The purpose of this AAS is to establish Standards on the procedures to be followed to obtain an understanding of the accounting and internal control systems and on audit risk and its components: inherent risk, control risk and detection risk. The standard also extensively deals with aspects such as meaning of audit risk and its three components, meaning and inherent limitations of accounting and internal control systems, control environment, control risk and its assessment, tests of control, assessment of inherent risk and its relationship with control risk, assessment of detection risk, audit risk in small business and communication of weaknesses.
The AAS is effective for all audits related to accounting period beginning on or after April 1, 2002.
Issued in February, 2002.
Published in the Handbook of Auditing Pronouncements, Vol. I, (Edn. 2003).
Also available as a separate publication of the Institute (Price: Rs. 25/-).