Paper 5 — Auditing & Ethics · Chapter

Core Audit Concepts

Cross-cutting auditing topics not tied to a single SA — internal control evaluation, audit sampling, CARO 2020 reporting, going concern and materiality. Expect 10–12 marks.

215 microlessons in this chapter

Read each in 5 minutes. Each has worked examples + the bare-Act text for reference.

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Internal Control — Components & Evaluation

Internal Control System components explained for CA Inter May 2026: all 5 COSO elements, audit impact, examples & exam tips under SA 315.

Audit Sampling — Statistical & Non-Statistical Methods

SA 530 Audit Sampling Methods explained for CA Inter May 2026: random, systematic, haphazard & stratified sampling with examples, risks, and

Companies (Auditor's Report) Order 2020 (CARO)

CARO 2020 explained for CA Inter: 21 reporting clauses, applicability rules, exemptions, and exam-ready examples for May 2026 Paper 5.

Going Concern — Audit Considerations

SA 570 Going Concern for CA Inter: what it means, red flags to spot, and how auditors report — explained simply for May 2026 exam prep.

Materiality — Concept and Application

Master Materiality in Audit (SA 320 & SA 450) for CA Inter May 2026 — learn how to set OM, PM, worked examples with ₹ figures, and common ex

Advances — Legal Disclosures and Classification in Bank Balance Sheet

Analytical Procedures — Purpose and Types

Appointment of Auditor Other Than Retiring Auditor – Section 140(4)

Appointment of Auditors – First and Subsequent [Section 139]

Appointment, Powers and Remuneration of Bank Auditors

Assertions in Auditing

Assurance Engagements — Concept, Elements, and Types

Audit Approach in Automated Environment

Audit Committee – Constitution and Functions [Section 177]

Audit Procedures – Seven Core Techniques

Audit Programme – Construction, Evidence & Evaluation

Audit Requirements — Mandatory and Voluntary

Audit Sampling Methods

Audit of Cinema Halls

Audit of Cooperative Societies — Legal Framework and Basics

Audit of Expenses in Banks — Interest and Operating Expenses

Audit of Hospitals

Audit of Hotels

Audit of Inventories – Ownership and Completeness Assertion

Audit of Local Bodies (Municipal Authorities)

Audit of Multi-State Cooperative Society (MSCS)

Audit of NGOs — Planning, Audit Areas, and Income Verification

Audit of PPE – Valuation, Depreciation, and Impairment

Audit of Property, Plant and Equipment — Cost Verification

Audit of Provisions and Contingencies in Banks

Audit of Revenue Items in Banks

Audit of Segment Information (SA 501)

Audit of Trade Payables – Completeness Assertion

Audit of Trade Receivables – Valuation Assertion

Audit vs Investigation

Auditing Intangible Assets – Completeness Assertion

Auditing Inventories – Obsolete and Damaged Items

Auditing Inventories – Rights and Obligations (Ownership Verification)

Auditing PPE – Depreciation and Impairment

Auditing PPE – Rights and Obligations Assertion

Bank Audit — Provisions and Contingencies

Benami Property – Disclosure Requirements in Financial Statements

Benefits and Need of Audit

CARO 2020 – Applicability and Exemptions

CARO 2020 – Clause 1: Fixed Assets (PPE and Intangible Assets)

CARO 2020 – Clause 2: Inventory

CARO 2020 – Clauses 10 & 11: Issue Proceeds (IPO/FPO/Private Placement) and Fraud

CARO 2020 – Clauses 12–16: Nidhi, Related Party Transactions, Internal Audit, Non-Cash Transactions, RBI Registration

CARO 2020 – Clauses 17–20: Cash Losses, Auditor Resignation, Going Concern, CSR

CARO 2020 – Clauses 3 & 4: Loans, Investments, Guarantees and Securities (Sections 185 & 186)

CARO 2020 – Clauses 5, 6 & 7: Deposits, Cost Records and Statutory Dues

CARO 2020 – Clauses 8 & 9: Undisclosed Income and Repayment of Loans

CARO – CSR Ongoing Projects and Consolidated Financial Statements

Cash Credit Facility – Classification and Schedule III Disclosure

Classification of Advances as per RBI Prudential Norms

Client Acceptance — Assessing Integrity of Prospective Client

Companies Act Section 53 – Shares Issued at a Discount

Company Audit — Eligibility and Disqualification of Auditor under Section 141

Company Audit — Reporting on Frauds under Section 143(12)

Company Audit — Section 143(1) Inquiries

Company Audit — Section 143(2) and 143(3) Audit Report Contents

Comparative Information in Audit Reports – SA 710

Components of Internal Control — Control Activities

Components of Internal Control — Control Environment

Components of Internal Control — Risk Assessment Process and Information System

Comptroller and Auditor General (C&AG) — Powers, Duties, and Roles

Conducting a Bank Audit — 18 Key Considerations

Control Activities Relevant to the Audit

Controls Relevant to the Audit and Nature of Understanding IC

Cooperative Society — Restrictions, Financial Provisions, and Auditor's Checks

Coordination between External Auditor and Internal Audit Function

Cost of PPE – Items Excluded from Capitalisation

Data Analytics and CAATs

Data Analytics and Computer Assisted Auditing Techniques (CAATs)

Direct Assistance from Internal Auditors — SA 610 Requirements and Limitations

Disqualifications of Auditors – Specific Cases [Section 141(3)(f)–(i)]

Documenting Risks and Reporting Audit Findings

Emphasis of Matter (EOM) Paragraph – SA 706

Engagement Partner's Responsibility for Independence Compliance

Evaluation of Internal Controls by the Auditor — Methods

External Confirmation Procedures — Auditor's Control Requirements

External Confirmations — Positive Confirmation Requests and Exception Handling

Familiarity Threats and Auditor Independence

Filling of Casual Vacancy and Auditor's Remuneration [Section 139(8)]

Forming Opinion on Financial Statements (SA 700)

Framework for Obtaining Audit Evidence – Risk Assessment vs Further Audit Procedures

Fundamental Principles of Ethics — Integrity and Confidentiality

Fundamental Principles of Professional Ethics — Objectivity, Confidentiality, Professional Competence

Going Concern – Material Uncertainty Reporting (SA 570)

Government Audit — Audit of Stores and Inventory

Government Audit — Expenditure Audit and Its Types

Government Audit — Nature, Definition and Objectives

Government Company Auditor Appointment – Section 139(5) & 143(5)

Independence of Auditors — Mind and Appearance

Inherent Limitations of Audit

Inherent Limitations of Audit — SA 200

Inquiry and Inspection by Central Registrar under MSCS Act (Sections 78 & 79)

Inspection as an Audit Procedure — Nature and Reliability of Evidence

Internal Control in an IT Environment — Manual vs Automated

Internal Control — Definition, Objectives, and Benefits

Internal Control — Limitations

Internal Controls over Trade Receivables (Debtors)

Internal Financial Controls (IFC)

Introduction to Automated Environment

Inventory Held by Third Parties — Audit Evidence (SA 501)

Inventory Valuation under AS 2 – Lower of Cost or NRV

Key Audit Matters (KAM) – SA 701

Key Features of Automated Environment and IT Risks

Manner and Procedure of Selection and Appointment of Auditors [Rule 3, CAAR 2014]

Manual vs Automated Controls – Characteristics and Suitability

Materiality — Particular Classes of ABCD, Documentation, and Audit Risk

Meeting with Entity's External Legal Counsel — Circumstances and Protocol

Monitoring of Controls

Nature and Definition of Audit

Non-Performing Assets — Definition and Classification Rules

Objectives of Independent Audit (SA-200)

Opening Balances — Audit Procedures for Newly Appointed Auditor

PPE – Elements of Cost and Decommissioning

Performance Audit and Audit of Receipts (Government Audit)

Professional Ethics — Meaning, Fundamental Principles, and Disciplinary Consequences for Chartered Accountants

Professional Skepticism

Professional Skepticism in Audit

Quality Control — SQC 1 and SA 220 Compared

Regulatory Disclosures – Loans to Promoters, Directors and KMPs

Regulatory Framework for Bank Audit

Related Parties – SA 550: Special Purpose Entities, Risk, and Auditor Procedures

Relevance and Reliability of Audit Evidence

Relevance of Internal Controls in Auditor's Risk Assessment

Removal of Auditor Before Expiry of Term [Section 140]

Resignation of Auditor – Section 140(2) & 140(3)

Rotation of Auditors [Section 139(2) and 139(12)]

SA 200 – Audit Risk: Detection Risk and Risk of Material Misstatement

SA 200 – Inherent Limitations of Audit

SA 200 – Scope of Audit, Fraud Detection and Audit vs Investigation

SA 200 — Benefits of Audit

SA 200 — Objectives of the Independent Auditor

SA 200 — Scope of Audit (Includes & Excludes)

SA 210 — Agreeing the Terms of Audit Engagement

SA 220 — Engagement Partner's Leadership Responsibility for Audit Quality

SA 220 — Engagement Partner's Responsibilities for Engagement Quality Control Review (EQCR)

SA 260 – Communication with TCWG: Process, Adequacy & Documentation

SA 265 – Communicating Deficiencies in Internal Control to TCWG and Management

SA 265 – Significant Deficiencies in Internal Control

SA 299 – Joint Audit of Financial Statements

SA 315 – Identifying and Assessing the Risk of Material Misstatement

SA 320 – Materiality in Planning and Performing an Audit

SA 330 — Framework and Overview of Auditor's Responses to Assessed Risks

SA 330 — Substantive Procedures: Analytical Procedures and Tests of Details (Vouching and Verification)

SA 330 — Tests of Controls (ToC): Extent, Design, Timing, Prior Audit Evidence, Deviations

SA 450 – Evaluation of Misstatements Identified During Audit

SA 450 – Evaluation of Misstatements Identified During the Audit

SA 500 – Audit Evidence: Meaning and Sources

SA 501 – Audit Evidence: Inventory (Existence & Condition)

SA 501 – Litigation & Claims

SA 501 – Segment Information

SA 505 – External Confirmation: Management Refusal

SA 505 – External Confirmations: Concept & Objective

SA 510 – Initial Audit Engagements: Opening Balances

SA 520 – Substantive Analytical Procedures: Appropriateness and Assertion Limitations

SA 530 – Analysing Deviations and Misstatements Found in Samples

SA 530 – Audit Procedures on Sample, Projection of Misstatements, and Evaluation of Results

SA 530 – Audit Sampling vs. Selecting Specific Items

SA 530 – Audit Sampling: Introduction, Meaning, Key Terms, and Population

SA 530 – Factors and Types for Selecting Specific Items from a Population

SA 530 – Methods of Sample Selection: Statistical vs Non-Statistical

SA 530 – Sample Selection Methods: Stratified, Block, Systematic/Interval

SA 530 – Sampling Plan, Sampling Design, and Factors Influencing Sample Size

SA 530 – Sampling Risk, Non-Sampling Risk, and Important Terms

SA 530 – Statistical Sampling: Why It Is More Scientific

SA 550 – Related Party Information: Records and Documents

SA 560 – Subsequent Events

SA 570 Going Concern — Additional Audit Procedures When Doubt Is Identified

SA 570 – Going Concern

SA 580 Written Representations — Date, Period Coverage, and Management Change

SA 580 Written Representations — Handling Inconsistency with Audit Evidence

SA 580 Written Representations — Scope and Content of Management Responsibilities

SA 580 – Written Representations

SA 610 – Direct Assistance by Internal Auditors: Restrictions and Pre-Conditions

SA 610 – Direct Assistance from Internal Auditors: Higher Risk Limitation

SA 700 — Audit Report: Elements and Unmodified Opinion

SA 701 — Key Audit Matters (KAM)

SA 705 – Modifications to the Opinion: Objective and Types

SA 705 — Modified Opinions: Qualified, Adverse, and Disclaimer

SA 710 – Comparative Information: Audit Procedures and Corresponding Figures

SA 710 – Comparative Information: Corresponding Figures vs Comparative Financial Statements

SQC 1 — Firm-Level Quality Control and Leadership Responsibilities

Schedule III – Mandatory Disclosure of Financial Ratios

Selecting Specific Items from a Population — Audit Sampling

Services Not to Be Rendered by Auditor [Section 144]

Special Features of Cooperative Audit

Sufficiency and Appropriateness of Audit Evidence

Sufficiency of Audit Evidence

Terms of Engagement in Recurring Audit

Testing Methods in Automated Environment

Testing of Internal Controls

Threats to Independence

Types of Assurance Engagements and Levels of Assurance

Types of Assurance Engagements – Audit vs. Review vs. Other

Types of Assurance Engagements — Audit, Review, and Others

Types of Audit Evidence – Nature and Source

Types of Audit Reports in Bank Audit

Types of Banks in India

Types of Controls in Automated Environment

UDIN – Unique Document Identification Number

Unmodified Opinion – Appropriate and Inappropriate Phrases (SA 700)

Uses and Advantages of Audit

Using Management's Expert as Audit Evidence (SA 500)

Verification of Bank Borrowings and Out-of-Order Account Classification

Verification of Bank Reconciliation Statement (BRS)

Vouching Other Expenses – Attributes for Verification

Vouching and Verification of Bank Borrowings

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