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AUDITING STANDARDSAUDITING STANDARDS

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IntroductionIntroductionAudit Mandate -

CAG’s (DPC) Act 1971 prescribes functions, duties and powers of SAI

Audit Mandate includes Audit of

Receipt and Expenditure from

Consolidated Fund

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Introduction (contd….)Introduction (contd….)Contingency Fund and Public AccountsTrading, Manufacturing, Profit and Loss

Account and Balance SheetAccounts of Stores and StockGovernment CompaniesStatutory CorporationsAuthorities and Bodies substantially financedGrants and Loans for specific purposes

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Audit ObjectivesAudit ObjectivesTo safeguard the financial interests of the

GovernmentUphold and promote public

accountabilitySound and economical financial practices

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Audit assists Audit assists Parliament/Legislatures in Parliament/Legislatures in exercising financial control exercising financial control

through through PACs/PUCs

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Scope of AuditScope of Audit

Includes:O Performance AuditO Regularity Audit Financial Audit Compliance Audit

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Basic PostulatesBasic Postulates

Audit must exercise his best judgement in determining -

audit procedurebasis of forming opinioncontents of his reportdue professional careindependence

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Auditing standards can be Auditing standards can be broadly grouped underbroadly grouped under

1 General Standards

2 Operational Standards

3 Reporting Standards

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General StandardsGeneral Standards

A Professional

B Manuals and Instructions

C Quality Assurance

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General Standards - ProfessionalGeneral Standards - Professional

QualificationTrainingAuditor should develop proper insight

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General StandardsGeneral Standards

Quality AssuranceAppropriate internal control system to

ensure quality of work

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Operational Audit StandardsOperational Audit Standards

Audit PlanningFinancial Statement AuditRegularity and Legal AuditPerformance Audit

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Operational Standards -Operational Standards -Audit PlanningAudit Planning

Audit should be properly guideddirected and supervisedsufficient understanding of the internal

control system of the auditee organisation

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Operational Standards - Operational Standards - Financial Statements AuditFinancial Statements Audit

Financial Statements are accurate and complete

True and fair viewprepared based on generally accepted

accounting principlessufficient disclosure

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Operational Standards -Operational Standards -Performance AuditPerformance Audit

Achievement of physical and financial goals and targets

social and economic objectsutilisation of resources as per projected

outlaycases of overpayment, losses, avoidable,

excess or infructuous expenditure due to improper planning

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Operational Standards -Operational Standards -Performance Audit (contd..)Performance Audit (contd..)

Delays in completionoverstaffing

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Operational Audit Standards(contd)Operational Audit Standards(contd)

Audit of ReceiptsAudit of Government CompaniesAuditing in EDP EnvironmentAudit Evidence(i) Sufficiency(ii) Relevance(iii) Competence

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Reporting StandardsReporting Standards

Field Audit Report -

Observations and conclusions in an appropriate form

Contents should be easy to understand

Report should be complete

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Reporting Standards (contd…)Reporting Standards (contd…)

Accurate

Convincing

Clarity

Concise

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Reporting Standards (contd…)Reporting Standards (contd…)

Report should be free from vagueness or ambiguity

relevant informationsupported by audit evidencetimeliness

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Reporting Standards (contd…)Reporting Standards (contd…)

Follow up of Audit reportsAdequatePromptProper

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Session SummarySession Summary

In this session we discussed :CAG’s DPC ActAuditing Standards