- ISA 200 deals with the independent auditor’s overall responsibilities when conducting an audit of financial statements in accordance with ISAs.
- Explains the scope, authority and structure of the ISAs.
- ISAs are written in the context of an audit of financial statements.
- An audit in accordance with ISAs is conducted on the premise that management and, where appropriate, those charged with governance have acknowledged certain responsibilities that are fundamental to the conduct of the audit.
- The audit of the financial statements does not relieve management or those charged with governance of their responsibilities
- To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and
- To report on the financial statements, and communicate as required bythe ISAs, in accordance with the auditor’s findings.
For definitions refer definition page
ISA 200 Requirements
- Compliance with ethical requirement relating to audit of financial statement.
- Auditor shall exercise professional judgement in planning and performing audit of financial statement.
- Auditor shall obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level for expression of opinion
- Auditor shall comply with all ISAs relevant to the audit.
- Auditor shall comply with each requirement of an ISA unless, entire ISA is irrelevant or requirement is conditional and condition doesn’t exist
- In case of departure from ISA auditor shall perform alternative audit procedures to achieve the aim of that requirement.
- If objective of ISA cannot be achieved auditor shall evaluate whether this prevents the auditor from achieving the overall objectives of the auditor and thereby requires the auditor, in accordance with the ISAs, to modify the auditor’s opinion or withdraw from the engagement. Document the same in accordance with ISA 230.
4 December 2015
In March 2009, the IAASB completed its Clarity Project and released its full set of 36 clarified ISAs and the clarified International Standard on Quality Control (ISQC). The Clarity Project involved a comprehensive review of all the ISAs and ISQC to improve their clarity and, thereby, their consistent application. As part of the Clarity Project, the ISAs have also been enhanced relative to the general approach to the audit, to instill a focus on objectives, promote a thinking audit, and emphasize the importance of professional skepticism; and to focus on aspects of financial statements that generally have a higher risk of material misstatement in virtually all audits, for example, estimates and fair values, related parties, and use of service organizations. In addition, the ISAs include enhancements regarding:
- Quality of audit evidence;
- Using the work of others, to ensure that auditors are satisfied that there is an appropriate basis on which to rely on the work of others, and to rely on others only when it is appropriate to do so; and
- Auditor communications and reporting, to emphasize the importance of open and constructive dialogue between auditors and those charged with governance/management, and to help ensure that important matters are brought to users' attention in a clear and meaningful way.
Each ISA is structured in separate sections:
- Introduction: Introductory material may include the purpose, scope, and subject matter of the ISA, in addition to the responsibilities of the auditor and others in the context in which the ISA is set.
- Objective: Each ISA contains a clear statement of the objective of the auditor in the audit area addressed by that ISA.
- Definitions: For greater understanding of the ISAs, applicable terms are defined in each ISA.
- Requirements: Each objective is supported by clearly stated requirements. Requirements are always expressed by the phrase "the auditor shall."
- Application and other explanatory material: The application and other explanatory material explains more precisely what a requirement means or is intended to cover, or includes examples of procedures that may be appropriate under given circumstances.
The clarified ISAs became effective for audits of financial statements for periods beginning on or after December 15, 2009. The latest version of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements was published December 2015.
Assessment Methodology
View the Assessment Methodology
As part of the Reports on the Observance of Standards and Codes (ROSC) initiative, the World Bank established a program in 2008 to assist its member countries with the implementation of international accounting and auditing standards for strengthening the financial reporting regime. The objectives of this program are two-fold:
- Analyze comparability of national accounting and auditing standards with international standards, determine the degree with which applicable accounting and auditing standards are complied, and assess strengths and weaknesses of the institutional framework in supporting high-quality financial reporting.
- Assist the country in developing and implementing a country action plan for improving institutional capacity with a view to strengthening the country's corporate financial reporting regime.
Introduction to International Standards on Auditing
International Standards on Auditing (ISA) refer to professional standards dealing with the responsibilities of the independent auditor while conducting the financial audit of financial info. These standards are issued by International Federation of Accountants (IFAC) through the International Auditing and Assurance Standards Board (IAASB). The ISAs include requirements and objectives along with application and other explanatory material. The auditor is obligatory to have knowledge about the whole text of an ISA, counting its application and other explanatory material, to be aware of the objectives and to apply the requirements aptly.
List of the Standards
The key standards issued by the ISA include:
- Respective responsibilities
- Audit planning
- Internal control
- Audit evidence
- Using work of other experts
- Audit conclusions and audit report
- Specialized areas
Structure of ISAs
Every ISA is structured in individual sections as:
Introductory material can include the purpose, scope, and subject matter of the ISA, as well as the responsibilities of the auditor and others in context in which the ISA is established.
Every ISA consists of as clear statement about the objective of the auditor in the audit area addressed by that ISA.
For higher understanding of the ISAs, pertinent terms are delineated in each ISA.
Every objective is shored up by clearly stated requirements. Requirements are always expressed by the phrase “the auditor shall.”
- Application and other explanatory material
The application and other explanatory material explains more exactly what is meant by a requirement or is intended to cover, or includes examples of procedures that can be appropriate under certain circumstances.
Objectives of the ISA
The ISA objectives are two-fold:
- Analyzing the comparability of national accounting as well as auditing standards with international standards, determine the degree with which applicable auditing and accounting standards are complied, and analyze strengths and weaknesses of the institutional framework in sustaining high-quality financial reporting.
- Assist the country in developing and implementing a country action plan for improvement of institutional capacity with a view of strengthening the corporate financial reporting system of the country.
List of ISAs
- ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing
- ISA 210, Agreeing the Terms of Audit Engagements
- ISA 220, Quality Control for an Audit of Financial Statements
- ISA 230, Audit Documentation
- ISA 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements
- ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements
- ISA 260, Communication with Those Charged with Governance
- ISA 265, Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
- ISA 300, Planning an Audit of Financial Statements
- ISA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment
- ISA 320, Materiality in Planning and Performing an Audit
- ISA 330, The Auditor's Responses to Assessed Risks
- ISA 402, Audit Considerations Relating to an Entity Using a Service Organization
- ISA 450, Evaluation of Misstatements Identified during the Audit
- ISA 500, Audit Evidence
- ISA 501, Audit Evidence-Specific Considerations for Selected Items
- ISA 505, External Confirmations
- ISA 510, Initial Audit Engagements-Opening Balances
- ISA 520, Analytical Procedures
- ISA 530, Audit Sampling
- ISA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures
- ISA 550, Related Parties
- ISA 560, Subsequent Events
- ISA 570, Going Concern
- ISA 580, Written Representations
- ISA 600, Special Considerations-Audits of Group Financial Statements (Including the Work of Component Auditors)
- ISA 610, Using the Work of Internal Auditors
- ISA 620, Using the Work of an Auditor's Expert
- ISA 700, Forming an Opinion and Reporting on Financial Statements
- ISA 705, Modifications to the Opinion in the Independent Auditor's Report
- ISA 706, Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report
- ISA 710, Comparative Information-Corresponding Figures and Comparative Financial Statements
- ISA 720, The Auditor's Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
- ISA 800, Special Considerations-Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
- ISA 805, Special Considerations-Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement
- ISA 810, Engagements to Report on Summary Financial Statements
- International Standard on Quality Control (ISQC) 1, Quality Controls for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements