SA 200 Objective Of Independent Auditor Conduct Of Audit

Updated on: Jun 22nd, 2021 - 9:02:36 AM

9 min read

social iconssocial iconssocial iconssocial icons

This standard primarily sets the objectives of an Independent Auditor (IA) and conduct of the audit in accordance with the Standards on Auditing (SA)


Listed below is the scope of this standard: 
1. Overall objectives of IA which are obliged to comply with 
2. States an IA’s general responsibilities which should be adhered to in all audits 
3. Determines the nature and scope of an audit necessary to achieve those responsibilities


The Standards issued by the Auditing and Assurance Standards Board, apply equally to all entities, irrespective of their form, size and nature.

Overall Objectives of the Auditor

Overall objectives of an IA with respect to audit of financial statements are as under:

  • To obtain reasonable assurance whether the financial statements are free from material misstatement and it’s prepared using applicable financial reporting framework
  • To report on the financial statements and communicate auditor’s findings as required by SA If reasonable assurance cannot be obtained and a qualified opinion in the auditor’s report is insufficient then the auditor should disclaim an opinion or withdraw from the engagement if withdrawal is legally permitted.


Some of the important definitions are given below:

Applicable financial reporting framework

“The financial reporting framework adopted by management and, where appropriate, those charged with governance in the preparation and presentation of the financial statements that is acceptable in view of the nature of the entity and the objective of the financial statements, or that is required by law or regulation.”

Audit evidence

Information used by IA based on which opinions are formed which includes data from financial statements and any other sources. For the purpose of SA, sufficiency of audit evidence is the measure of quantity and appropriateness is measured with the quality of the audit evidence.

Detection risk

“The risk that the procedures performed by an IA to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material, either individually or when aggregated with other misstatements”


The person(s) with executive responsibilities for the conduct of the entity’s day to day operations. Responsibilities of the management include preparation of financial statements within applicable financial reporting framework that are free from material misstatement. Management should provide the auditor with the following: 

  • All information that are relevant to the preparation and presentation of the financial statements
  • Any additional information that an IA may request from management
  • Unrestricted access to IA to obtain audit evidence


It is the difference between what is reported on the financial statements and what should have been reported as per the applicable financial reporting framework.

Risk of material misstatement

The risk that the financial statements are materially misstated prior to audit. This consists of two components – Inherent risk which is errors before consideration of any related controls and Control risk will not be prevented by the entity’s internal control.

inline CTA
File your returns in just 3 minutes
100% pre-fill. No manual data entry


This primary requirement of this SA is an IA has to obtain reasonable assurance that the financial statements are free from material misstatements whether due to fraud or error. Also to:

  • Identify and assess risk of material misstatement based on understanding of the entity and its internal control
  • Obtain sufficient audit evidence about whether material misstatement exist  and implement appropriate control to mitigate the risk
  • Form an opinion on financial statements based on conclusions drawn from the audit evidence

Key Requirements of an Independent Auditor

Internal Audit

Conduct of an Audit in Accordance with SAs

Complying with SAs Relevant to the Audit

  • IA to comply with all SAs relevant to the audit. A SA is relevant which it is in effect and circumstances addressed by the SA exist
  • IA should have complete understanding of the SA including its application and explanatory material. IA can appropriately apply the requirements of SA as and when required
  • Only the IA complies with all the requirement of a SA, that fact should be represented on the IA’s report

Objective stated in the Individual SA

When planning and performing the audit, an IA should use all the objectives set out in the SA, having regard to the interrelationships among various SAs, to:

  • Determine whether any additional audit procedures are required to be performed apart from those stated in the SAs
  • Evaluate whether sufficient appropriate audit evidence has been obtained

Complying with Relevant SA requirements

IA to comply with all the requirements of an SA unless: 

  • The entire SA is not relevant; or
  • Relevant requirement is a conditional and the condition does not exist

Exception to the above clause:
IA can depart from complying with certain requirements of SA based on judgment but has to perform alternative audit procedures to achieve the aim of that requirement. IA can restrain from the compliance only when specific audit procedure which even when performed are ineffective for that audit.

Failure to Achieve an Objective

If an objective in a relevant SA cannot be achieved and it in turn affects the overall objective of an IA, then SA requires IA’s opinion to be modified or withdraw from the engagement. Failure to achieve an objective represents a significant matter and requires to be documented as per SA 230. 

Effective Date 
This SA is effective for audits of financial statements for periods beginning on or after April 1, 2010.

inline CTA
Get an expert at affordable price
For ITR, GST returns, Company Registration, Trademark Registration, GST Registration

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use


ISO 27001

Data Center


SSL Certified Site

128-bit encryption