STANDARDS FOR AUDITS AND REVIEWS OF HISTORICAL FINANCIAL INFORMATION :

SA 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with
Standards on Auditing

This Standard establishes the independent auditor’s overall responsibilities when conducting an audit of financial statements in accordance with SAs.

Ethical Requirements Relating to an Audit of Financial Statements – The auditor should apply the following
fundamental principles of professional ethics relevant when conducting an audit of financial statements; (a)
Integrity; (b) Objectivity; (c) Professional competence and due care; (d) Confidentiality; and (e) Professional
behaviour

Professional Skepticism – Professional skepticism includes being alert to, for example; (a) Audit evidence that contradicts other audit evidence obtained;
(b) Information that brings into question the reliability of documents and responses to inquiries to be used as
audit evidence; (c) Conditions that may indicate possible fraud; (d) Circumstances that suggest the need for
audit procedures in addition to those required by the SAs

Professional Judgment – Professional judgment is necessary in particular regarding decisions about:

(a) Materiality and audit risk; (b) The nature, timing, and extent of audit procedures used to meet the requirements of the SAs and gather audit evidence; (c) Evaluating whether sufficient appropriate audit evidence has been obtained, and whether more needs to be done to achieve the objectives of the SAs and thereby, the overall objectives of the auditor; (d) The evaluation of management’s judgments in applying the entity’s applicable financial reporting framework; (e) The drawing of conclusions based on the audit evidence obtained, for example, assessing the reasonableness of the estimates made by management in preparing the financial statements

Sufficient Appropriate Audit Evidence and Audit Risk – To obtain reasonable assurance, the auditor shall
obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and thereby enable
the auditor to draw reasonable conclusions on which to base the auditor’s opinion

Sufficiency and Appropriateness of Audit Evidence – Audit evidence is necessary to support the auditor’s opinion and report. It is cumulative in nature and is primarily obtained from audit procedures performed during the course of the audit. Sufficiency is the measure of quantity of audit evidence whereas appropriateness is the measure of quality of audit evidence

Audit Risk – Audit risk is a function of the risks of material misstatement and detection risk. The risks of material
misstatement may exist at two levels:

(a) The overall financial statement level; and (b) The assertion level for classes of transactions, account balances, and disclosures. For a given level of audit risk, the acceptable level of detection risk bears an inverse relationship
to the assessed risks of material misstatement at the assertion level

Conduct of an Audit in Accordance with SAs – The auditor shall comply with all SAs relevant to the audit. An
SA is relevant to the audit when the SA is in effect and the circumstances addressed by the SA exist. The auditor
shall have an understanding of the entire text of an SA, including its application and other explanatory material,
to understand its objectives and to apply its requirements properly. The auditor shall not represent compliance
with SAs in the auditor’s report unless the auditor has complied with the requirements of this SA and all other
SAs relevant to the audit