Standards on Auditing: List of All Standards along with Practical Approach and examples

Standard on Auditing (SA)

Practical Approach

Example

SA 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing

Understand the entity, its environment, and assess the risks of material misstatement. Plan and perform audit procedures to obtain sufficient appropriate audit evidence.

Assess the risks of material misstatement in a company's financial statements based on its industry, business operations, and internal control environment.

SA 210: Agreeing on the Terms of Audit Engagements

Agree on the terms of the audit engagement, including the scope, objectives, and responsibilities of the auditor and the management.

Sign an engagement letter with a client, clearly defining the audit objectives, responsibilities, and the expected timeframe for completion.

SA 220: Quality Control for an Audit of Financial Statements

Establish and maintain quality control policies and procedures within the audit firm to ensure that the audit is conducted in accordance with relevant auditing standards.

Implement a system of peer review within the audit firm to evaluate the quality of audit engagements and identify areas for improvement.

SA 230: Audit Documentation

Maintain sufficient and appropriate audit documentation that provides evidence of the auditor's basis for the audit opinion.

Document the auditor's understanding of the company's internal control system, including flowcharts and test results for key controls.

SA 240: The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements

Assess the risk of fraud, respond to the risks, and appropriately document the auditor's response.

Perform procedures to identify fraud risks, such as analyzing journal entries for unusual transactions and conducting interviews with key personnel.

SA 250: Consideration of Laws and Regulations in an Audit of Financial Statements

Identify and evaluate the impact of laws and regulations on the financial statements and the audit.

Review compliance with relevant tax laws and regulations by examining supporting documents and tax filings.

SA 260: Communication with Those Charged with Governance

Communicate effectively with those charged with governance to understand their roles and responsibilities, and to provide appropriate information about the audit.

Conduct regular meetings with the board of directors to discuss audit findings, significant accounting policies, and internal control weaknesses.

SA 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management

Communicate significant deficiencies and material weaknesses in internal control to management and those charged with governance.

Prepare a management letter highlighting weaknesses in internal control and recommendations for improvement.

SA 299: Responsibility of Joint Auditors

Coordinate and communicate effectively with other auditors when conducting a joint audit engagement.

Divide the audit work based on agreed-upon areas of responsibility and regularly communicate with other auditors to share findings and conclusions.

SA 300: Planning an Audit of Financial Statements

Develop an overall audit strategy and plan based on the assessed risks of material misstatement.

Identify significant accounts, transaction cycles, and audit procedures to be performed during the audit engagement based on the company's operations and risk profile.

SA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment

Understand the entity's operations, industry, and internal control environment to assess the risks of material misstatement.

Analyze the company's control environment, evaluate the design and implementation of key internal controls, and identify potential areas of control weaknesses.

SA 320: Materiality in Planning and Performing an Audit

Determine materiality levels to assess the significance of misstatements in the financial statements.

Set materiality thresholds based on the company's size, industry, and stakeholders' expectations.

SA 330: The Auditor's Responses to Assessed Risks

Design and perform audit procedures to address the assessed risks of material misstatement.

Perform substantive testing on high-risk areas such as revenue recognition or inventory valuation.

SA 402: Audit Considerations Relating to an Entity Using a Service Organization

Evaluate the controls implemented by service organizations that affect the entity's financial statements.

Review the service organization's Service Organization Control (SOC) reports to assess the design and operating effectiveness of controls.

SA 450: Evaluation of Misstatements Identified during the Audit

Evaluate the impact of identified misstatements on the financial statements and determine appropriate corrective actions.

Quantify the effect of identified misstatements on the financial statements and assess whether they are material or immaterial.

SA 500: Audit Evidence

Obtain sufficient appropriate audit evidence to support the audit opinion.

Inspect supporting documents, perform substantive testing, and obtain confirmations from third parties to corroborate financial statement assertions.

SA 501: Audit Evidence - Specific Considerations for Selected Items

Perform specific audit procedures for selected items such as inventories, litigation, and subsequent events.

Physically count and reconcile inventory quantities with the general ledger to verify their existence and accuracy.

SA 505: External Confirmations

Request confirmations from third parties to obtain audit evidence directly from independent sources.

Send confirmation requests to banks to verify the accuracy and existence of the client's bank balances.

SA 510: Initial Audit Engagements – Opening Balances

Determine the procedures to be performed when auditing opening balances in the financial statements of a new audit engagement.

Review the prior year's financial statements, perform analytical procedures, and reconcile opening balances with supporting documents.

SA 520: Analytical Procedures

Use analytical procedures to assess the reasonableness of financial information and identify areas of potential misstatement.

Compare current year financial ratios with industry benchmarks and prior year ratios to identify significant variances.

SA 530: Audit Sampling

Apply statistical or non-statistical sampling methods to select items for testing when performing substantive procedures.

Select a sample of customer invoices and verify their accuracy by comparing them with supporting documents.

SA 540: Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures

Evaluate the reasonableness of accounting estimates made by management and assess the adequacy of related disclosures.

Review management's assumptions and methods used to estimate the provision for doubtful debts and assess their reasonableness.

SA 550: Related Parties

Identify related party relationships and transactions, and evaluate their impact on the financial statements.

Obtain a list of related party transactions, review their terms, and assess whether they are conducted on an arm's length basis.

SA 560: Subsequent Events

Evaluate subsequent events occurring between the financial statement date and the auditor's report date.

Review post-balance sheet events to identify any material events that may require adjustment or disclosure in the financial statements.

SA 570: Going Concern

Evaluate the entity's ability to continue as a going concern and consider the adequacy of related disclosures.

Assess the company's financial performance, cash flow projections, and commitments to determine whether there are material uncertainties about its ability to continue operations.

SA 580: Written Representations

Obtain written representations from management to confirm the completeness and accuracy of information provided to the auditor.

Request a representation letter from management stating that all financial information and records have been made available and are complete and accurate.

SA 600: Using the Work of Another Auditor

Use the work of another auditor in performing audit procedures related to specific components of the financial statements.

Obtain the work papers and audit findings from the component auditor and evaluate their competence and independence.

SA 610: Using the Work of Internal Auditors

Determine the extent to which the work of the internal audit function can be used to reduce the scope of the external audit.

Evaluate the internal audit function's competence, objectivity, and procedures performed to determine the reliance that can be placed on their work.

SA 620: Using the Work of an Auditor's Expert

Use the work of an expert employed or engaged by the auditor to obtain audit evidence in areas requiring specialized knowledge.

Engage a valuer to provide an independent valuation of the company's intangible assets and use the expert's report as audit evidence.

SA 700: Forming an Opinion and Reporting on Financial Statements

Formulate an appropriate audit opinion and prepare the auditor's report on the financial statements.

Express an unmodified opinion when the financial statements are prepared in accordance with the applicable financial reporting framework.

SA 701: Communicating Key Audit Matters in the Independent Auditor's Report

Communicate key audit matters, i.e., matters of most significance, in the auditor's report.

Disclose in the auditor's report the significant judgments made in the application of accounting policies or areas of high financial statement risk.

SA 705: Modifications to the Opinion in the Independent Auditor's Report

Modify the audit opinion when there are material misstatements in the financial statements.

Issue a qualified opinion when the financial statements contain material misstatements that are not pervasive in nature.

SA 706: Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report

Provide additional information or explanations in the auditor's report when necessary.

Include an emphasis of matter paragraph to draw attention to a significant uncertainty disclosed in the financial statements.

SA 710: Comparative Information - Corresponding Figures and Comparative Financial Statements

Evaluate the consistency and comparability of corresponding figures and comparative financial statements.

Ensure that the financial statements' corresponding figures and comparative information are properly presented and consistent with the current period's financial statements.

SA 720: The Auditor's Responsibilities Relating to Other Information

Evaluate the consistency of other information, such as annual reports, with the audited financial statements.

Review the company's press releases and management's discussion and analysis to determine if they are consistent with the financial statements.

SA 800: Special Considerations - Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks

Perform audit procedures on financial statements prepared using a special purpose framework.

Assess whether the financial statements prepared using a special purpose framework comply with the applicable framework's recognition, measurement, presentation, and disclosure requirements.