13. M/s DEF & Associates have been appointed as the statutory auditor of JKL
Ltd. for the first time for the financial year 2024-25. The engagement partner,
CA D, is briefing his engagement team about the need of Engagement
Standards and Quality Control Standards in the areas of financial statement
audits and in other types of assurance services. Out of the following which
one point is not correct about why standards are needed?
Options
AStandards equip professional accountants with professional knowledge
& Skill.
BStandards ensure audit quality.
CStandards promote uniformity as audit of financial statements is
carried out following these Standards.
DStandards ensure carrying out of audit against established benchmarks
at par with local practices.
✅Option D — Standards ensure carrying out of audit against established benchmarks
at par with local practices.
All Options:
AStandards equip professional accountants with professional knowledge
& Skill.
BStandards ensure audit quality.
CStandards promote uniformity as audit of financial statements is
carried out following these Standards.
DStandards ensure carrying out of audit against established benchmarks
at par with local practices. ✓
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Detailed Solution & Explanation
To address the question, let's analyze each option given to identify the one that is not correct about why standards are needed in the context of financial statement audits and other types of assurance services. Option A suggests that standards equip professional accountants with professional knowledge and skill, which is a correct statement as standards provide a framework that guides auditors in performing their duties effectively and efficiently, ensuring they possess the necessary knowledge and skills. Option B states that standards ensure audit quality, which is also correct because standards set out the requirements and guidelines that auditors must follow to ensure that audits are conducted in a manner that achieves high-quality results, thereby enhancing the credibility of financial statements. Option C mentions that standards promote uniformity as the audit of financial statements is carried out following these standards, which is accurate. Uniformity is crucial in audits because it ensures that similar transactions and events are treated and reported consistently across different entities, making it easier for stakeholders to compare and understand financial statements. Option D claims that standards ensure the carrying out of audits against established benchmarks at par with local practices. This statement is not entirely correct in the context of why standards are needed. While standards do provide benchmarks for conducting audits, the primary purpose of standards is to ensure that audits are conducted in accordance with internationally accepted principles and guidelines, rather than merely aligning with local practices. Local practices can vary significantly and may not always adhere to the highest standards of auditing. Therefore, standards are meant to elevate the quality of audits beyond mere compliance with local norms, ensuring that audits are conducted with integrity, objectivity, and professionalism, regardless of geographical location. Hence, **Option D** is the correct answer.