Accounting, Auditing and Taxation: Auditing

Professional Skepticism, Professional Judgement and Applicable Financial Reporting Framework

Professional Skepticism, Professional Judgement and Applicable Financial Reporting Framework

Professional Skepticism Professional Skepticism An attitude that includes a questioning mind , being alert to conditions which may ind...

Introduction of IFAC, Management’s Responsibility and Auditor’s Responsibility

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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">International Federation of Accountants<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">International Federation of Accountants
(IFAC)</span></b></h2>
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<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">It is the global
organization for the accountancy profession. It is dedicated in serving the
public interests by strengthening the profession. IFAC has 167 members and
associates in 127 countries around the world representing approximately 2.5
million accountants in public practice, education, government service, industry
and commerce.</span></h4>
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<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">ICAP is a member of IFAC.</span></h3>
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<span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">IFAC includes four boards.</span></span></h4>
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<span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The
International Auditing and Assurance Standards Board (IAASB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The
International Accounting Education Standards Board (IAESB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The
International Ethics Standards Board for Accountants (IESBA)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">The
International Public Sector Accounting Standards Board (IPSASB)</span><o:p></o:p></span></h4>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International
Auditing and Assurance Standards Board (IAASB)</span></b></h3>
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<span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">1.</span><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"><span style="font-weight: normal;"> </span>  
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">It develops international standards. e.g.</span><b><o:p></o:p></b></span></h4>
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<span style="font-family: Symbol; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">          ·</span><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"><span style="font-weight: normal;"> </span>       <span style="font-weight: normal;">
</span></span></span><span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Auditing (ISAs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards in Assurance
Engagements (ISAEs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Review Engagements
(ISREs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Related Services
(ISRSs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">International Standards on Quality Control
(ISQC) </span><o:p></o:p></span></h4>
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<span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">It issues Practice Statements to guide
auditors in implementing international standards            and promoting good audit
practices in general.</span><o:p></o:p></span></h4>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Process
of Producing a New ISA</span></b></h3>
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<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The process of producing an
ISA is as follows:</span></span></h4>
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<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">A
subject is selected for detailed study, with a view to eventually issuing an
ISA.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">After
a period of study and research, if there is agreement to proceed, an exposure
draft        is produced. The exposure draft is approved by the IAASB and then
distributed widely            amongst the profession and others for comment.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Comments
and proposed amendments are considered by the IAASB. The draft standard        is then
modified and approved by the IAASB.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">The
new ISA is then published.</span><o:p></o:p></span></h4>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility of Management and Those Charged With
Governance<o:p></o:p></span></b></div>
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<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">With respect to the audit it
is management and TCWG who are responsible:</span></span></h4>
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<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For
prevention and detection of fraud<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For
the preparation of the financial statements;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For
designing and implementing internal controls; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">To
provide the auditor with:<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">            a.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Unrestricted
access to persons within the entity to obtain evidence;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">            b.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Access
to all information relevant to the preparation of the financial statements of                    which management is aware; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">            c.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Additional
information that the auditor may request from management for the                          purpose of the
audit.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">To
provide written representation to the auditor at the end of the audit.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"> </span></span></h4>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility Of Auditor<o:p></o:p></span></b></div>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Auditor’s responsibility is
to:</span></span></h4>
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<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Obtain
reasonable assurance whether financial statements are free from material                    misstatements; and<br /> <o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">Express
an opinion on whether financial statements are prepared, in material respects,
in      accordance with applicable financial reporting framework.</span><o:p></o:p></span></h4>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Expectation Gap<o:p></o:p></span></b></div>
<h4 style="text-align: left;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">Expectation
gap refers to the fact that the public perception of the role and
responsibilities of the external auditor is different from his statutory role
and responsibilities. For example</span></h4>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Public Perception<o:p></o:p></span></b></div>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Reality<o:p></o:p></span></b></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial
  statements are prepared by the auditor.</span></h4>
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  <h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial
  statements are prepared by the management.</span></h4>
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  <h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor
  has a duty to prevent and detect fraud.</span></h4>
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  <h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Management
  is responsible to prevent and detect fraud.</span></h4>
</td>
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  <h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor
  tests 100% items.</span></h4>
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  <h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor
  tests only a sample of items.</span></h4>
</td>
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</tbody></table>
<h4 style="text-align: left;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The expectation of the public are often set at a level
higher than that at which the external auditor actually operates.</span></h4>
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Introduction of IFAC, Management’s Responsibility and Auditor’s Responsibility

International Federation of Accountants International Federation of Accountants (IFAC) It is the global organization for the accountan...

Introduction of Audit, Assurance, Assurance Engagement and Audit Report

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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">International Federation of Accountants<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">International Federation of Accountants
(IFAC)</span></b><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"> </span></h2>
<h4 style="text-align: left;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">It is the global
organization for the accountancy profession. It is dedicated in serving the
public interests by strengthening the profession. IFAC has 167 members and
associates in 127 countries around the world representing approximately 2.5
million accountants in public practice, education, government service, industry
and commerce.</span></h4>
<h3 style="text-align: left;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">ICAP is a member of IFAC.</span></h3>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">IFAC includes four boards.</span></span></h4>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The
International Auditing and Assurance Standards Board (IAASB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The
International Accounting Education Standards Board (IAESB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The
International Ethics Standards Board for Accountants (IESBA)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">The
International Public Sector Accounting Standards Board (IPSASB)</span><o:p></o:p></span></h4>
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<h3 style="text-align: left;">
<b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International
Auditing and Assurance Standards Board (IAASB)</span></b></h3>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">It develops international standards. e.g.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12pt; line-height: 115%;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Auditing (ISAs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards in Assurance
Engagements (ISAEs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Review Engagements
(ISREs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Related Services
(ISRSs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">        
</span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Quality Control
(ISQC)<br /> <o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">It issues Practice Statements to guide
auditors in implementing international standards            and promoting good audit
practices in general.</span><o:p></o:p></span></h4>
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<h3 style="text-align: left;">
<b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Process
of Producing a New ISA</span></b></h3>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The process of producing an
ISA is as follows:</span></span></h4>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">A
subject is selected for detailed study, with a view to eventually issuing an
ISA.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">After
a period of study and research, if there is agreement to proceed, an exposure
draft        is produced. The exposure draft is approved by the IAASB and then
distributed widely            amongst the profession and others for comment.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Comments
and proposed amendments are considered by the IAASB. The draft standard        is then
modified and approved by the IAASB.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">The
new ISA is then published.</span><o:p></o:p></span></h4>
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<br /></div>
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<br /></div>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility of Management and Those Charged With
Governance<o:p></o:p></span></b></div>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">With respect to the audit it
is management and TCWG who are responsible:</span></span></h4>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For
prevention and detection of fraud<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For
the preparation of the financial statements;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For
designing and implementing internal controls; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">To
provide the auditor with:<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">          a.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Unrestricted
access to persons within the entity to obtain evidence;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">          b.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Access
to all information relevant to the preparation of the financial statements of                    which management is aware; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">          c.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Additional
information that the auditor may request from management for the                          purpose of the
audit.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">To
provide written representation to the auditor at the end of the audit.</span><o:p></o:p></span></h4>
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<br /></div>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility Of Auditor<o:p></o:p></span></b></div>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Auditor’s responsibility is
to:</span></span></h4>
<h4 style="text-align: left;">
<span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Obtain
reasonable assurance whether financial statements are free from material                    misstatements; and<br /> <o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">Express
an opinion on whether financial statements are prepared, in material respects,
in      accordance with applicable financial reporting framework.</span><o:p></o:p></span></h4>
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<br /></div>
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<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Expectation Gap<o:p></o:p></span></b></div>
<h4 style="text-align: left;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">Expectation
gap refers to the fact that the public perception of the role and
responsibilities of the external auditor is different from his statutory role
and responsibilities. For example</span></h4>
<h4>
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 <tbody>
<tr>
  <td style="background: #C00000; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" width="349"><div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Public Perception<o:p></o:p></span></b></div>
</td>
  <td style="background: #C00000; border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" width="356"><div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;">
<b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Reality<o:p></o:p></span></b></div>
</td>
 </tr>
<tr>
  <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"><h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial
  statements are prepared by the auditor.</span></h4>
</td>
  <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"><h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial
  statements are prepared by the management.</span></h4>
</td>
 </tr>
<tr>
  <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"><h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor
  has a duty to prevent and detect fraud.</span></h4>
</td>
  <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"><h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Management
  is responsible to prevent and detect fraud.</span></h4>
</td>
 </tr>
<tr>
  <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"><h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor
  tests 100% items.</span></h4>
</td>
  <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"><h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor
  tests only a sample of items.</span></h4>
</td>
 </tr>
</tbody></table>
</h4>
<h4>
<span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The expectation of the public are often set at a level
higher than that at which the external auditor actually operates.</span></h4>
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Introduction of Audit, Assurance, Assurance Engagement and Audit Report

International Federation of Accountants International Federation of Accountants (IFAC) It is the global organization for the account...