Auditing and Assurance Standard 1

Like, GAAP, there are 35 auditing and assurance standards. Ist AAS  ( Basic Principles Governing an Audit) out of there explains basic rules for auditing of any organization. These rules are very simple but it is needed for all type of examination of accounts. This standard classifies these rules in 10 points.

1.    Integrity, objectivity and independence

As per this rule, auditor should do his auditing work independently. He should not be affected due to the any approach. Whether he is auditing of his relative or any other person, he should be impartial all the time. Only then, his examination will be useful.

2.    Confidentiality

Businessman shares many confidential information to the auditor. It is the rule for auditor; he should not share it with other. He may only share if as per any law, it is compulsory.

3.    Skill and Competence

For solving auditing problem, auditor should use his skills and competence. For example when a auditor has checked the balance sheet, he saw building value Rs. 40,00,000 but normal rate of building in this area is just Rs. 4,00,000 to Rs. 5,00,000 in same area. So, he should find normal mistake by using his common sense.

4.    Work Performed by Others

Sometime auditor has to depend on other auditors and employees for completing his audit work. So, it is the duty of auditor, he should appoint them as per their qualification and skill. He should also check the work which is done by other. Because he is responsible for his advice even he does not check all the accounts.

5.    Documentation

Auditor should collect all the documents which is needed for his audit. All document should be classified and keep in a direction that it can easily be found when it is needed.

6.    Planning

Auditor should make the plan of audit. He should complete the audit on the time. For completing audit on the time, he should make the plan when its ledger accounts will audit. When company’s final account’s will audit. When company’s stock will  be checked physically. Auditor will also make the plan about “How to audit ledger accounts and financial statements?”

7.    Audit Evidence

Audit evidence is the base of better audit. These evidence are relating to financial information. If he has to give his opinion on the financial information, he should obtain its all proofs. These proofs will be bills, vouchers and receipts of transactions. On this, he can ensure the validity of transactions.

8.    Accounting System and Internal Control

Auditor should check both accounting system and internal control system before accepting it as it is. If there is the need of improvement in it, he can bring it in the notice.

9.    Audit Conclusions and Reporting

Auditor should conclude in his reports:

• Financial information follows all statutory requirements.
•  Financial information are prepared on the basis of accounting policies.
• Audit report must be in written and a clear opinion on the financial information.

10. Effective Date

All the auditing and assurance standard apply on or after 1^st April 1985