ISA 200 – Overall objectives of the Independent Auditor and the Conduct of an Audit in accordance with ISAs

Question 1

What is the main focus of ISA 200?

Answer 1

ISA 200 deals with the independent auditor’s overall responsibilities when conducting an audit of financial statements in accordance with ISAs.

Question 2

What is the purpose of an audit as defined by ISA 200?

Answer 2

The purpose of an audit under ISA 200 is to enhance the degree of confidence of intended users in the financial statements.

Question 3

What level of assurance is required by ISA 200?

Answer 3

ISA 200 requires the auditor to obtain reasonable assurance, which is a high level of assurance, regarding whether the financial statements are free from material misstatement, whether due to fraud or error.

Question 4

What is the concept of materiality in auditing?

Answer 4

Materiality in auditing means that misstatements, including omissions, are considered material if they could affect the economic decisions of users of the financial statements.

Question 5

On what can materiality be based in an audit?

Answer 5

Materiality in an audit can be based on the size or nature of the misstatement, or both.

Question 6

What do ISAs require from auditors regarding materiality?

Answer 6

ISAs require auditors to exercise professional judgment and professional skepticism throughout the course of the audit.

Question 7

What are the overall objectives of an audit according to ISA 200?

Answer 7

1. To obtain reasonable assurance that the financial statements as a whole are free from material misstatement enabling the auditor to express an opinion on whether the financial statements have been prepared, in all material aspects in accordance with the applicable financial reporting framework;
2. To report on the financial statements and communicate as required by the ISAs, in accordance with the auditors’ findings.

Question 8

What are the key requirements for conducting an audit according to ISA 200?

Answer 8

Auditors must:
1) Comply with all relevant ethical requirements, including independence standards set by IAASA and professional bodies;
2) Plan and perform audits with professional skepticism;
3) Exercise professional judgment;
4) Comply with all relevant ISAs;
5) Have a thorough understanding of all ISAs;
6) Not represent compliance unless all relevant ISAs have been adhered to;
7) Achieve the objectives stated in ISAs by obtaining sufficient appropriate evidence.