Does either India or China have a set of auditing standards?

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What are Audit Standards : Auditing Standards are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory.

Why Audit Standards Needed: The trade and commerce grew tremendously and involvement of public money has increased. The investors invest the business placing reliance on audited accounts, so undoubtly the audit should be carried out utmost professional care and sincerity to uphold the faith posed by public in them. To build up the reliance on audited accounts and faith on auditor there should be standards. All audit process should be carried by following those standards which in turns enhance the reliability up on auditor that nothing goes wrong and all process had been followed by the auditor.

Auditing standards also help the members in proper and optimum discharge of their profession duties. Auditing standards also promote uniformity in practice as also comparability.

Does India Has Set of Audit Standard In India The Institute of Chartered Accountants of India has responsibility to issue the audit standard. It is done by their Audit and Assurance Standard Board. Broadly following is the process for issuing the Audit Standards

The Auditing and Assurance Standards Board identifies the areas where auditing standards need to be formulated and the priority in regard to their selection.

In the preparation of the auditing standards, the Board is normally, assisted by study groups comprising of a cross section of members of the Institute.

On the basis of the work of the study groups, an Exposure Draft of the proposed auditing standard is prepared by the Board and issued for comments of the members.

After taking into the comments received, the draft of the proposed auditing standard is finalised by the Board and submitted to the Council of the Institute.

The Council considers the final draft of the proposed auditing standard and, if necessary, modifies the same in consultation with the Board. The auditing standard is then issued under the authority of the Council.

While formulating the auditing standards, the Board also takes into consideration the applicable laws, customs, usages and business environment in the country

India has almost 35 Audit Standard mentioned in Annexure I.

The Institute of Chartered Accountants of India is a member of the International Federation of Accountants. Therefore, as a matter of policy, the auditing standards issued by the ICAI are in harmony with the International Standards on Auditing Till date, the IAASB of the IFAC has issued thirty nine Engagement Standards, comprising one Standard on Quality control (ISQC), thirty two ISAs, two International Standards on Review Engagements (ISREs), two International Standards on Assurance Engagements (ISAEs) and two International Standards on Related Services (ISRSs).

A List of comparison of Indian Audit Standard (AAS) with Internal standards (ISQC)is given in annexure II.

Situation in Australia: The Australian Government established the Auditing and Assurance Standard Board (AUASB) which is responsible for developing, issuing and maintaining Auditing standards in Australia. The standard issued by the board has legal enforceability under Corporation Act 2001.

Australia has issued 41 audit standards.

How Audit standards issued in Australia

The AUASB Board members and staff or other Australian stakeholders may identify technical issues that require consideration and these may be referred to the IAASB.

A project proposal will be developed by AUASB for relevant technical issues and if the project is worthwhile it is placed on the work program agenda.

Following research and stakeholder consultation the final outcome may be the issue of a pronouncement, such as a Standard, Guidance Statement, or a Bulletin.

The AUASB makes submissions to the International Auditing and Assurance Board (IAASB) and also provides formal submissions on documents issued for comment by the IAASB, to contribute to the setting of international auditing and assurance standards.

Comparability with International Standards : Followings are member of the International Federation of Accountants

CAP Australia

The Institute of Chartered Accountants in Australia

National Institute of Accountants in Australia

In Australia The AUASB is responsible for issuing standards. From April 2006 onwards Australian Standards are issued based on International audit and assurance standards. This ensures that Australia's auditing standards are consistent with international standards.

Does either India or China have an equivalent of the Corporations Act or the ASX Listing Rules, and if so, how does it support quality auditing in that country? Compare with the situation in Australia.

In Australia

In India

Corporation /Company act

The Corporation Act 2001 was formed to set out the laws dealing with business in Australia focused on Companies. The Corporations Act is the principal legislation regulating companies in Australia. It regulates matters such as the formation and operation of companies (in conjunction with a constitution that may be adopted by a company), duties of officers, takeovers and fund raising

( Source http://en.wikipedia.org/wiki/Corporations_Act_2001)

Company Act 1956 is formed to regulate the formation, financing, functioning and winding up of companies. The Act contains the mechanism regarding organisational, financial, managerial and all the relevant aspects of a company

ASX Listing Rules

ASX's Listing Rules govern the admission of entities to the official list, quotation of securities, suspension of securities from +quotation and removal of entities from the official list. They also govern disclosure and some aspects of a listed entity's conduct. Compliance with the Listing Rules is a requirement for admission to the official list. It is also a requirement under the contract that an entity enters into on being admitted. 

www.asx.net.au/supervision/rules_guidance/listing_rules.htm

The Securities Transactions in India at present are mainly governed by two Acts.  

      1. The Securities Contracts (Regulation) Act, 1956, and

      2. The Securities & Exchange Board of India Act, 1992.

The Securities Contracts (Regulation) Act, 1956 is an Act to prevent undesirable transactions in securities by regulating the business of dealing therein, by providing for certain other matters connected therewith

Securities & Exchange Board of India (SEBI) 1992 was formed to Protect the interest of investor in securities Promote the development of the securities Market, To regulate the securities Market and for matter concerned therewith or incidental there to.

http://www.sebi.gov.in

Quality of Auditing

As per corporation Act auditor has to form opinion that financial reports is accordance with the act and present true and fare view.

Further the Act cover the detailed provisions over -

Audit to be conducted in accordance with auditing standards  

Audit working papers to be retained for 7 years  

Auditor's independence declaration  

Auditor's report on annual financial report  

Auditor's report on half-year financial report  

Auditor's power to obtain information  

Reporting to ASIC  

Assisting auditor  

Special provisions on audit of debenture issuers and guarantors

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/

in Australia as per ASX listing rules company's has to deposit Audited Financial Statement and annual reports.

Thus all requirements as per corporation act, listing rules and other act and regulations provide the guidelines and forms according which audit should be carried and helping the auditor to present true and fare view over the financial statement of companies.

The company act 1956 and rules made there under provide detailed provisions over books of accounts and other statutory register that are to maintained. The purpose of audit is that accounts are presenting true and fare view.

Fur this act and rules made there under provide the provisions for appointment of auditor, their qualification/disqualification, their retirement, resignations, rights etc.

The Department of Company Affairs notified the Companies (Auditor's Report) Order, 2003 which provide the details on which point audit of the company is to performed.

Securities Contract (Regulation) rules 1957 requires that every company which is applying for listing or is listed has to furnish audited financial statement.

Further The SEBI (Disclosure and Investor Protection) Guidelines 2000 requires audited financial statement. There are wide range of topic which the financial statement has to cover.

Thus these regulations also improve the audit quality in India.

Does either India or China have an equivalent of Australia's APES110 Code of Ethics for Professional Accountants? If so, how is it applied and enforced? Compare with the situation in Australia.

The "Code of Conduct" is essentially a set of professional ethical standards regulating the relationship of Chartered Accountants with their clients, employers, employees, fellow members of the group and the public generally.

The maintenance of ethical standards is the collective concern of the Institute as well as all members of the profession. The ideal situation, of course, would be that the maintenance of ethical standards at individual member level is so self-evident that its further mention need not be made. However, the human nature being what it is, a man may often place his personal gain above service. Therefore, it is necessary to keep on reinforcing the idea of keeping up and observing the highest ethical standards repeatedly.

In Australia

In India

Code of Ethics for

Professional Accountants

CPA Australia members must comply with APES 110 Code of ethics for professional accountants. Section 290 of the code deals with issues relating to professional independence for assurance engagements, where an existing client of a member engages them to provide assurance services and where the member's ability to provide these services could potentially be compromised by existing engagements.

The standard is based on the Code of Ethics for Professional Accountants issued by the International Federation of Accountants

http://www.cpaaustralia.com.au/cps/rde/xchg/cpa-site/hs.xsl/knowledge-auditing-toolkit-guides-code-ethics.html

The Chartered Accountants Act, 1949 and the Schedules to the Act set out the acceptable forms of behaviour of the members of the profession. The Conduct of the Chartered Accountants is judged under provisions contained in the Chartered Accountants Act, 1949 and the Schedules thereto; setting out different forms of behaviour which would constitute professional or other misconduct under the Act. The Chartered Accountants Act is framed for the regulation of the profession of Chartered Accountants.

http://icai.org/post.html?post_id=735

How it applies and enforced

APESB standards contain the professional rules on ethics and requirements relating to the conduct and performance of professional services across various types of engagements. They are mandatory for all members of the professional accounting bodies.

If any members violate then there are some penal provisions.

In India the code of ethics are mandatory for the Members of the ICAI.

If any members violate any provisions a penal action is taken against that Member.

The ICAI has set up the disciplinary committee to view and take steps against professional misconduct.

Finally, compare the overall quality of auditing in either India or China with the experience in Australia. Are the experiences similar? Different? Where is Australia performing better, or worse, than either India or China

Auditing standards and practices are the backbone on which reported financial performance is based. The data and basis of reported financial statements are auditing standards and practices as applied

In Australia

In India

Whether country has Auditing Standards

Yes

Yes

Whether Country has Accounting Standards

Yes

Yes

Professional Ethics to Ensure Independent, true and fare audits

Yes

Yes

Regulatory Requirements like corporation act or other act ?

Yes

Yes

Whether Countries has controlling Body?

Yes

has various board like

Australian Accounting Standards Board (AASB), CPA Australia,

Auditing and Assurance Standards Board (AUASB)

Accounting Professional & Ethical Standard Board (EPESB),

Yes

1. Institute for Financial Accounting & Audit i.e. The Institute of Chartered Accountants of India (ICAI) which alone is responsible for Accounting and Auditing Standards, maintaining code of conducts among the Members.

2. The Indian Institute of Cost and Work Accountant (ICWA) for cost audit.

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