Core concepts
- 01Audit response to identified risk: ToC + substantive procedures.
- 02Internal Financial Controls (IFC) reporting under Sec 143(3)(i) — judgement & disclosure.
- 03Fraud risk: SA 240 — auditor's response (revenue presumption, management override).
- 04Forensic audit triggered by red flags — separate engagement, not statutory audit.
- 05ESG audit / Business Responsibility Sustainability Reporting (BRSR) — emerging assurance area.
Flowchart
Audit Response Framework | Identify Risk (SA 315) | Design Procedures (SA 330) | Test Controls + Substantive | Conclude + Report (SA 700/701/705) | Special: Fraud (SA 240), Going Concern (SA 570), KAM (SA 701)
Exam-critical pointers
- ⭐Material weakness in IFC mandates qualification of opinion on IFC (separate from FS opinion).
- ⭐Sec 143(12) fraud reporting threshold: ≥ ₹1 cr to CG, < ₹1 cr to audit committee.
- ⭐BRSR Core (top 1000 listed) — assurance by FY 2023-24 onwards.
- ⭐Money laundering — auditor's responsibility under PMLA reporting (suspicious transactions).
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