Taxmann Audit of Financial Statements by Pranav Jain – 1st Edition April 2022

This book comprehensively covers the entire cycle of audit of financial statements, starting from the ‘appointment of the auditor’ to the ‘issuance of the audit report’. It also provides guidance on ‘risk-based audit’ as per the Standards on Auditing issued by the Institute of Chartered Accountants of India (ICAI).

This book will be helpful for audit assistants, engagement partners, and small & medium practitioners.

The Present Publication is the latest 2022 Edition, authored by CA Pranav Jain, updated till 31^st March 2022. The noteworthy features of the book are as follows:

• [Comprehensive Explanation of Audit Procedures] in an easy to understand language, keeping in mind the junior staff or less experienced auditors
• [Examples of Potential Risks of Material Misstatement] are included in the book for the particular financial statement area
• [Interlinking of Audit Procedures & Risks of Material Misstatements] in addition to other procedures required as per the standards on auditing or meeting the statutory requirements
• [Practical Examples] have been included to explain the audit procedures & other concepts
• [Numerical Examples] have been included to explain the concept of FIFO & weighted average in case of valuation of inventories
• [Real Case Scenarios] are used to explain the concepts to bring more clarity
• [Examples for the Audit Team to Understand Audit Procedures] are included in this book
• [60+ Templates] to facilitate the auditor in meeting the documentation requirements & obtain information in a meaningful format
• [Linkages to Legal Requirements] are included in this book. Examples of such linkages are as follows:
  • Companies Act, 2013
  • Accounting Standards
  • Standards on Auditing besides covering reporting requirements such as CARO 2020 and disclosure requirements as per Companies Act, 2013 & Accounting Standards
• [Illustrative Disclosures as per revised Schedule III & Requirements of Accounting Standards] for each financial statement area to enable the auditor for the following:
  • Adequate disclosures in financial statements
  • Meeting reporting requirements
  • Helping even the junior-most team member to understand the concept

The book has 49 chapters divided into four divisions (covering each stage of the audit of financial statements), which are as follows:

• Division 1 | Preliminary Activities
  • This division describes in detail the preliminary activities such as
    • Appointment
    • Rotation
    • Resignation
    • Removal of Auditor
    • The Requirements of Joint Audit
• Division 2 | Planning of Audit
  • This division is divided into 13 chapters, each covering a specific element of audit planning. This division has an in-depth analysis of the following:
    • Understanding the entity and its environment
    • Identification and assessment of risks of material misstatement
    • Response to identified risks
    • Determination of materiality, among others
    • Logistics and management of audit
• Division 3 | Audit of Each Line Item of the Financial Statement
  • There is an in-depth discussion of core concepts such as:
    • Professional scepticism
    • Documentation
    • External Confirmations
  • Each chapter in this division covers a specific line item of the financial statement
  • Each chapter describes the possible risks, such as:
    • Material Misstatement
    • Audit Procedures
    • Description of legal requirements such as accounting standard and Companies Act, 2013
  • Additionally, each chapter includes the reporting requirements required by CARO 2020 or Companies Act 2013, disclosure requirements of Schedule III to Companies Act, 2013 and applicable accounting standards
  • There are also illustrative disclosures as per Schedule III and Accounting Standards
• Division 4
  • This division consists of 8 chapters covering aspects such as:
    • Going Concern
    • Subsequent Events
  • There is detailed guidance on the following:
    • Audit Quality Assurance
    • Audit Completion Activities
    • Evaluation of Results of Audit Procedures
  • This division also covers written representations and communication with those charged with governance
  • There is a detailed analysis on forming an opinion on the financial statements and covers concepts such as modification to the auditor’s report, the emphasis of matter, etc.
• Appendices
  • The book also includes 62 appendices that provide various templates to assist the auditor in gathering information from the entity or meeting the documentation requirements of the standards on auditing, or creating speaking work papers for the audit file.

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