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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
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