INTOSAI Auditing Standards
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DAY 2
SESSION NO.1 (THEORY)
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Learning Objectives
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In the previous session we discussed
Mandate for performance audit
Definition of performance auditing, 3 Es concept,
Equity and Ethics
Specific nature of Performance Audit
Performance Audit and Programme evaluation
Common types of Programme Evaluation
Performance Audit Process
Expected outcomes of performance auditing.
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Contd..
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Objectives of Performance Auditing
Difference between Performance auditing and
Financial auditing.
What performance auditing requires from the
auditors.
Analyse the performance auditing cycle.
Importance of documentation of decisions at
various stages of the performance audits.
Recognize why the impact of the performance
auditing needs to be evaluated.
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Learning Objectives
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In this session we will discuss :
 INTOSAI Auditing Standards
 CAG’s DPC Act
 CAG`s Auditing Standards
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INTOSAI Auditing Standards
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INTOSAI-International Organization of Supreme
Audit Institutions
Each member country has its own standards
It is not mandatory
But it is the BEST PRACTICES consensus
amounting the member countries.
It tends to evolve a current trend issues and
concerns in auditing methodology and practices.
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History
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A committee was set up in May 1984
 Members from Austria, Argentina,
Australia, Brazil, Costa Rica, Japan,
Philippines, Saudi Arabia, Sweden, U.K.
and U.S. constituted the Committee.
 Although the word Standards has been used
it serves as a guideline as individual SAIs
have their own Standards.
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Basic Postulates
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General Frame work deduced from Lima
and Tokyo declarations.
 INTOSAI’s own reports and declarations
 United Nations Expert Group Meeting in
Public Accounting and Auditing in
Developing countries
 Formed the basic vision towards this
endeavour
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contd….
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They are the basic assumptions, consistent
premises, logical principles, and requirements
which help the auditors to form the audit opinion
 SAIs are required to adopt all material standards
where necessary subject to local differences.
 Some standard may not fit in with the SAI’s own
standard
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Contd…
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It is the endeavour of the SAI
 To ensure public accountability
 Adequate accounting standards
 Adequate internal control of the auditees
 Adequate safe guards for easy access of the
records for audit
 Adequate safeguards to avoid conflict
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Audit activities
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SAIs are set under the Act of the supreme
legislature of a particular nation
 They deal with the duties, functions,
conditions of service of the SAI and its
related offices
 There exists a relation between the
jurisdictional activities and the other
activities.
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Scope of Govt. Audit
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It includes regularity and performance audit
 Regularity includes, financial accountability
 This involves examination and evaluation of
financial records
 Attestation of financial administration of the
auditee
 Test check of statutes and regulations
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Contd…
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Ascertainment of internal control
 Audit of propriety and probity
 Audit of economy, efficiency,effectiveness
 Reporting on any other matters considered
necessary
 Checking of financial statements of the
auditees for the accuracy
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Due care
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SAIs are equipped to handle the standards
of the various audits.
 They should be handled in a professional
manner
 The audit should be objective
 The concern of audit should be to apply the
auditing standard
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General standards
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This deals with the qualification and fitness
of the auditor to handle audit in a
professional manner
 Independence is another standard
 The auditor and Sai must be independent
 The Sai and auditor should exercise due
care to in effectively using the Auditing
standard
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Contd...
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The objective is to conduct an audit objectively
and to collect sufficient, adequate and reliable
audit evidence to substantiate the audit findings.
 Manuals and other writings to support the audit
work
 Auditor too have sufficient skill to handle the
audit subject however difficult it may be.
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Independence
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The auditor should do his work
independently without fear or favour.
 Though independent SAI has to work in
close liaison with the Legislature.
 SAI helps the Legislature in dealing with its
reports
 SAI also helps the legislature in preparation
of the annual financial statements.
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Contd…
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SAI keeps away from political influence
 SAI to observe the dictates of legislation
 The legislation should not direct the SAI to
plan and conduct the audit as per certain
directives.
 SAI should have independence in deciding
the manner and method of conducting the
audits.
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Contd…
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All the receipts and expenditure of the
Govt. would be subject to SAI audit.
 But in certain cases other bodies and
corporations not having any direct link with
the Govt.some times request the Sai to
conduct audit
 In such cases also it is to be seen that the
Auditing standards are kept up
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Responsibility of the Legislature
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It should provide all necessary help to the
SAI in terms of resources and manpower to
which the SAI is accountable.
 There should not be any direction from the
executive in regard to the performance of
the audit mandate
 SAI to have uninterrupted access to the
records for audit purposes.
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Contd…
SAI need not be managers to an entity’s
execution
 Sai may co-operate with bodies having
expertise in the matter of audit without
affecting the independence of audit.
 Competence:
 Audit should have competence to handle
modern skills and technique of audit.
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Competence contd…
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The SAIs competence in forming audit
opinion, recommendations and conclusions
should possess the standard expected of it.
 The opinion should be objective and not
biased
 The SAI should have coherent view
amongst the functionaries.
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Contd…
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In order to maintain the quality of opinion, the
SAI should equip itself with the modern
techniques, innovations and research
 The members should be subjected to periodical
sharpening of skills through training, manuals and
other publications
 Audit planning, structuring of the audits etc should
have the necessary logic and standard
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Qualification
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General standards stipulate that the auditor should
have the necessary qualification
 Where found deficient, training should be
imparted
 SAI should have professional development
programmes
 The SAI personnel have adequate knowledge
about the Govt. their system and position
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Contd…
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SAI should continuously pursue the policy
of updating the skills of the personnel
through circulars, booklets, manuals,
regulations etc.
 It should also derive external expertise
to enrich its resources
There should be good liaison between the
audit and audittee
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Contd…
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SAI should:
 Confirm that integral quality assurance
processes have operated satisfactorily
 The quality of the AR should be ensured
 Avoid repetition of weakness
 SAI to approve the system of accounting
and audit
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Field Standard
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The auditor should plan the audit for a high
quality audit
 The work of audit staff should be
supervised
 Audit should evaluate the internal control
 Regularity and financial audits should bring
irregularities, illegal acts
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Collection of evidence
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Competent, relevant, and reasonable evidence
should be obtained to support the audit’s findings
 In analysing the financial statement the audit
should ensure that the financial statements do
depict a true and fair view
 It also discloses the various areas where the
accounts do not disclose the correct accounting
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Steps for audit
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Plan
 Know the entity and projects
 Define objective and scope
 Define audit approach
 Prepare the budget and schedule fr the audit
 Identify the staff requirements
 Discuss the above with the auditee
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Supervision and review
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Audit should be supervised to ensure
achievement of audit objective
 Supervision for method and substance
 Ensure that audit is conducted as per the
auditing standard
 Ensure that the working papers are filed
 They contain evidence to support the
opinion
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Reliability of internal control
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Ensure that internal control exists
 Ensure that the laws and regulations are
properly seen
 Ensure that frauds are not taking place
 Audit evidence:
 All conclusions should be supported by
audit evidence
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Contd…
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Ensure that the evidences reliable, complete
and sufficient
 Ensure that they support the auditing
standards
 Helps planning the audit
 Help the professional development
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Reporting standard
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This relates to both regularity audit and
certification audit
 Findings are to set out in proper form
 The opinion should be preceded by a
suitable title
 The report should be dated and signed
 It should contain objective and scope
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Contd…
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The report should be complete
It should address the auditee
Subject matter should be identified
Legal base should be included in the report
It should conform to the standards
It should be issued within the time frame
Opinion should be expressed in the standard
format
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