What is Company Secretaries Auditing Standard (CSAS-3) and what is the process of forming an opinion under this standard ?

The Company Secretaries Auditing Standard (CSAS-3) is applicable to the Auditor undertaking Audit under any statute. The Standard deals with the basis and manner for forming Auditor's opinion on subject matter of the audit. The objective of CSAS-3 is to enable the Auditor to lay down the basis and manner for evaluation of the conclusions drawn from the Audit Evidence obtained and express an opinion through written report. PROCESS OF FORMING AN OPINION UNDER CSAS-3 Step 1: Materiality Principle of completeness Principle of Objectivity Materiality Principle of Timeliness Principle of a contradictory process The Auditor shall consider Materiality while forming his opinion and adhere to: The principle of completeness that requires the Auditor to consider all relevant Audit Evidence before issuing a report; The principle of objectivity that requires the Auditor to apply professional judgment and scepticism in order to ensure that all reports are factually correct and that findings or conclusions are presented in a relevant and appropriate manner. The principle of timeliness that implies preparing the report in due time; and The principle of a contradictory process that implies checking the accuracy of facts and incorporating responses from persons concerned. Note: The Auditor may consider various judgments, clarifications, opinion, conflicting interpretations while framing the opinion to the best of his professional acumen. Step 2: Precedence and Practices The Auditor shall adhere to generally accepted precedence and practices in relation to forming of an opinion as may be available from historical perspective of any kind of audit. Step 3: Third Party Report or Opinion The Auditor shall adhere to the following while forming an opinion based on Third Party reports or opinions: The Auditor shall indicate the fact of use of Third Party report or opinion and shall also record the circumstances necessitating the use of third party report or opinion; The Auditor shall indicate the fact if Third Party report or opinion is provided by the Auditee; The Auditor shall consider the important findings/ observation of Third Party; The Auditor shall, if necessary and feasible, carry out a supplemental test to check veracity of the Third Party report or opinion. Step 4: Form of an Opinion Form of an Opinion Unmodified Opinion Modified Opinion Limitation 1. Unmodified Opinion The Auditor shall express an unmodified opinion when based on Audit Evidence, the Auditor concludes that: there is due compliance with the applicable laws in terms of timelines and process; and the Records as relevant for the audit verified by him as a whole are free from Mis-statement and maintained in accordance with the applicable laws. 2. Modified Opinion The Auditor shall express modified opinion when the Auditor concludes that: based on the Audit Evidence obtained, there is non-compliance with the applicable laws in terms of timelines or process; or based on the Audit Evidence obtained, the Records as a whole are not free from Misstatement; or are not maintained in accordance with applicable laws; or he is unable to obtain sufficient and appropriate Audit Evidence to conclude that there is due compliance with the applicable laws in terms of timelines and process; or he is unable to obtain sufficient and appropriate Audit Evidence to conclude that the Records as a whole are free from Misstatement; or are maintained in accordance with applicable laws. Whenever the Auditor expresses a modified opinion or disclaims an opinion, the text of the opinion shall be either in italics or bold letters. 3. Limitation If, after accepting the Audit Engagement, the Appointing Authority imposes a limitation on the scope of the audit which, in the opinion of the Auditor, is likely to result in the need to express a modified opinion or to disclaim an opinion, the Auditor shall request the Appointing Authority to remove the limitation. If the Appointing Authority refuses or fails to remove the limitation, the Auditor shall communicate the matter to the Management and determine whether it is possible to perform alternative procedure to obtain sufficient and appropriate Audit Evidence. If the Auditor is unable to obtain sufficient and appropriate Audit Evidence, the Auditor shall determine the implications as follows: If the Auditor concludes that the possible effects of unavailable Audit Evidence could be nonmaterial, the Auditor shall modify the opinion; or If the Auditor concludes that the possible effects of unavailable Audit Evidence could be material, the Auditor shall express disclaimer of opinion. Step 5: Auditor's Responsibility The Auditor's Report shall include a section with the heading "Auditor's Responsibility". Auditor's Report shall state that the responsibility of the Auditor is to express opinion on the compliance with the applicable laws and maintenance of records based on audit. The Auditor's Report shall also state that the audit was conducted in accordance with applicable Standards. The Auditor's Report shall also explain that those Standards require that the Auditor comply with statutory and regulatory requirements and plan and perform the audit to obtain reasonable assurance about compliance with applicable laws and maintenance of Records. Auditor's Report shall also state that due to the inherent limitations of an audit including internal, financial and operating controls, there is an unavoidable risk that some Misstatements or material non-compliances may not be detected, even though the audit is properly planned and performed in accordance with the Standards. Step 6: Format of the Report The report shall be addressed to the Appointing Authority unless otherwise specified in the Audit Engagement Letter or provided in the applicable law. The report shall be detailed enough to serve its intended purpose. Where specific formats are prescribed, those formats shall be followed for reporting. If any information cannot be appropriately placed within the paragraphs of the report, it shall be given in form of annexure(s). Signature block shall mention the name of the audit firm along with the registration number, if any, the name of the Auditor, certificate of practice number, the membership number of the Auditor, specifying whether associate or fellow member, as applicable. The Auditor shall clearly mention date and place of signing the report, in case report is signed by two different persons on different dates or different places; same shall be mentioned in the report.