CA Final PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS Syllabus

PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS in CA Final, not a summary of it.

1. 1

   Quality Control

   2 topics

   • SQC 1 Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services Engagements
   • SA 220 Quality Control for an Audit of Financial Statements
2. 2

   General Auditing Principles and Auditors Responsibilities

   5 topics

   • SA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
   • SA 250 Consideration of Laws and Regulations in an Audit of Financial Statements
   • SA 260 Communication with Those Charged with Governance
   • SA 299 Joint Audit of Financial Statements
   • SA 402 Audit Considerations Relating to an Entity Using a Service Organisation
3. 3

   Audit Planning, Strategy, and Execution

   6 topics

   • SA 300 Planning an Audit of Financial Statements
   • SA 450 Evaluation of Misstatements identified During the Audit
   • SA 520 Analytical Procedures
   • SA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures
   • SA 610 Using the Work of Internal Auditors
   • SA 620 Using the Work of an Auditor’s Expert
4. 4

   Materiality, Risk Assessment and Internal Control

   9 topics

   • Evaluation of Internal Control Procedures
   • Components of Internal Controls
   • Internal Control and Risk Assessment
   • Auditor’s response to assessed risks
   • Risk-Based Audit- Audit Risk Analysis
   • Reporting on Internal Control Weaknesses
   • Framework on Reporting of Internal Controls
   • SA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
   • SA 330 The Auditor’s Responses to Assessed Risks
5. 5

   Audit Evidence

   overview

   Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

6. 6

   Completion and Review

   overview

   Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

7. 7

   Reporting

   6 topics

   • SA 700 Forming an Opinion and Reporting on Financial Statements
   • SA 701 Communicating Key Audit Matters in the Independent Auditor’s Report
   • SA 705 Modifications to the Opinion in the Independent Auditor’s Report
   • SA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report
   • SA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements
   • SA 720 The Auditor’s Responsibility in Relation to Other Information
8. 8

   Specialized Areas

   3 topics

   • Basic and Overview of SA 800 Special Considerations
     • Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
   • Basic and Overview of SA 805 Special Considerations
     • Audits of Single Financial Statements and Specific Elements
     • Accounts or Items of a Financial Statement
   • Basic and Overview of SA 810 Engagements to Report on Summary Financial Statements
9. 9

   Audit-related Services

   2 topics

   • Basic and Overview of SRS 4400 Engagements to Perform Agreed-upon Procedures Regarding Financial Information
   • Basic and Overview of SRS 4410 Compilation Engagements
10. 10

    Review of Financial Information

    2 topics

    • Basic and Overview of SRE 2400 Engagements to Review Historical Financial Statements
    • Basic and Overview of SRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity
11. 11

    Prospective Financial Information and Other Assurance Services

    3 topics

    • Basic and Overview of SAE 3400 The Examination of Prospective Financial Information
    • Basic and Overview of SAE 3402 Assurance Reports on Controls at a Service Organisation
    • Basic and Overview of SAE 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus
12. 12

    Digital Auditing and Assurance

    5 topics

    • Auditing digitally and Digital auditing
    • Usage of Automated Tools such as CAAT
    • Data Analytics
    • Artificial Intelligence
    • Remote Auditing
13. 13

    Group Audits

    2 topics

    • Audit of Consolidated Financial Statements - Responsibility of Parent Company, Auditor of the Consolidated Financial Statements; Audit Considerations - Permanent Consolidation, Current Period Consolidation; Reporting
    • Audit of Group Financial Statements including the work of Component Auditors (SA 600 Using the Work of Another Auditor)
14. 14

    Special Features of Audit of Banks & Non-Banking Financial Companies

    overview

    Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

15. 15

    Overview of Audit of Public Sector Undertakings: Concept of Propriety Audit; Performance Audit;

    overview

    Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

16. 16

    Comprehensive Audit Internal Audit : Provisions of Internal Audit as per Companies Act, 2013; Scope of Internal Auditing; Relationship between Internal and External Auditor; Basics of Internal Audit Standards issued by the ICAI; Drafting of Internal Audit Report; Audit Trail, Internal Audit as a Management Function

    overview

    Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

17. 17

    Due Diligence, Investigation and Forensic Accounting: Due Diligence Review; Audit versus Investigation; Steps for Investigation; Types of Investigation; Procedure, Powers, etc. of Investigator; Types of Fraud, Indicators of Fraud, Follow-up thereof; Forensic Accounting- meaning, difference between Statutory Audit and Forensic Accounting, Forensic Accounting and Investigation Report, Introduction of Forensic Accounting and Investigation Standards

    overview

    Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

18. 18

    Emerging Areas: Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance, etc.

    overview

    Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

19. 19

    Professional Ethics and Liabilities of Auditors: Introduction of Code of Ethics as per IESBA and Code of Ethics with special reference to the relevant provisions of the Chartered Accountants Act, 1949 and the Regulations thereunder; Application of Fundamental Principles; Application of Threats, Evaluation of Threats; Addressing Threats and Safeguards; Conceptual Framework; Important Provisions of Chartered Accountants Act,1949 and Chartered Accountants Regulations 1988

    overview

    Examined as a single unit within PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS — no further topic split in the official outline.

PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS flashcards for CA Final

25 of 50 cards from the PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS deck — real questions with worked answers.

1. What is the objective of SA 220 (Quality Control for an Audit of Financial Statements)?

   To implement quality control procedures at the engagement level that provide reasonable assurance that the audit complies with professional standards and applicable legal/regulatory requirements, and that the auditor's report issued is appropriate in the circumstances.

2. Under SQC 1, what are the six elements of a firm's system of quality control?

   1) Leadership responsibilities for quality within the firm, 2) Ethical requirements, 3) Acceptance and continuance of client relationships and specific engagements, 4) Human resources, 5) Engagement performance, and 6) Monitoring.

3. Per SQC 1, what is the maximum retention period for engagement documentation and how soon must assembly of the final file be completed?

   Final assembly of the audit file should be completed within 60 days after the date of the auditor's report, and engagement documentation should be retained for a period of not less than 7 years from the date of the auditor's report (or group report, if later).

4. Under SA 240, define the two types of intentional misstatements relevant to the auditor.

   1) Misstatements resulting from fraudulent financial reporting (manipulation of financial statements to deceive users), and 2) Misstatements resulting from misappropriation of assets (theft of an entity's assets, often by employees).

5. What is the 'fraud triangle' under SA 240, comprising the three conditions generally present when fraud occurs?

   1) Incentive/pressure to commit fraud, 2) Opportunity (a perceived opportunity exists, e.g., weak controls), and 3) Rationalization (an attitude/ability to rationalize committing the fraud).

6. Under SA 240, what is the presumption regarding revenue recognition?

   The auditor shall, based on the presumption that there are risks of fraud in revenue recognition, evaluate which types of revenue, revenue transactions or assertions give rise to such risks. If this presumption is rebutted, the auditor must document the reasons.

7. Distinguish 'error' from 'fraud' as defined in SA 240.

   The distinguishing factor is intent: fraud is an intentional act involving deception to obtain an unjust or illegal advantage, whereas error is an unintentional misstatement in the financial statements.

8. Under SA 250, distinguish the auditor's responsibility for two categories of laws and regulations.

   Category 1: Laws/regulations with a direct effect on determination of material amounts and disclosures (auditor obtains sufficient appropriate evidence on compliance). Category 2: Other laws/regulations that may have a material effect through fines/litigation (auditor performs limited specified procedures to identify non-compliance).

9. Per SA 260, who are 'Those Charged With Governance' (TCWG)?

   The person(s) or organisation(s) (e.g., a corporate trustee) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity, including overseeing the financial reporting process.

10. Name key matters SA 260 requires the auditor to communicate to TCWG.

    The auditor's responsibilities in relation to the audit; the planned scope and timing of the audit; significant findings from the audit; and (for listed entities) auditor independence, including a statement of compliance with relevant ethical requirements.

11. Under SA 299, how is the work divided in a joint audit and what is each joint auditor's responsibility?

    Work may be divided by identifiable units/areas, periods, assets/liabilities, or items of income/expenditure. Each joint auditor is responsible only for the work allocated to them (division of work), but all joint auditors are jointly and severally responsible for work not divided, common audit areas, compliance with SAs, and the audit report's appropriateness.

12. Under SA 299, how should a difference of opinion among joint auditors be reported?

    Where joint auditors disagree on any matter to be covered by the report, each is entitled to express their own opinion through a separate audit report. A joint auditor is not bound by the views of the majority.

13. What is a 'service organisation' under SA 402?

    A third-party organisation (or segment) that provides services to user entities that are part of those entities' information systems relevant to financial reporting (e.g., payroll processing, IT hosting).

14. Distinguish a Type 1 report from a Type 2 report under SA 402.

    Type 1: Report on the description and design of controls at a service organisation at a point in time (no testing of operating effectiveness). Type 2: Report on the description, design AND operating effectiveness of controls throughout a specified period (includes the service auditor's tests and results).

15. What is the objective of SA 300 (Planning an Audit)?

    To plan the audit so that it will be performed in an effective manner. Planning involves establishing the overall audit strategy and developing a detailed audit plan.

16. Under SA 300, distinguish the overall audit strategy from the audit plan.

    The overall audit strategy sets the scope, timing and direction of the audit and guides development of the plan. The audit plan is more detailed and describes the nature, timing and extent of risk assessment procedures, further audit procedures, and other procedures required to comply with the SAs.

17. Under SA 450, define a 'misstatement' and 'uncorrected misstatements'.

    A misstatement is a difference between a reported item's amount/classification/presentation/disclosure and what is required for conformity with the applicable financial reporting framework. Uncorrected misstatements are misstatements the auditor has accumulated during the audit that have not been corrected by management.

18. Under SA 450, what are the three categories of misstatements the auditor may identify?

    1) Factual misstatements (no doubt), 2) Judgmental misstatements (differences in management's judgments about estimates or selection/application of accounting policies the auditor considers unreasonable), and 3) Projected misstatements (the auditor's best estimate of misstatements in populations, extrapolated from audit samples).

19. What is the objective of SA 520 (Analytical Procedures)?

    To obtain relevant and reliable audit evidence when using substantive analytical procedures, and to design and perform analytical procedures near the end of the audit that assist in forming an overall conclusion on whether the financial statements are consistent with the auditor's understanding of the entity.

20. Define 'analytical procedures' as per SA 520.

    Evaluations of financial information through analysis of plausible relationships among both financial and non-financial data, including investigation of identified fluctuations or relationships that are inconsistent with other relevant information or differ significantly from expected values.

21. Under SA 540, what is an 'accounting estimate' and 'estimation uncertainty'?

    An accounting estimate is an approximation of a monetary amount in the absence of a precise means of measurement. Estimation uncertainty is the susceptibility of an accounting estimate and related disclosures to an inherent lack of precision in its measurement.

22. Under SA 540, what is the auditor's point estimate vs. management's point estimate?

    Management's point estimate is the amount selected by management for recognition/disclosure as an accounting estimate. The auditor's point estimate (or range) is the amount(s) derived from audit evidence to evaluate management's point estimate.

23. Under SA 610, can the external auditor use internal auditors to provide direct assistance, and what areas are prohibited?

    Yes, the external auditor may use internal auditors to provide direct assistance under direction, supervision and review. However, direct assistance cannot be used for work involving significant judgments or higher risks of material misstatement, evaluating significant accounting estimates, or assessing the internal audit function itself. (Note: in India, SA 610 limits/prohibits direct assistance per ICAI's adoption.)

24. Under SA 610, what factors must the external auditor evaluate before using the work of the internal audit function?

    1) The extent to which the internal audit function's organisational status and policies support its objectivity, 2) The level of competence of the function, and 3) Whether it applies a systematic and disciplined approach, including quality control. The external auditor retains sole responsibility for the audit opinion.

25. Distinguish an 'auditor's expert' from a 'management's expert' under SA 620.

    An auditor's expert is an individual/organisation with expertise in a field other than accounting/auditing, whose work is used by the auditor to obtain sufficient appropriate evidence. A management's expert is one whose work is used by the entity to assist in preparing the financial statements.

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