a high level of detail or verification but to confirm that
the financial statements appear to conform to these standards.
4. Offering a Conclusion Based on Moderate Evidence
 The practitioner’s review provides a basis for issuing a conclusion that is based on
moderate evidence, derived from the limited procedures performed. This is different
from an audit, where a high level of assurance is sought through extensive evidence
collection.
 The objective is to communicate the practitioner’s findings in a clear and concise
way, informing stakeholders that, based on the limited procedures, no material issues
have been identified.
5. Supporting Decision Making for Stakeholders
 While not as comprehensive as an audit, the review engagement still plays an
important role in supporting the decision-making processes of stakeholders,
including investors, lenders, and management. By obtaining a review report,
stakeholders receive an additional layer of assurance that the financial statements
are credible and free of material misstatement.
6. Maintaining Professional Skepticism and Independence
  An important objective of SRE 2400 is to ensure that the practitioner
maintains professional skepticism and independence throughout the engagement.
Although the scope of work is limited, the practitioner is expected to approach the
engagement with the same level of objectivity and ethical standards as in an audit.
 Independence is key to ensuring that the conclusion provided is impartial and can be
relied upon by users of the financial statements.
7. Providing a Balanced Report
 The objective is also to deliver a balanced report that highlights any areas of concern
or reservations, if identified during the review. If no material modifications are
required, the practitioner concludes that the financial statements are fairly
presented. However, if issues are detected, the practitioner is responsible for
pointing them out in the report.
Procedure
1. Inquiries of Management
 The practitioner conducts inquiries with management and others within the entity
who have responsibilities for financial and accounting matters. This includes asking
about:
 Accounting policies and practices followed by the entity.
 Whether the financial statements are prepared in accordance with the
applicable financial reporting framework.
 Significant transactions and events during the period.
 Areas where management judgment was applied.
 Potential errors or irregularities that could affect the financial statements.
 Any events or conditions that may cast significant doubt on the entity’s ability
to continue as a going concern.
 Inquiries help the practitioner gain insight into how the financial statements were
prepared and whether there are any potential risks of material misstatement.
2. Analytical Procedures
 Analytical procedures involve evaluating financial information by analyzing plausible
relationships among both financial and non-financial data. The practitioner performs
comparisons and assesses variances, ratios, and trends to identify unusual items or
inconsistencies that may indicate issues.
 Examples of analytical procedures include:
 Comparing the current period’s financial results to prior periods, budgets, or
industry averages.
  Assessing significant fluctuations or trends that do not appear reasonable.
 Performing ratio analysis (e.g., liquidity ratios, profitability ratios) to evaluate
performance over time.
 Reviewing relationships between financial data and key performance
indicators (KPIs).
3. Comparison of Financial Information
 The practitioner may compare the financial statements with previous periods or with
forecasts and budgets. This can highlight areas that deviate from expectations and
might need further investigation or explanation.
4. Assessing the Accounting Policies
 The practitioner reviews the accounting policies adopted by the entity to ensure they
are appropriate, consistently applied, and in accordance with the applicable financial
reporting framework.
 If accounting policies have changed, the practitioner inquires about the reasons for
the change and assesses whether the changes were disclosed and applied correctly.
5. Obtaining Written Representations
 The practitioner requests written representations from management, confirming the
accuracy of the financial information provided. This includes representations on
matters such as:
 The completeness of financial records.
 The recognition, measurement, and presentation of transactions in the
financial statements.
 Disclosures made in the financial statements.
 These written representations help ensure that management takes responsibility for
the accuracy and completeness of the financial statements.
7. Obtaining Knowledge of the Entity and its Environment
 The practitioner needs to acquire a basic understanding of the entity’s business and
industry to perform relevant inquiries and analytical procedures effectively. This
helps in recognizing the context in which financial information is prepared and
identifying potential risks of material misstatement.
8. Review of the Entity’s Financial Reporting Processes
 The practitioner also inquires about the entity’s financial reporting processes to
understand how financial data is collected, summarized, and reported. This includes:
 Assessing the processes used by management to ensure the accuracy of
financial information.
  Understanding controls over the preparation and presentation of financial
statements, though no testing of internal controls is performed.
11. Documentation
 The practitioner documents all the procedures performed, evidence obtained, and
conclusions reached during the review. This includes:
 The results of inquiries and analytical procedures.
 Written representations from management.
 Any issues identified during the engagement and how they were resolved.
 Proper documentation is essential to support the limited assurance conclusion in the
review report.
12. Issuing the Review Report
 The final procedure is the preparation and issuance of the review report, which
provides a limited assurance conclusion on whether any material modifications are
necessary for the financial statements to comply with the applicable financial
reporting framework.
 The report explicitly mentions that the engagement provides limited assurance and is
not an audit, emphasizing the differences in the scope of work performed.

Review of interim financial statement by (SREs)

1. Objective
The objective of an auditor performing a review of interim financial information is to enable
the auditor to express limited assurance about whether they have become aware of any
material modifications that should be made to the interim financial information for it to
conform to the applicable financial reporting framework.
2. Limited Assurance vs. Reasonable Assurance
 Limited Assurance: Unlike a full audit, which provides reasonable assurance, a review
of interim financial information offers limited assurance. This means the auditor is
not expected to obtain the same level of evidence as in an audit. Instead, the
procedures are more limited in scope, focusing primarily on inquiry and analytical
review.
 Reasonable Assurance: This higher level of assurance is provided through extensive
substantive testing and internal control assessments, but it is not the goal of a review
engagement under SRE 2410.
3. Applicability
  Interim financial information typically includes condensed financial statements for a
period shorter than a full financial year, such as quarterly or half-yearly financial
statements.
 This standard is applied where the independent auditor who performed the audit of
the entity’s last annual financial statements is engaged to review the entity’s interim
financial information.
4. Procedures
The review procedures for interim financial information under SRE 2410 are
primarily inquiries and analytical procedures, similar to those in SRE 2400, but are
specifically tailored to interim financial reporting.
5. Documentation
 The auditor documents all inquiries, analytical procedures, and findings from the
review. This includes documenting the rationale for conclusions reached, and any
communication with management about findings or adjustments.
6. Reporting
 Conclusion: The auditor issues a report on the review of interim financial
information. This report includes a statement that based on the review, nothing has
come to the auditor’s attention that causes them to believe the interim financial
information is not prepared in accordance with the applicable financial reporting
framework.
 Emphasis on Limited Assurance: The review report explicitly mentions that the
engagement was not a full audit and thus only provides limited assurance.
 If any material misstatements or issues are identified, the auditor must communicate
these clearly in the report, including any emphasis of matter or modifications to the
conclusion.
7. Use of Professional Judgment
 Auditors are expected to apply professional judgment throughout the review
process, determining whether further inquiry or procedures are necessary if any
discrepancies or unusual items arise during the review.
8. Independence and Ethical Requirements
 The auditor must remain independent and comply with all relevant ethical standards
throughout the review engagement, just as they would during an audit.
9. Importance to Stakeholders
 The review of interim financial information provides critical limited assurance to
users such as investors, creditors, and regulatory bodies, ensuring that the interim
 reports reflect the entity’s financial position without undergoing the comprehensive
processes of a full audit.

*1.4 Standards on Assurance Engagements (SAEs)

-Examination of prospective financial information
-SAE 3400, Assurance report on controls at service
organization -SAE 3402, Assurance on financial
information provided in prospectus -SAE 3420*
*1.5 Company Audit - Audit of Shares, Qualifications and
Disqualifications of Auditors, Appointment of
auditors, Removal of auditors, Powers and duties of
auditors, Branch audit, Joint audit, Special audit,
Reporting requirements under the Companies Act, 2013.*

Concepts of true and fair and materiality and audit risk in the context of audit of companies.
True and Fair
Definition: The concept of “true and fair” is a fundamental principle in financial reporting
and auditing. It requires that financial statements present a true and fair view of the
company’s financial performance and position. This means that the financial statements
should be accurate, complete, and free from bias or misstatement.
Key Elements:
1. Accuracy: Financial information should be free from significant errors or inaccuracies.
The figures presented in the financial statements should accurately reflect the
company’s transactions and financial condition.
2. Completeness: All relevant financial information should be included in the financial
statements. Omissions that could influence the decisions of users should be avoided.
3. Neutrality: Financial statements should be free from bias. They should not be
manipulated to present the company in a more favorable or unfavorable light than is
justified by the actual financial performance and position.
4. Consistency: Financial information should be presented consistently from one period
to the next. Changes in accounting policies or estimates should be disclosed and
justified.
5. Prudence: Financial statements should be prepared with caution, ensuring that
assets and income are not overstated, and liabilities and expenses are not
understated.
Materiality
Definition: Materiality is a concept that relates to the significance of financial information to
users of financial statements. An item is considered material if its omission or misstatement
could influence the economic decisions of users taken on the basis of the financial
statements.
Key Elements:
1. Quantitative Aspect: This involves setting a monetary threshold for determining
materiality. Items above this threshold are considered material, while those below
are considered immaterial. The threshold can vary depending on the size and nature
of the company.
2. Qualitative Aspect: Certain items may be material due to their nature, even if their
monetary value is relatively small. For example, transactions involving related parties
or significant changes in accounting policies can be material due to their qualitative
impact.
3. User Perspective: Materiality is assessed from the perspective of users of financial
statements. What may be material to one user may not be material to another. The
auditor must consider the needs and expectations of various users.
Application in Auditing:
 Planning and Execution: Auditors use materiality to plan and perform the audit. It
helps in determining the nature, timing, and extent of audit procedures. For
example, more extensive testing may be required for items that are considered
material.
 Evaluation of Misstatements: During the audit, auditors evaluate identified
misstatements to determine whether they are material. This involves considering
both the size and nature of the misstatements.
 Audit Opinion: The concept of materiality is critical in forming the audit opinion.
Auditors must assess whether any identified misstatements, individually or in
aggregate, are material to the financial statements. If material misstatements are not
corrected, the auditor may issue a modified opinion.

#Interrelationship Between True and Fair and Materiality

The concepts of “true and fair” and “materiality” are closely related and together ensure the
reliability and relevance of financial statements:
 True and Fair Assessment: Achieving a true and fair view requires considering
materiality. Financial statements that omit or misstate material information cannot
be considered true and fair.
  Materiality Thresholds: Setting appropriate materiality thresholds helps ensure that
financial statements focus on information that is significant to users, thereby
contributing to their true and fair presentation.
 Audit Judgment: Auditors use their professional judgment to apply the concepts of
true and fair and materiality. This involves balancing the need for detailed accuracy
with the relevance of information to users.

#Audit Risk in the Context of Audit of Companies

Audit risk is the risk that an auditor may unknowingly fail to appropriately modify their
opinion on financial statements that are materially misstated. It is a crucial concept in the
auditing of companies because it affects the quality and reliability of the audit opinion.
Understanding and managing audit risk is essential to ensure the integrity and effectiveness
of the audit process.

#Components of Audit Risk

Audit risk is typically broken down into three components:
1. Inherent Risk (IR): The susceptibility of an assertion about a transaction, account
balance, or disclosure to a misstatement that could be material, assuming there are
no related controls. This risk is influenced by the nature of the business, the
complexity of transactions, and the financial environment in which the company
operates.
2. Control Risk (CR): The risk that a misstatement that could occur in an assertion and
that could be material will not be prevented, or detected and corrected, on a timely
basis by the entity’s internal control. This is influenced by the effectiveness of the
company’s internal control systems.
3. Detection Risk (DR): The risk that the procedures performed by the auditor will not
detect a misstatement that exists and that could be material. This risk is influenced
by the nature, timing, and extent of audit procedures and the auditor’s application of
these procedures.
Audit Risk Model
An audit risk model is a conceptual tool applied by auditors to evaluate and manage the
various risks arising from performing an audit engagement. The tool helps the auditor decide
on the types of evidence and how much is needed for each relevant assertion.
The audit risk model indicates the type of evidence that needs to be collected for each
transaction class, disclosure, and account balance. It is best determined during the planning
stage and only possesses little value in terms of evaluating audit performance.
An audit risk model is a conceptual tool applied by auditors to evaluate and manage the
overall risk encountered in performing an audit. The audit risk model is best applied during
the planning stage and possesses little value in terms of evaluating audit performance. Risk
elements are (1) inherent risk, (2) control risk, (3) acceptable audit risk, and (4) detection
risk.

Managing Audit Risk

1. Assessing Inherent Risk
 Industry Analysis: Evaluate the risks associated with the company’s industry,
including economic, regulatory, and competitive factors.
 Company Analysis: Assess the complexity of the company’s operations, the nature of
its transactions, and its financial position.
 Fraud Risk: Consider the potential for fraud, including management override of
controls and incentives for fraudulent reporting.
2. Assessing Control Risk
 Internal Control Evaluation: Understand and evaluate the effectiveness of the
company’s internal controls. This includes assessing the design and implementation
of controls and testing their operating effectiveness.
 Control Environment: Assess the overall control environment, including the
company’s governance structure, management’s attitude towards controls, and the
ethical culture of the organization.
3. Reducing Detection Risk
 Audit Planning: Develop a detailed audit plan that outlines the nature, timing, and
extent of audit procedures. Ensure that the audit approach is tailored to the specific
risks identified.
 Audit Procedures: Use a combination of substantive procedures and tests of controls
to gather sufficient appropriate audit evidence. Apply procedures such as analytical
reviews, confirmations, inspections, and recalculations.
  Professional Skepticism: Maintain a questioning mindset and critically assess audit
evidence. Be alert to conditions that may indicate possible misstatement due to error
or fraud.
Response to Assessed Risks
1. Designing Audit Procedures
 Risk-Based Approach: Tailor audit procedures based on the assessed levels of
inherent and control risks. For higher-risk areas, increase the extent and rigor of
audit procedures.
 Substantive Testing: Perform detailed testing of transactions, account balances, and
disclosures to detect material misstatements. This includes tests of details and
substantive analytical procedures.
2. Evaluating Audit Evidence
 Sufficiency and Appropriateness: Ensure that the audit evidence obtained is sufficient
and appropriate to support the audit opinion. Evaluate the relevance and reliability
of the evidence.
 Addressing Misstatements: Identify and evaluate any misstatements found during
the audit. Assess whether they are material individually or in aggregate and consider
their implications for the audit opinion.
3. Forming the Audit Opinion
 Overall Conclusion: Based on the audit evidence obtained, form an overall conclusion
on the financial statements. Consider whether they provide a true and fair view and
are free from material misstatement.
 Communicating Results: Communicate the audit findings and conclusions to
management and those charged with governance. Issue the audit report, including
any modifications to the audit opinion if necessary.

Audit Reports: Qualifications

Qualifications in an audit report refer to the auditor’s expressions of concerns or
reservations about certain aspects of the financial statements. These qualifications are
significant because they indicate that the auditor has identified issues that could affect the
reliability or accuracy of the financial statements.
Here’s a detailed look at what qualifications in an audit report entail:
1. Types of Qualifications
a. Unqualified Opinion (Clean Opinion)
  Description: An unqualified opinion is issued when the auditor concludes that the
financial statements present a true and fair view of the company’s financial position
and performance, and are free from material misstatements.
 No Qualification: This type of opinion indicates that the auditor has no reservations
about the financial statements.
b. Qualified Opinion
 Description: A qualified opinion is issued when the auditor encounters certain issues
that do not affect the overall reliability of the financial statements but are significant
enough to warrant a qualification.
 Reason: This could be due to limitations in the scope of the audit, disagreements
with management about accounting treatments, or other concerns.
 Example: “Except for the matter described in the Basis for Qualified Opinion section,
the financial statements give a true and fair view.”
c. Adverse Opinion
 Description: An adverse opinion is issued when the auditor concludes that the
financial statements do not present a true and fair view and are materially misstated.
 Reason: This opinion is given when the financial statements are fundamentally
flawed, and the misstatements are pervasive.
 Example: “The financial statements do not present a true and fair view due to the
misstatements described.”
d. Disclaimer of Opinion
 Description: A disclaimer of opinion is issued when the auditor is unable to form an
opinion on the financial statements due to a significant limitation in the audit scope
or uncertainty.
 Reason: This may occur if the auditor cannot obtain sufficient appropriate audit
evidence or if there are significant uncertainties.
 Example: “We do not express an opinion on the financial statements due to the
reasons described.”

#Notes on Accounts
Notes on Accounts are detailed disclosures provided in the financial statements to explain
and provide additional information about the figures reported. They are an integral part of
financial reporting and help users understand the basis of preparation, accounting policies,
and any significant financial information that is not readily apparent from the financial
statements alone.
1. Purpose of Notes on Accounts
 Clarity: To provide clarity on various elements of the financial statements, such as
accounting policies, methods, and significant estimates.
 Transparency: To enhance transparency by disclosing information that is essential for
understanding the financial position and performance of the company.
 Compliance: To ensure compliance with accounting standards and legal
requirements.
2. Contents of Notes on Accounts
a. Accounting Policies
 Description: Details the specific accounting policies and principles adopted by the
company, including methods of valuation, depreciation, and recognition of income
and expenses.
 Examples: Policies for revenue recognition, inventory valuation (FIFO, LIFO), and
depreciation methods (straight-line, reducing balance).
b. Accounting Estimates and Judgments
 Description: Provides information on significant estimates and judgments made by
management in preparing the financial statements.
 Examples: Estimates related to impairment of assets, provisions for doubtful debts,
and useful lives of fixed assets.
c. Contingent Liabilities and Commitments
 Description: Discloses potential liabilities that may arise from past events and are
contingent on future outcomes, as well as commitments that may affect future cash
flows.
 Examples: Pending litigation, guarantees, and capital commitments.
d. Related Party Transactions
 Description: Details transactions and balances with related parties, including
subsidiaries, associates, joint ventures, and key management personnel.
 Examples: Loans to or from related parties, management remuneration, and
transactions with subsidiaries.
e. Segment Reporting
 Description: Provides information on different segments or divisions of the company,
including their financial performance and position.
 Examples: Revenue, profit or loss, and assets of different business segments or
geographical regions.
f. Financial Instruments
 Description: Discloses information about financial instruments, including their
classification, valuation, and associated risks.
 Examples: Derivatives, investments, and loans.
g. Subsequent Events
 Description: Covers events that occur after the balance sheet date but before the
financial statements are issued, which may impact the financial statements.
 Examples: Acquisition of a significant asset, changes in legal or regulatory
environment, or major changes in market conditions.
3. Presentation and Format
 Compliance: Notes on accounts should be presented in compliance with the relevant
accounting standards and legal requirements, such as the Indian Accounting
Standards (Ind AS) or International Financial Reporting Standards (IFRS).
 Clarity and Consistency: The information should be presented clearly and
consistently to ensure it is easily understandable by users of the financial statements.
 Materiality: Only material information should be disclosed to avoid cluttering the
financial statements with insignificant details.
4. Importance of Notes on Accounts
 Informed Decision-Making: Helps investors, creditors, and other stakeholders make
informed decisions by providing a deeper understanding of the company’s financial
health and operations.
 Regulatory Compliance: Ensures that the company complies with accounting
regulations and standards, avoiding potential legal or regulatory issues.
 Audit Process: Assists auditors in their review and verification of the financial
statements by providing necessary explanations and details.
5. Common Issues in Notes on Accounts
 Lack of Detail: Insufficient detail or clarity in the notes can lead to misunderstandings
or misinterpretations of the financial statements.
 Inconsistent Information: Discrepancies between the notes and the financial
statements can raise concerns about accuracy and reliability.
 Non-Compliance: Failure to comply with accounting standards or regulatory
requirements can result in legal or reputational issues

*difference between Notes on Accounts and Qualifications in Audit Reports *

1. #Detailed Observations by the Statutory Auditor
a. Financial Statement Review
 Accuracy and Completeness: Assess the accuracy and completeness of financial
statements, including the balance sheet, profit and loss account, cash flow
statement, and notes to accounts.
 Compliance: Verify compliance with applicable accounting standards (e.g., Indian
Accounting Standards, IFRS) and regulatory requirements.
 Material Misstatements: Identify and report any material misstatements or errors in
the financial statements.
b. Internal Controls
 Effectiveness: Evaluate the effectiveness of the company’s internal control systems
and processes.
 Weaknesses: Report any weaknesses or deficiencies in internal controls that could
impact financial reporting or operational efficiency.
 Recommendations: Provide recommendations for improving internal controls and
mitigating risks.
c. Compliance with Laws and Regulations
 Regulatory Compliance: Review compliance with relevant laws, regulations, and
corporate governance requirements.
 Legal Issues: Report any significant legal or regulatory issues that could affect the
company’s financial position or operations.
d. Fraud and Irregularities
 Detection: Assess the risk of fraud and detect any irregularities or fraudulent
activities.
 Reporting: Report any detected fraud or irregularities to management and, if
necessary, to regulatory authorities.
e. Accounting Policies and Estimates
 Consistency: Review the consistency and appropriateness of accounting policies and
estimates used in preparing the financial statements.
 Judgments: Evaluate significant judgments and estimates made by management,
such as asset impairments, provisions, and revenue recognition.
f. Financial Performance and Position
 Analysis: Analyze the company’s financial performance and position, including
profitability, liquidity, solvency, and cash flows.
  Comparisons: Compare current financial performance with historical data and
industry benchmarks.
g. Audit Findings and Issues
 Document: Document and discuss significant audit findings, issues, and concerns
with management.
 Resolution: Work with management to address and resolve identified issues and
discrepancies.

2. #Obligations of Reporting to Members

a. Auditor’s Report
 Opinion: Express an opinion on whether the financial statements give a true and fair
view of the company’s financial position and performance.
 Types of Opinions: Include unqualified, qualified, adverse, or disclaimer of opinion
based on the audit findings.
 Basis for Opinion: Provide a basis for the opinion, including any significant matters or
qualifications.
b. Directors’ Report
 Inclusion: Ensure that the auditor’s report is included in the Directors’ Report, which
is presented to the shareholders at the Annual General Meeting (AGM).
 Significance: The Directors’ Report should reflect the financial statements and audit
findings, providing shareholders with a comprehensive overview of the company’s
financial health.
c. Communication of Significant Issues
 Significant Findings: Communicate any significant issues or concerns raised during
the audit, such as material misstatements, internal control weaknesses, or non-
compliance with laws.
 Management Responses: Share management’s responses to these issues and any
corrective actions taken or planned.
d. Compliance with Reporting Standards
 Accounting Standards: Ensure that the auditor’s report complies with the relevant
accounting and auditing standards.
 Regulatory Requirements: Adhere to regulatory reporting requirements, including
those specified by the Companies Act, 2013, and other relevant regulations.
e. Reporting to the Board
  Audit Committee: Report significant findings and issues to the Audit Committee or
Board of Directors, providing them with insights into the audit process and
outcomes.
 Follow-Up: Discuss follow-up actions and resolutions with the Board or Audit
Committee, ensuring that appropriate measures are implemented.
f. Reporting to Regulatory Authorities
 Statutory Reporting: Fulfill statutory reporting obligations, including the submission
of the auditor’s report to the Registrar of Companies (RoC) and other relevant
regulatory bodies.
 Fraud Reporting: Report any detected fraud or significant irregularities to regulatory
authorities, if required.

Objectives of a Special Audit

 Compliance Verification: Ensure that the institution complies with educational
regulations, accreditation standards, and funding requirements.
 Operational Efficiency: Evaluate the efficiency and effectiveness of educational and
administrative operations.
 Financial Integrity: Examine the use of funds, including grants and donations, to
ensure they are used appropriately and in accordance with legal and institutional
guidelines.
 Governance and Accountability: Assess the effectiveness of governance structures,
management practices, and internal controls.
2. Key Areas of Focus
1. Compliance with Educational Standards
 Curriculum and Accreditation: Verify that the institution adheres to the
curriculum requirements set by accrediting bodies and regulatory agencies.
 Quality Assurance: Check if the institution follows quality assurance practices
for teaching, assessment, and student support.
 Student Records: Ensure that student records are maintained accurately and
securely, and that admission and graduation processes comply with
regulatory standards.
Example: An audit might review whether a university is meeting accreditation standards by
examining course syllabi, faculty qualifications, and student feedback mechanisms.
 2. Financial Management
 Funding and Expenditure: Assess how funding from government grants,
donations, and tuition fees is allocated and spent. Ensure that expenditures
are justified and documented.
 Financial Reporting: Evaluate the accuracy and completeness of financial
statements and reports. Verify that financial transactions are recorded in
compliance with accounting standards.
 Budget Adherence: Review adherence to budgetary constraints and financial
planning practices.
Example: An audit might examine the allocation of funds for research projects to ensure
they are used for their intended purposes and in accordance with grant requirements.
3. Internal Controls and Governance
 Governance Structure: Assess the effectiveness of the institution’s
governance structure, including the roles and responsibilities of the board of
trustees and senior management.
 Internal Controls: Evaluate the internal control systems in place to prevent
fraud, mismanagement, and errors. This includes reviewing processes for
approving expenditures, managing assets, and safeguarding sensitive
information.
 Policies and Procedures: Verify that policies and procedures are documented,
communicated, and followed.
Example: An audit might review the procedures for approving and monitoring contracts with
third-party vendors to ensure compliance with institutional policies and prevent conflicts of
interest.
4. Compliance with Regulations and Laws
 Legal Compliance: Ensure compliance with relevant local, state, and federal
laws, including labor laws, safety regulations, and non-discrimination policies.
 Accreditation Requirements: Verify adherence to accreditation requirements
and any other standards set by educational authorities.
Example: An audit might assess compliance with the Americans with Disabilities Act (ADA)
to ensure that facilities and programs are accessible to students with disabilities.
5. Student and Faculty Affairs
 Faculty Credentials: Verify that faculty members have the required
qualifications and credentials as per regulatory and accreditation standards.
  Student Services: Evaluate the effectiveness and efficiency of student
services, including academic advising, career services, and support for special
needs.
Example: An audit might review the recruitment and hiring processes for faculty to ensure
that they are conducted fairly and in compliance with institutional policies.
6. Use of Technology and Data Management
 Data Security: Assess the measures in place to protect sensitive data,
including student records, financial information, and research data.
 Technology Utilization: Evaluate the effectiveness and efficiency of
technology systems used for administrative and educational purposes.
Example: An audit might review cybersecurity practices to ensure that student data is
protected against unauthorized access and breaches.

3. Audit Process
1. Planning
 Define Scope: Determine the scope and objectives of the audit based on the
specific focus areas and institutional needs.
 Gather Information: Collect relevant documents, policies, and previous audit
reports to understand the institution’s operations and regulatory
environment.
2. Fieldwork
 Conduct Tests: Perform tests and reviews of financial records, compliance
with regulations, and operational processes.
 Interviews and Observations: Conduct interviews with key personnel and
observe processes to gather insights and evidence.
3. Analysis
 Evaluate Findings: Analyze the data collected to identify any issues,
discrepancies, or areas of non-compliance.
 Compare with Standards: Compare findings with relevant standards,
regulations, and best practices to assess compliance and performance.
4. Reporting
 Prepare Report: Draft a comprehensive audit report that includes findings,
recommendations, and any identified areas of non-compliance or inefficiency.
  Review and Discuss: Review the report with institutional stakeholders,
including management and the governing board, to discuss findings and
action plans.
5. Follow-up
 Monitor Implementation: Follow up on the implementation of audit
recommendations and corrective actions to ensure that issues are addressed
effectively.

4. Examples of Special Audits in Educational Institutions

 University Accreditation Review: An audit of a university’s compliance with

accreditation standards, including curriculum quality, faculty qualifications, and
student support services.
 Grant Utilization Audit: A special audit of how grant funds are utilized in a research
institution to ensure that the money is used for its intended purpose and in
accordance with grant conditions.
 Campus Safety and Compliance Audit: An audit assessing compliance with safety
regulations and campus security measures, including emergency preparedness and
accessibility.
2. Hotels
Hotels are service-oriented businesses with a focus on hospitality. Auditing them involves
examining their revenue sources, internal controls, compliance, and operational efficiency.
Key Points:
 Revenue Recognition: Assess how the hotel recognizes revenue from different
streams (room bookings, food and beverage, event services, etc.). Ensure proper cut-
off procedures and adherence to applicable accounting standards (e.g., IFRS 15 for
revenue recognition).
 Occupancy Rates: Verify the accuracy of recorded occupancy rates and their
correlation with revenue generated. This can involve reviewing booking systems,
guest check-ins, and revenue reconciliation.
 Cash Handling: Review cash handling procedures for front desk transactions,
restaurant services, and other operations. Ensure proper segregation of duties and
reconciliation of cash deposits with accounting records.
 Fixed Assets: Hotels typically have significant investments in property, plant, and
equipment (PPE). The auditor should review fixed asset registers, depreciation
policies, and capital expenditures.
  Inventory Management: Check inventories for housekeeping, food and beverages,
and other hotel supplies. Proper internal controls should be in place to prevent theft
or wastage.
 Licenses and Compliance: Verify compliance with local laws and regulations,
including food safety, health and safety standards, and occupancy permits.
 Loyalty Programs: If the hotel operates a loyalty program, assess how rewards are
recorded and valued as liabilities.

3. Clubs
Clubs (e.g., recreational, social, or sporting clubs) often function as non-profit organizations,
relying on membership fees, donations, and event revenue. Their audits focus on member-
related activities and ensuring the financial health of the organization.
Key Points:
 Membership Fees: Evaluate the processes for collecting and recognizing membership
fees. Ensure that the club properly categorizes different types of memberships and
follows consistent policies for revenue recognition.
 Member Accounts and Receivables: Examine outstanding dues and fees from
members. Assess collection procedures and whether bad debts are written off
appropriately.
 Fundraising and Donations: For non-profit clubs, verify the accuracy of recorded
donations and adherence to donor restrictions (if any). Review whether funds are
used as specified.
 Events and Sponsorships: Clubs often host events or secure sponsorships. Auditors
need to evaluate how event income and related expenses are recorded.
 Inventory Control: Many clubs operate food and beverage services, which require
inventory management similar to hotels. Assess internal controls for procurement
and stock control.
 Internal Controls and Governance: Review governance structures, including board
oversight and the role of the audit committee, if applicable. Ensure that internal
controls are designed effectively to minimize the risk of fraud or mismanagement.
 Tax-Exempt Status: If the club enjoys tax-exempt status, the auditor should ensure
compliance with tax laws and maintain proper documentation to support the club’s
non-profit status.

4. Hospitals
Hospitals, whether public or private, are complex entities with high levels of regulation.
Auditors must consider financial as well as operational aspects, including billing practices,
patient care, and compliance with healthcare standards.
Key Points:
 Revenue Cycle: Hospitals have multiple revenue streams, including patient fees,
insurance claims, and government reimbursements. Assess the hospital’s billing
system, accounts receivable, and the accuracy of insurance claims. Ensure there are
proper controls for recognizing revenue and writing off bad debts.
 Expense Control: Healthcare involves significant expenses, including payroll, medical
supplies, and equipment. Review internal controls for procurement, accounts
payable, and expense categorization. Auditors should ensure compliance with any
caps or budgets for these costs.
 Payroll and Staffing: Healthcare staffing can be complex due to multiple shifts and
specialized labor (e.g., doctors, nurses, technicians). The auditor should review
payroll systems to ensure compliance with labor laws, overtime payments, and
contracts.
 Fixed Assets and Equipment: Hospitals have significant investments in medical
equipment and facilities. Ensure that all equipment is properly recorded,
depreciated, and maintained.
 Inventory of Medical Supplies: Auditors should verify inventory controls for
pharmaceuticals, medical supplies, and other consumables. Losses due to theft,
spoilage, or expiration should be properly accounted for.
 Compliance with Regulations: Hospitals are subject to stringent regulatory
standards, including licensing, patient care, and data privacy (e.g., HIPAA in the U.S.).
Auditors must assess compliance with relevant healthcare regulations.
 Insurance and Risk Management: Hospitals must maintain adequate malpractice
insurance and general liability coverage. The auditor should review the hospital’s
insurance policies and risk management practices.
 Grants and Donations: If the hospital receives government grants or donations,
auditors should ensure that these funds are properly accounted for and that their
use complies with the terms of the grant or donation.
 Patient Data and Confidentiality: With healthcare data becoming increasingly digital,
auditors must review data protection policies to ensure the hospital is safeguarding
patient information against breaches.

*Audit under other Laws- 3.1 Cost audit, Environmental Audit, Energy Audit.,
Audit under different statutes, viz; income tax, other
direct tax laws and indirect taxes*
*Module IV
Auditing in Computerized Environment
4.1 Audit under computerised environment: Computer
auditing; specific problems of EDP audit, need for review of
internal control especially procedure controls and facility
controls; techniques of audit of EDP output; Use of
computers for internal and management audit purposes; test
packs, computerised audit programmes; involvement of the
auditor at the time of setting up the computer system*