Audit of Financial Statements book by Pranav Jain

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' and archival of the audit file. 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. Also, this book moves away from the 'checklist' based approach (which is more beneficial for experienced auditors) to describing the audit procedures in a comprehensive and easy-to-understand language.

The Present Publication is the 2nd Edition and has been amended until April 2023. This book is authored by CA Pranav Jain with the following noteworthy features:

[Overview of Audit Trail], which is mandatory for companies w.e.f. 1st April 2023 has been included in this book
[Important Requirements of Audit Quality Maturity Model] issued by ICAI has been included
[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
[Significant Findings of Reviews by NFRA, QRB & FRRB to Highlight Non-Compliances] have been incorporated in various chapters
[Practical Examples] have been included to explain the audit procedures & other concepts. For instance, a detailed example has been included to explain the requirements of the applicable standards of auditing regarding the identification of risks of material statements and documentation thereof
[Real Case Scenarios] are used to describe the concepts to bring more clarity
[Numerical Examples] have been included to explain the concept of FIFO & weighted average in case of valuation of inventories
[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 and linkage to the Audit Quality Maturity Model issued by the ICAI
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 | Concept of Going Concern & Subsequent Events
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 66 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.