| CA Intermediate Syllabus May 2026 Auditing and Ethics |
| Topics |
Subtopics |
| Nature, Objective, and Scope of Audit |
Auditing Concepts:
- Origin of Auditing,
- Meaning of Audit,
- Need for Audit (Benefits of Audit), Objective of the Audit, Scope of Audit, External Audit engagements,
- Qualities of Auditor
- Inherent Limitations of an Audit; Relationship of auditing with other disciplines.
- (SA 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit following Standards on Auditing)
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| Audit Strategy, Audit Planning, and Audit Program: |
- The auditor’s responsibility is to plan an audit of financial statements. Benefits of audit planning.
- Planning is a continual and iterative process.
- Discussion of elements of planning with the entity’s management.
- Involvement of key engagement team members in planning the audit. Preliminary engagement activities.
- The auditor’s consideration of client continuance and ethical requirements. Planning activities.
- Establishing an overall audit strategy: assistance for the auditor. Development of an audit plan.
- Documenting the overall audit strategy and audit plan and audit program.
- Development of Audit Plan and Program
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| Risk Assessment and Internal Control: |
Audit Risk.
- Risk of Material Misstatement, Inherent Risk and Control Risk, and Detection Risk.
- Sampling and Non-Sampling Risk.
- Concept of Materiality, Materiality in Planning and Performing an Audit.
- The auditor’s responsibility is to apply the concept of materiality.
- An auditor’s determination of materiality is a matter of professional judgment. Materiality and Audit
- Risk.
- Application of materiality in planning and performing the audit. Concept of Performance Materiality.
- Determining materiality and performance materiality when planning the audit.
- Use of benchmarks in determining materiality for the financial statements as a whole. Materiality level or levels for particular classes of transactions, account balances, or disclosures.
- Revision in materiality as the audit progresses. Documenting the Materiality.
- (SA 320 Materiality in Planning and Performing an Audit).
- Identifying and Assessing the Risk of Material Misstatement: Risk Assessment Procedures.
- Understanding the entity and its environment: internal control.
- Documenting the Risks.
- Evaluation of internal control system.
- Testing of Internal control; Internal Control and IT Environment (SA 315) Identifying and Assessing the
- Risks of Material Misstatement Through Understanding the Entity and Its Environment).
- Digital Audit
- Key features
- Impact of IT-related Risks
- Impact on Controls
- Internal Financial Controls as per Regulatory requirements
- Types of Controls
- Audit approach
- Understanding and documenting Automated environment
- Testing methods, data analytics for audit, assessing and reporting audit findings.
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| Audit Evidence |
- Meaning of Audit Evidence.
- Relevance and Reliability of Audit Evidence
- Sufficient appropriate audit evidence
- Meaning of Assertions
- Assertions contained in the Financial Statements. Source of audit evidence
- Test of controls
- Substantive Procedures- Test of details and Substantive analytical procedures, Audit procedures for obtaining audit evidence.
- Evaluation of Audit Evidence (SA 500 Audit Evidence), Audit Trail
- (Using the work of Internal Auditors – SA 610)
- Internal audit function.
- External Auditor’s Responsibility for the audit, Evaluating the internal audit function.
- Basics of Internal Financial Control and reporting requirements. The distinction between Internal Financial Control and Internal Control over Financial Reporting.
- Audit Sampling: (SA 530 Audit Sampling). Meaning of Audit Sampling.
- Designing an audit sample; Types of sampling (Approaches to Sampling).
- Sample Size and selection of items for testing; Sample selection method.
- Obtaining evidence of the existence of inventory; Audit procedure to identify litigation & claims.
- Obtaining evidence regarding the presentation and disclosure of segment information
- (SA 501 Audit Evidence – Specific Considerations for Selected Items)
- External confirmation procedures.
- Management’s refusal to allow the auditor to send a confirmation request; Negative Confirmations (SA 505 External Confirmations); Audit evidence about opening balances; Accounting policies relating to opening balances; Reporting with regard to opening balances (SA 510 Initial Audit Engagements-Opening Balances)
- Meaning of Related Party; Nature of Related Party Relationships & Transactions; Understanding the Entity’s Related Party Relationships & Transactions (SA 550 Related Parties)
- Analytical Procedures.
- Meaning, nature, purpose, and timing of analytical procedures; Substantive analytical procedures.
- Designing and performing analytical procedures prior to Audit.
- Investigating the results of analytical procedures (SA 520 Analytical Procedures)
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| Audit of Items of Financial Statements |
- Audit of sale of Products and Services; Audit of Interest Income, Rental Income, Dividend Income, Net gain/loss on sale of Investments, etc.
- Audit of Purchases, Employee benefits expenses, Depreciation, Interest expense, Expenditure on Power and fuel, Rent, Repair to building, Repair to Machinery, Insurance, Taxes, Travelling Expenses, Miscellaneous Expenses, etc.
- Audit of Share Capital, Reserve and surplus, Long-term Term Borrowings, Trade Payables, Provisions, Short-term Term Borrowings, and other Current Liabilities.
- Audit of Land, Buildings, Plant and equipment, Furniture and fixtures, Vehicles, office equipment, Goodwill, Brand/Trademarks, Computer Software, etc.
- Audit of Loans and advances, Trade Receivable, Inventories, Cash and cash Equivalent, and Other Current Assets. Audit of Contingent Liabilities. (The list of items is illustrative only.)
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| Audit Documentation |
- Concept of Audit Documentation
- Nature & Purpose of Audit Documentation; Form, Content & Extent of Audit Documentation. Completion Memorandum.
- Ownership and custody of audit documentation (SA 230 Audit Documentation).
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| Completion and Review |
- Meaning of Subsequent Events
- Auditors obligations in different situations of subsequent events.
- Procedures for subsequent events. (SA 560 Subsequent Events).
- Responsibilities of the Auditor with regard to Going Concern Assumption; Objectives of the Auditor
- regarding Going Concern.
- Events or conditions that may cast doubt on the going concern assumption.
- Audit Procedures when events or conditions are identified (SA 570 Going Concern). Overview and
- Introduction of Evaluations of Misstatements Identified During the Audit (SA 450).
- Written Representations as Audit Evidence.
- Objective of Auditor regarding Written Representation.
- Management from whom written representations may be requested.
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| Audit Report |
- Forming an opinion on the Financial Statements.
- Auditor’s Report- basic elements (SA 700 Forming an Opinion and Reporting on Financial Statements).
- Communicating key Audit Matters in the Independent Auditor’s Report (SA 701) Types of Modified Opinion, Circumstances When a Modification to the Auditor’s Opinion is Required, Qualified, Adverse Disclaimer of Opinion (SA 705 Modification 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.
- Nature of Comparative Information.
- Corresponding Figure; Comparative Financial Statements (SA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements).
- Branch audit; Joint audit; Reporting requirements under the Companies Act, 2013, including CARO
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| Special Features of Audit of Different Types of Entities |
- Appointment of Auditor,
- Audit Procedure and Audit Report in respect of different Category of Entities
- Government; Local bodies; Not-for-profit organizations; Trust and Societies, Partnership Firms
- Audit of different types of undertakings, i.e., Educational Institutions, Hotels, Clubs, Hospitals, etc.
- Basics of Limited Liability Partnerships (LLPs) Audit and Co-operative Societies Audit.
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| Audit of Banks |
- Understanding of accounting systems in Banks
- Audit Approach
- Audit of Revenue items,
- Special Consideration in Bank Audit with emphasis on Advances and NPAs
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| Ethics and Terms of Audit Engagements |
- Meaning of Ethics. – Ethics is a State of Mind, Need for Professional Ethics.
- Principles-based approach v Rules-based approach (Ethical or Legal).
- The fundamental principles of Professional Ethics: Integrity;
- Objectivity; Professional Competence and Due care; Confidentiality; Professional Behaviour.
- Independence of Auditors.
- Threats to Independence: Self-interest threats, Self Review threats, Advocacy threats, Familiarity threats, Intimidation threats.
- Safeguards to Independence; Professional Scepticism, Terms of Audit Engagements Preconditions for an audit; Audit Engagement
- Agreement on Audit Engagement Terms
- Terms of Engagement in Recurring Audits (SA 210 Agreeing the Terms of Audit Engagements)
- Overview and Introduction of SQC 1 Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services Engagements
- Overview and Introduction of SA 220 (Quality Control for an Audit of Financial Statements).
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