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ISA 200, also known as International Standard on Auditing (ISA) 200 - Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing, is a fundamental standard that outlines the responsibilities of an auditor when conducting an audit of financial statements. The International Auditing and Assurance Standards Board (IAASB) sets out this standard to provide guidance on the general principles that underlie the auditor's work during an audit engagement.
The main objective of ISA 200 is to establish the overall objectives of the independent auditor and the conduct of an audit in accordance with International Standards on Auditing. It sets the tone for the audit process and provides a framework for the auditor to follow throughout the engagement.
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ISA 200 emphasizes that the primary responsibility of the auditor is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. This involves the auditor exercising professional skepticism and maintaining an attitude of independence throughout the audit.
The standard highlights the importance of the auditor maintaining a questioning mind and being alert to conditions that may indicate possible misstatement in the financial statements. Professional skepticism is crucial in enabling the auditor to critically assess the information provided by management and to corroborate it with sufficient appropriate audit evidence.
ISA 200 requires the auditor to comply with relevant ethical requirements, including independence, integrity, and objectivity. The auditor must maintain independence from the entity being audited and act with integrity and objectivity in all aspects of the audit.
The standard emphasizes the importance of conducting the audit in accordance with relevant International Standards on Auditing. This includes planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
ISA 200 also highlights the importance of the auditor documenting their work in sufficient detail to provide a clear understanding of the work performed, the evidence obtained, and the conclusions reached. Proper documentation is essential for supporting the auditor's opinion on the financial statements.
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In conclusion, ISA 200 plays a crucial role in setting the foundation for the conduct of an audit in accordance with International Standards on Auditing. By outlining the overall objectives of the auditor and emphasizing the need for professional skepticism, compliance with ethical requirements, and adherence to auditing standards, ISA 200 helps ensure the quality and integrity of the audit process. Auditors and audit firms around the world refer to this standard to guide their work and uphold the principles of transparency, accuracy, and reliability in financial reporting.
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Prepared by Umar A.