Overall Objectives of the Independent Auditor and the Conduct of an Audit

INTEGRANTES: YENIFER CHAVEZ VILORIA & SILVIA RAMBAUTH MEZA

ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing        

ISA 200 is an auditing standard issued by the International Auditing and Assurance Standards Board (IAASB). The objective of this standard is to establish the fundamental principles and responsibilities of the auditor during an audit of financial statements. It is divided into three main sections: Introduction, which establishes the purpose and scope of the standard, as well as its relationship with other auditing standards. In the Fundamental Principles section, ISA 200 establishes five fundamental principles that the auditor must follow when performing an audit of financial statements: integrity, objectivity, professional competence and due diligence, confidentiality and compliance with the regulatory framework. Finally, the Audit Procedures section describes the procedures the auditor should follow to obtain sufficient appropriate evidence during the audit. These procedures include gaining an understanding of the entity and its environment, assessing the risk of material misstatement in the financial statements, responding to assessed risks, and performing substantive and compliance testing.        

ISA 210, Agreeing the Terms of Audit Engagements        

 This standard establishes the responsibilities of the auditor and the entity to be audited during the planning phase of the audit. The objective is to ensure that both parties reach agreement on the responsibilities, objectives and scope of the audit, including the establishment of the terms of the engagement.

ISA 220, Quality Control for an Audit of Financial Statements        

ISA 220 establishes requirements for the implementation of a system of quality control in an audit firm. The objective of this standard is to ensure that the firm has appropriate policies and procedures to comply with ethical, professional and legal requirements applicable to the audit of financial statements.        

ISA 230, Audit Documentation        

This standard establishes the requirements for audit documentation, with the objective of providing adequate evidence to support the auditor’s opinion. ISA 230 states that the documentation should be adequate, complete and clear, and should include all relevant information for the audit.

ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements                

This standard establishes the auditor’s responsibilities in relation to fraud during an audit of financial statements. ISA 240 requires the auditor to assess the risk of fraud in the entity and take appropriate steps to identify and respond to fraud, including communicating identified fraud to management and those charged with governance.

ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements        

This standard establishes requirements for the auditor to consider applicable laws and regulations during the audit of the financial statements. ISA 250 states that the auditor should be aware of laws and regulations that may have a significant impact on the audited entity, and should inform management and those charged with governance of identified non-compliances.

ISA 260, Communication with Those Charged with Governance        ISA 260 Summary        

This standard establishes requirements for the auditor to communicate significant audit-related matters to those charged with governance. ISA 260 requires the auditor to communicate relevant matters to those charged with governance in a timely and clear manner and to document such communication.

ISA 265, Communicating Deficiencies in Internal Control to Those Charged with Governance and Management        

This standard establishes requirements for the auditor to communicate deficiencies in internal control to management and those charged with governance. ISA 265 states that the auditor should communicate relevant deficiencies in a timely and clear manner, and should document such communication to support the auditor’s opinion on the audited financial statements.

ISA 300, Planning an Audit of Financial Statements        

This standard establishes that the auditor must adequately plan its work and adequately supervise it throughout the audit process. Planning should be based on an understanding of the business and the environment in which the company operates, and an assessment of the risks of material misstatement in the financial statements.

ISA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment        

This standard requires the auditor to obtain sufficient knowledge of the entity and its environment to identify and assess the risks of material misstatement in the financial statements. The auditor should evaluate the effectiveness of the entity's internal control and design audit procedures that are appropriate to the risks identified.

ISA 320, Materiality in Planning and Performing an Audit        

This standard establishes that the auditor should evaluate the materiality of the components of the financial statements and consider it when planning and performing the audit. The auditor should ensure that the audit procedures performed are adequate to detect material misstatements in the financial statements, but should also be commensurate with the materiality.

ISA 330, The Auditor’s Responses to Assessed Risks        

This standard requires the auditor to design and implement appropriate responses to assessed risks. Responses may include modifying the design or applying additional audit procedures, as well as requesting confirmation from third parties. The auditor should also consider evaluating internal control and obtaining adequate evidence in the process of responding to assessed risks.

ISA 402, Audit Considerations Relating to an Entity Using a Service Organization

This International Standard on Auditing deals with the audit of financial considerations in a business acquisition, i.e. when a company acquires another company or business and financial issues such as the fair value of the assets and liabilities acquired and the assessment of the impact of the acquisition must be considered, this ISA establishes the procedures that auditors should follow when evaluating a business acquisition, with the objective of ensuring that the financial statements accurately reflect the financial reality and the impact of such acquisition on the company.        

ISA 450, Evaluation of Misstatements Identified during the Audit        

ISA 450 establishes the procedures that auditors should follow when identifying misstatements in an entity’s financial statements during the audit. Based on the identification of such misstatements, auditors assess the extent and impact of the misstatements on the entity’s financial information, as well as their materiality.

ISA 500, Audit Evidence        

This standard requires the auditor to obtain sufficient appropriate audit evidence to support the auditor’s opinion on the financial statements. Audit evidence may be obtained from compliance tests and substantive tests of transactions, account balances and disclosures. The auditor should design appropriate audit procedures to obtain sufficient appropriate audit evidence.

ISA 501, Audit Evidence-Specific Considerations for Selected Items        

This standard establishes that the auditor should take into account additional considerations to obtain appropriate and sufficient audit evidence regarding specific items in the financial statements. These items may include inventories, accounts receivable, investments and property, plant and equipment. The auditor should determine which audit procedures are most appropriate to obtain audit evidence about these items.

ISA 505, External Confirmations                

The standard establishes that the auditor must obtain sufficient appropriate and relevant evidence to support his opinion on the audited financial statements. The evidence must be obtained through different audit procedures, such as inspection of documents, observation and confirmation with third parties. ISA 505 also establishes the importance of evaluating the sufficiency and adequacy of the evidence obtained, as well as the need to adequately document the process of obtaining evidence. In general, the standard seeks to ensure that the auditor obtains a solid base of evidence to support his opinion on the audited financial statements.

ISA 510, Initial Audit Engagements-Opening Balances        

The standard establishes that the auditor must critically evaluate significant accounting estimates made by the management of the audited entity and consider whether they are reasonable in the context of the financial statements as a whole. To do this, the auditor must evaluate the evidence obtained from the audit procedures performed and the information available on the accounting estimates.ISA 510 also establishes the need for the auditor to adequately document his evaluation and the conclusions reached on significant accounting estimates, as well as the importance of communicating any discrepancy or concern in this regard to the management of the audited entity.

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