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

The PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS syllabus for CA Final in full: 19 chapters, 45 topics and 3 sub-topics, every one listed below, plus 50 PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS flashcards with answers.

19Chapters
45Topics
3Sub-topics
50Flashcards

PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS syllabus: all 19 chapters

Expand any chapter to see its topics and sub-topics.

  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. 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. 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. 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. Audit Evidence

     overview

    No separate topics listed for this chapter.

  6. Completion and Review

     overview

    No separate topics listed for this chapter.

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

     overview

    No separate topics listed for this chapter.

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

     overview

    No separate topics listed for this chapter.

  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

    No separate topics listed for this chapter.

  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

    No separate topics listed for this chapter.

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

     overview

    No separate topics listed for this chapter.

  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

    No separate topics listed for this chapter.

CA Final PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS flashcards — 50 questions with 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.

Show the other 30 PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS flashcards

  1. 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.

  2. 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.

  3. 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.)

  4. 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.

  5. 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.

  6. What are the five components of internal control under the COSO/SA framework?

    1) Control environment, 2) Entity's risk assessment process, 3) Information system and communication, 4) Control activities, and 5) Monitoring of controls.

  7. State the audit risk model formula.

    Audit Risk (AR) = Inherent Risk (IR) x Control Risk (CR) x Detection Risk (DR). The first two together form the Risk of Material Misstatement (RMM = IR x CR), which the auditor assesses; detection risk is what the auditor controls through nature, timing and extent of procedures.

  8. Define inherent risk, control risk and detection risk.

    Inherent risk: susceptibility of an assertion to a misstatement that could be material, before considering controls. Control risk: risk that a material misstatement will not be prevented/detected and corrected on a timely basis by internal controls. Detection risk: risk that the auditor's procedures will not detect an existing material misstatement.

  9. What is the objective of SA 265 (Communicating Deficiencies in Internal Control)?

    To communicate appropriately to TCWG and management deficiencies in internal control that the auditor has identified during the audit and that, in the auditor's professional judgment, are of sufficient importance to merit their respective attentions.

  10. Under SA 265, distinguish a 'deficiency in internal control' from a 'significant deficiency'.

    A deficiency exists when a control is unable to prevent/detect-and-correct misstatements on a timely basis, or a needed control is missing. A significant deficiency is a deficiency or combination of deficiencies that, in the auditor's professional judgment, is of sufficient importance to merit the attention of TCWG.

  11. Under SA 330, what are the two types of further audit procedures the auditor designs in response to assessed risks?

    1) Tests of controls (to evaluate operating effectiveness of controls in preventing/detecting material misstatements), and 2) Substantive procedures (tests of details and substantive analytical procedures to detect material misstatements at the assertion level).

  12. Under SA 330, what are the two categories of overall responses to assessed risks at the financial statement level?

    Overall responses include: emphasizing professional skepticism to staff; assigning more experienced staff or those with special skills; providing more supervision; incorporating unpredictability in procedures; and making general changes to the nature, timing or extent of audit procedures.

  13. Under SA 700, what are the elements/headings of an unmodified independent auditor's report?

    Title; Addressee; Opinion; Basis for Opinion; Going Concern (if applicable); Key Audit Matters (for listed); Responsibilities of Management/TCWG for the FS; Auditor's Responsibilities for the Audit; Other Reporting Responsibilities; Signature; Place; Date; and UDIN/membership details.

  14. What are 'Key Audit Matters' (KAM) under SA 701?

    KAM are those matters that, in the auditor's professional judgment, were of most significance in the audit of the current period's financial statements. They are selected from matters communicated with TCWG.

  15. For which entities is communication of Key Audit Matters mandatory under SA 701?

    Communicating KAM is required for audits of complete sets of general purpose financial statements of listed entities, and when the auditor otherwise decides to or is required by law/regulation to communicate KAM.

  16. Under SA 705, what are the three types of modified opinions and the circumstances driving each?

    1) Qualified opinion ('except for') - misstatements are material but not pervasive, OR inability to obtain evidence where possible effects are material but not pervasive; 2) Adverse opinion - misstatements are both material and pervasive; 3) Disclaimer of opinion - inability to obtain sufficient evidence where possible effects are both material and pervasive.

  17. Under SA 705, what is the matrix linking the nature of the matter to the auditor's judgment about pervasiveness?

    Material but NOT pervasive: Misstatement -> Qualified; Inability to obtain evidence -> Qualified. Material AND pervasive: Misstatement -> Adverse; Inability to obtain evidence -> Disclaimer.

  18. Distinguish an Emphasis of Matter (EOM) paragraph from an Other Matter (OM) paragraph under SA 706.

    An EOM paragraph refers to a matter appropriately presented/disclosed IN the financial statements that is of such importance it is fundamental to users' understanding. An OM paragraph refers to a matter NOT presented/disclosed in the financial statements that is relevant to users' understanding of the audit, auditor's responsibilities, or the report.

  19. Under SA 710, distinguish 'corresponding figures' from 'comparative financial statements'.

    Corresponding figures: prior period amounts/disclosures are included as an integral part of the current period FS, read only in relation to current figures; the audit opinion refers only to the current period. Comparative financial statements: prior period amounts/disclosures are for comparison but the opinion refers to each period for which financial statements are presented.

  20. Under SA 720, what is 'other information' and the auditor's responsibility for it?

    Other information is financial or non-financial information (other than the audited FS and auditor's report) included in an entity's annual report. The auditor reads it to identify material inconsistencies with the FS or the auditor's knowledge; the auditor does not audit or express an opinion on it but must report if a material misstatement of the other information exists.

  21. What does SA 600 (Using the Work of Another Auditor) say about the principal auditor's responsibility?

    When the principal auditor uses the work of another (component) auditor and bases their opinion on the FS as a whole, the principal auditor is responsible for forming and expressing the opinion. The principal auditor is NOT responsible for the work of the other auditor except where there is reason to believe such work cannot be relied upon, provided due care was exercised.

  22. What is the difference between SA 800, SA 805 and SA 810 (Special Considerations)?

    SA 800: audits of complete financial statements prepared per a special purpose framework. SA 805: audits of single financial statements or specific elements/accounts/items of a financial statement. SA 810: engagements to report on summary financial statements derived from audited financial statements.

  23. Distinguish SRE 2400 from SRE 2410 (Review engagements).

    SRE 2400: engagements to review historical financial statements performed by a practitioner who is NOT the auditor of the entity. SRE 2410: review of interim financial information performed by the independent auditor of the entity. Both provide limited (negative) assurance, primarily through inquiry and analytical procedures.

  24. What level of assurance is provided under SRS 4400 (Agreed-Upon Procedures) and SRS 4410 (Compilation Engagements)?

    Both provide NO assurance. SRS 4400 (AUP): the practitioner reports factual findings of agreed-upon procedures, with users drawing their own conclusions. SRS 4410 (Compilation): the practitioner uses accounting expertise to assist management in preparing/presenting financial information, expressing no opinion or conclusion.

  25. What type of assurance does SAE 3400 (Examination of Prospective Financial Information) provide regarding assumptions and presentation?

    The auditor provides negative (limited) assurance on whether the assumptions provide a reasonable basis for the prospective financial information, and positive (reasonable) assurance that the PFI is properly prepared on the basis of those assumptions and presented in accordance with the relevant framework. A caveat regarding achievability of results is included.

  26. What is the subject matter of SAE 3402 and SAE 3420?

    SAE 3402: assurance reports on controls at a service organisation (the service auditor's report on description, design and operating effectiveness of controls). SAE 3420: assurance engagements to report on the compilation of pro forma financial information included in a prospectus.

  27. What are CAATs and give common examples used in digital auditing.

    Computer Assisted Audit Techniques (CAATs) are tools/techniques using the computer as an audit tool. Examples include test data (test packs), integrated test facility (ITF), parallel simulation, audit software/generalized audit software (GAS) for data extraction and analysis, and embedded audit modules (SCARFs).

  28. In digital auditing, distinguish 'auditing digitally' from 'digital auditing'.

    Auditing digitally refers to using technology (CAATs, data analytics, AI, remote tools) to perform a traditional audit more efficiently. Digital auditing refers to auditing digital/automated processes and controls (the digital ecosystem of the auditee itself), addressing risks arising from digitised business operations.

  29. In the audit of consolidated financial statements, what are 'permanent consolidation' adjustments versus 'current period consolidation' adjustments?

    Permanent consolidation adjustments are made at the first time of consolidation and recur, e.g., determination of goodwill or capital reserve, and the parent's share in pre-acquisition profits/reserves. Current period consolidation adjustments relate only to the current period, e.g., elimination of intra-group transactions and unrealised profits, and adjustments for harmonising accounting policies.

  30. In a group audit, what is a 'component auditor' and a 'significant component'?

    A component auditor is an auditor who performs work on the financial information of a component for the group audit. A significant component is one identified by the group engagement team that is of individual financial significance to the group, or that is likely to include significant risks of material misstatement of the group financial statements due to its specific nature/circumstances.

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

What is in the CA Final PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS syllabus?

CA Final PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS is split into 19 chapters: Quality Control, General Auditing Principles and Auditors Responsibilities, Audit Planning, Strategy, and Execution, Materiality, Risk Assessment and Internal Control, Audit Evidence, Completion and Review, Reporting, Specialized Areas, Audit-related Services, Review of Financial Information, Prospective Financial Information and Other Assurance Services and Digital Auditing and Assurance, and 7 more. Together they contain 45 topics and 3 sub-topics.

How many chapters are in CA Final PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS?

19 chapters, containing 45 topics and 3 sub-topics. The largest chapter is Materiality, Risk Assessment and Internal Control, with 9 topics.

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

Yes — a 50-card PAPER 3: ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS deck, printed in full in the flashcards section of this page and available in the Examius app with spaced repetition. The free plan covers one exam of your choice, including its flashcards; Examius Pro, a one-time purchase, unlocks every other exam and deck.