The International Standard on Auditing (ISA) looks after work performed by the independent auditors. It deals with their overall tasks while carrying out an audit of financial statements compliant with ISAs. It, particularly, is in charge of setting out the overall goals of the independent auditor, and elucidates the features and scope of an audit planned to facilitate the auditor to meet those goals. It also gives details about the policies, structure, authority and extent of the ISAs. ISAs are basically followed in UK and Ireland. It explains the conditions necessary to be fulfilled for conducting the audit in accordance with the ISAs. ISAs are chalked out in reference of an audit of financial statements conducted by an auditor. They are to be tailored as required in the situations when applicable to the audits of other historical financial data. ISAs do not deal with the functions of the auditor that may exist in legal statute, directive. Their responsibilities may vary from those recognized in the ISA. But it is likely that the auditor may find guidelines of the ISAs useful in such situations. However, they have to take care that they perform in conformity with the respective regulatory or legal provisions.
The financial statements are being prepared by the accounting department of an enterprise. ISAs do not interfere in the manner these are prepared and maintained by the organization. ISAs look after the manner in which the audit of financial statements is conducted. The function of auditor is separate from that of the accounting department and does not merge with their functions. The audit of financial statements aims at improving the quality of financial statements for the parties whose interest is intended in the business entity. So, auditor expresses an independent opinion on the fair presentation of financial statements in all aspects in compliance with the applied financial reporting principles displaying the true standing of the business concern. This audit must be conducted in agreement with the established framework of ISAs.
ISAs makes it mandatory for the auditor to achieve reasonable assurance regarding whether the overall financial statements are free from any kind of material falsification arising out of some fraudulent activities or some other calculation mistakes. When an auditor attains adequate proof while carrying out the audit so as not to express any negative belief for the material misstatement of the financial statements, then we can say that auditor has obtained reasonable assurance. But, reasonable assurance is a limited level of assurance due to the presence of inbuilt restrictions of an audit as a result of which most of the audit evidences upon which conclusion in the form of auditors opinion drawn upon by the auditor is assumed to be convincing rather than decisive.
Thus, the financial audit in UK has to be performed as per the guidelines of ISAs. Auditors London must precede in the direction as laid by the ISA and conduct the audit of financial statements in an efficient way obtaining reasonable assurance about the accuracy of financial statements and thereby, giving an opinion regarding this.