## SA 200: Scope of Audit

Knowing what audit includes and — critically — what it does not include is a frequent exam area. The boundary of the auditor's work is defined by scope.

### What Audit INCLUDES

Area	Description
Coverage	All aspects of the entity's financial information
Reliability & Sufficiency	Assessing reliability and sufficiency of financial information
Proper Disclosure	Ensuring proper disclosure of financial information
Opinion	Expression of an opinion on Financial Statements

### What Audit Does NOT Include

Exclusion	Reason
Preparation & presentation of FS	Management's responsibility, not the auditor's
Physical condition of assets / suitability & life of civil structures	Outside the auditor's technical competence (requires engineering expertise)
Genuineness / authentication of documents	Auditor is not a forensic document examiner
Investigation	A separate, specific engagement with different objectives — not subsumed within general audit

### Memory Aid — PDGI (What Audit Excludes)

P — Preparation of FS (management's job)
D — Duties outside scope of competence
G — Genuineness of documents
I — Investigation

### Practical Boundary Test

Always ask: "Does this task require an auditor's expertise, or does it require a different professional?"

Civil engineer needed? → Outside audit scope.
Forensic document examiner needed? → Outside audit scope.
Independent financial examination needed? → Within audit scope.

Worked example

### Example 1

Civil structures: An auditor is auditing a real estate company with civil structures worth ₹5 crores on its books. The auditor verifies the book value, checks depreciation is calculated correctly, and confirms disclosure in the FS. The auditor does NOT opine on structural soundness or remaining useful life — that requires a civil engineer. The auditor may rely on an expert's report if needed.

### Example 2

Document authentication: During audit, the auditor reviews sales invoices. The auditor checks that invoices exist, appear consistent with the BoA entries, and are from identifiable customers. However, if a suspicion arises that invoices are forged, the auditor cannot authenticate them — a forensic expert would be needed. The audit scope does not cover document genuineness.

### Example 3

Audit vs. Investigation: A client suspects that an accounts manager has embezzled funds and asks the auditor to 'look into it.' The auditor must explain that this constitutes an investigation — a separate engagement with a specific mandate, different procedures, and a different report. The regular audit does not automatically cover investigative work.

⚠️ Common exam mistakes

Thinking the auditor is responsible for preparing or correcting the FS — the auditor only examines and opines; any correction is management's responsibility.
Assuming audit includes verifying that documents are genuine — the auditor checks documents as audit evidence but cannot authenticate them.
Confusing audit with investigation — these are distinct engagements; investigation is specifically excluded from audit scope.
Believing the auditor must comment on physical condition or useful life of fixed assets — these require technical expertise beyond the auditor's competence.

Reference:

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SA 200 — Scope of Audit (Includes & Excludes)

Worked example

⚠️ Common exam mistakes