How many principles are listed in AAS1 which govern auditor’s professional obligation?

 Options:

a) Nine b) Fourteen c) Seven d) Eight

The Correct Answer Is:

• a) Nine

The correct answer to the question is option A, which states that there are nine principles listed in AAS-1 (Auditing and Assurance Standard 1) that govern the auditor’s professional obligations. To understand why this answer is correct and why the other options are not, we need to explore the purpose and content of AAS-1 and the specific principles it outlines.

Why Option A is Correct:

AAS-1, titled “Basic Principles Governing an Audit,” is a fundamental standard issued by the Institute of Chartered Accountants of India (ICAI). This standard lays down the foundational principles that guide auditors in carrying out their professional obligations and conducting audits. The correct answer is indeed “nine,” as there are nine principles listed in AAS-1. Here’s a brief overview of these principles:

1. Integrity:

Auditors must maintain honesty and integrity in all aspects of their professional work. They should be straightforward, truthful, and impartial.

2. Objectivity:

Auditors should be impartial and free from conflicts of interest. They must approach the audit with an unbiased and independent mindset.

3. Professional Competence and Due Care:

Auditors are required to possess and apply the necessary knowledge, skills, and judgment to perform audits effectively. They should exercise due care, diligence, and professional skepticism throughout the audit process.

4. Confidentiality:

Auditors must respect and maintain the confidentiality of information obtained during the audit. They should not disclose any information to third parties without proper authority or legal requirement.

5. Professional Behavior:

Auditors should comply with relevant professional and ethical standards. They should conduct themselves in a professional manner and avoid actions or situations that could discredit the profession.

6. Technical Standards:

Auditors must follow the applicable auditing and assurance standards in conducting their work. They should ensure that the audit is planned and executed in accordance with these standards.

7. Audit Documentation:

Auditors are required to prepare and maintain adequate and appropriate audit documentation. These records should provide a clear and complete record of the audit work performed and the evidence obtained.

8. Planning and Supervision:

Auditors should plan the audit in a way that ensures the audit is conducted effectively and efficiently. Adequate supervision of the audit team is also essential to maintain quality.

9. Audit Evidence:

Auditors must obtain sufficient and appropriate audit evidence to support their audit opinion. This evidence should be relevant, reliable, and convincing.

Now, let’s explain why the other options (B, C, and D) are not correct:

Option B: “Fourteen.”

AAS-1 lists nine principles governing an audit, not fourteen. The standard provides a comprehensive but concise set of principles that guide auditors in their professional obligations. The correct number is nine, as mentioned earlier.

Option C: “Seven.”

Seven is not the correct number of principles in AAS-1. The standard includes a more extensive set of principles to ensure that auditors maintain high professional standards and fulfill their responsibilities effectively.

Option D: “Eight.”

AAS-1 does not contain eight principles. It consists of nine fundamental principles that auditors must adhere to when conducting audits. These principles are essential to maintaining the quality and integrity of the auditing profession.

In summary, AAS-1, which governs the auditor’s professional obligations, outlines nine fundamental principles that auditors must follow in their work.

These principles encompass integrity, objectivity, professional competence, due care, confidentiality, professional behavior, adherence to technical standards, proper audit documentation, planning and supervision, and the collection of appropriate audit evidence.

These principles are critical to upholding the standards and integrity of the auditing profession in India and ensuring the quality of audit services provided to clients and stakeholders.

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