Internship Report On

“Audit procedure of Aziz Halim Khair Choudhury Chartered

Accountants”

Supervised By
Shahana Kabir
Assistant Professor
Department of Business Administration
Faculty of Business and
Entrepreneurship Daffodil International
University

Submitted By
Delwar Hossain
ID: 163-11-5264
Program BBA, Major: Accounting
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University

Date of Submission: 26-08-2020

 Letter of Transmittal

26th August, 2020

Shahana Kabir
Assistant Professor
Department of Business Administration
Faculty of Business & Entrepreneurship
Daffodil International University

Subject: Submission of Internship Report

Dear Madam,

In connection of my practical orientation in Aziz Halim Khair Choudhury

Chartered Accountants, I would like to submit the report of my internship
program to you on Audit Procedure of Aziz Halim Khair Choudhury.

It is a great pleasure for me to present this report; AHKC Financial Services A wide
range of equipment is available in many offices. I admit my shortcomings, but I
work hard to gather as much information as possible and present it on my behalf.

I humbly request you to accept this report for your kind evaluation.

Sincerely yours,

...............................
Delwar Hossain
ID: 163-11-5264
Major in Accounting
Department of Business Administration
Faculty of Business &
Entrepreneurship Daffodil International
University
 Certificate of Approval

This is to certify that Delwar Hossain, ID: 163-11-5264 is a regular student of the
Department of Business Administration, College of Business and Entrepreneurship,
Daffodil International University. You have completed the internship report titled
“Audit Procedure of Aziz Halim Khair Choudhury Chartered Accountants.”

He did his job according to my suggestions and guidance. He tried his best to do it
successfully. I think this program will help him build his career in the future.

Signature.............................

Shahana Kabir
Assistant Professor
Department of Business Administration
Faculty of Business & Entrepreneurship
Daffodil International University
 Acknowledgement

First of all, I must express my gratitude to the Almighty who gave me the opportunity to
successfully complete the internship program.

I would like to express my highest appreciation and thanks to my Supervisor Shahana Kabir,
Assistant Professor, Department of Business Administration, College of Business and
Entrepreneurship, Daffodil International University. She has been a wonderful mentor to me. I
would like to thank you for inspiring my report. I would also like to thank the rest of the
professors who have helped me in the last four years of university life.

I would like to express my deepest thanks to Rajib Dash Assistant Manager, Chartered
Accountants at AHKC for his genuine guidance and oversight. I appreciate your constant support.
It would have been impossible for me to keep my client confidential and make the report without
his help..

I would like to express my deepest thanks to Rajib Dash Assistant Manager, Chartered
Accountants at AHKC for his genuine guidance and supervision. I appreciate your constant
support. It would have been impossible for me to keep my client confidential and make the
report without their help.
 Executive Summary

This report contains the details of the “NGO (Barcik) audit practice followed by
AHKC chartered Accountants’’ is an outcome of BBA internship program. Such
programs facilitate us to apply our intensification in value of the theoretical
knowledge in the practical field.

This report is divided into seven chapters. First chapter contains the introductory
part of the report. That is its origin, objective, scope methodology & limitation of
the study.

In chapter two the background of AHKC and overall scenario are discussed.
Chapter three includes a brief discussion about theoretical framework of audit,
auditing, NGO, journey of NGO in Bangladesh with a full effort to clear the
Procedure and provisioning requirement will enhance the understanding of the
report. Audit procedure of NGO “Barcik”, is briefly discuss on the chapter four.
Moreover, this chapter also includes the Necessary documents for NGO audit the
work plan/audit plan. Observation and Recommendation by AHKC based on audit
Procedure of “Barcik”, consider on the chapter five.

Chapter six is in relation to the findings of the study, recommendation and

concluding part of report. It includes the findings on the comprehensive audit of
“Barcik”. It covers the conclusion drawn on the basis of data presented earlier.
 Table of Contents
Serial No. Content Page No.

i. Letter of Transmittal ii
ii. Certificate of Approval iii
iii. Acknowledgement Iv
iv Executive Summary v
Chapter 1: Introduction
1.1 Introduction
1.2 Origin of the Report
1.3 Objectives of the study
1.4 Scope of the Study
1.5 Methodology of the Study
1.6 Limitations of the study

Chapter 2: Organization
Profile
2.1 Background
2.2 Our Vision and Mission
2.3 Our Goals
2.4 Our Values
2.5 Our Philosophy
2.6 Important Enlistment
2.7 Our International Affiliation
2.8 Logistic Support
2.9 AHKC Chartered Accountants and its
services
2.9.1 Audit and Assurance
2.9.2 Taxation and VAT
2.9.3 Advisory
Chapter 3: Literature Review
3.1 Definition of Auditing
3.2 Distinction between auditing and
accounting
3.3 Types of Audit
 3.4 AICPA generally Accepted Auditing
standards
3.5 Audit Risks
3.6 Audit Evidence
3.7 Rights and Duties of an Auditor
(Company’s Act 1990)
Chapter 4 : Audit Procedures
Followed
by Aziz Halim khair
Choudhury
4.1 Engagement Procedures
4.2 Audit Procedures Followed By
AHKC
4.3 Audit Risks
4.4 Consideration of Fraud and Error
4.5 Inquiries of Management
4.6 Documentation
4.7 Management Representations
4.8 Communication
4.9 Development of effective and
efficient audit plan/ work program
4.10 Conduct Audit Testing
4.10.1 Test of Controls
4.10.2 Control Outlines
4.11 Substantive Tests
4.12 Evaluate and communicate audit
results
4.12.1 External Report/ Auditor’s report
4.12.2 Internal Report/ Management letter
Chapter 5:Case study of
NGO “Barcik”

5.1 Internship Program

5.2 Responsibilities and Learning in the

Audit department of AHKC auditors
5.2.1 Audit plan

5.2.2 Checking of books of accounts

5.2.3 Operation of audit

Chapter 6: Findings and

Recommendation
6.1 Work programs are not followed
properly
6.2 Limited time to complete an audit
engagement
6.3 Difficulties in obtaining required
audit evidences.
Chapter 7:Conclusion

7.1 Conclusion
Glossary
Bibliography
 Chapter 1

Introduction
 Introduction:
An audit is the review or inspection of multiple books by an auditor, followed by a physical inventory
check to ensure that all departments adhere to a documented transaction record system. The auditor is a
person trained to verify and verify that the accounting data provided by a subsidiary accurately
corresponds to the activities that have been considered by the company.
The audit is one of the insurance services provided by the professional accountant. The audit is a
systematic process of obtaining and objectively evaluating statements about economic actions and
events in order to establish the degree of communication between those statements set by criteria and
interactive results to interested users. It can be done internally by the employees of the organization
or externally by an external company.
AHKC Chartered Accounts Firm is prominent firm in Bangladesh. AHKC started their journey in
1979. In this report only consider on the NGO- Barcik audit procedure, which is followed by the
AHKC. Identify the findings of the Barcik and also findings of AHKC. On the basis of the findings
there is recommendation to overcome this kind of criteria.

Origin of the Report:

The internship program is a must for students completing the BBA program within the College of
Business & Business at Daffodil International University.
In the internship program I was employed in a host company called AHKC for a period of three
months. I found out how the audit of the NGO "Barcik" is carried out. I also learned about the audit
procedure of AHKC Chartered Accountants and how the commitment is made in case of an annual
audit.

Objectives of the study:

The main objectives of this report are analyses the audit procedure of AHKC.
There are some specific objectives:
 Gaining practical knowledge and experience on how AHKC performs an audit of Barcik and
their sub recipients.
 To find out some limitation on the overall Barcik audit procedures performed by AHKC.
 To understand the risk areas when audit activities being performed.
 To make some recommendation based on the findings.
 Scope of the study:

This report prepared on the basis of Barcik audit procedure followed by AHKC. In this reason
focused only Barcik and discovered the all findings of this organization.

A) Audit procedure, which is followed by the organization for performing Barcik audit.
B) Background and future of AHKC.
C) Audit client’s status which is being audited by AHKC
D) The administration of the company's audit, which is followed by the organization to perform any
audit.

Methodology of the study:

Methodology is the way to constantly solve the research problem. This work was completed by
subsequent orderly and consecutive steps. First, the issue of research was expressed. Second, a
comprehensive survey was conducted to gather relevant and mandatory literature. Third, the working
theory was developed. Fourth, a research project had been established. According to data sources, it
can be classified into two sources.

Data sources

Primary Secondary
sources sources

Primary Sources of Information:

 Direct discussion with clients.
 Work with different research teams.
 Connects with collaborators, research managers and research staff.
 Observation during physical factory visit.

Secondary Sources of Information:

 Collected secondary information through annual audit report, management audit report,
accounting system, policies, Circulation & audit working papers.
 ICAB manual.
 The data comes from a variety of sources from stable sources.
Data analysis and interpretation:

Effective procedures are recommended for identifying and identifying data, based on process data.
Thus publicity is an important part of the decision-making process of the artist and the creative
person. Then, the entire data process was counted to complete the entire report.

Limitations of the study:

The study is carried out in order to make a complete study of the external audit procedures that
benefited from many facilities and that encountered some difficulties during my study. These
obstacles can be called limitations of the study. These limitations are as follows.

 Limitation of the during internship period.

 The information acquired for the study was not adequate.
 Confidential documents or objects to the firm were not available to access.
 As practice is the first step, it is not possible to know everything about the screening process.
 As an internship student so lack of proper knowledge in audit procedure.
 Chapter 2

Organization Profile
 Background:
Established in 1979, AHKC is proud to be one of the leading marketing professionals in Bangladesh.
We provide large-scale services in the prevention of internal risks, preventing the best solutions to
meet the needs of users. The company focuses on business consulting and consulting, tax planning
and budgeting and insurance services. The company has three officers in Dhaka. AHKC is managed
by professionals protecting a wide range of industries.

Our Vision and Mission:

OUR VISION is to be the most appreciated and independent accounting and access company that
provides quality services to our clients, ensuring a working environment in which our company
members grow professionally and can be responsible members of our municipality where we carry
out activities.

OUR MISSION is to help our clients achieve their goals by providing the highest quality accounting,
auditing, tax and related professional services. We understand that receptivity and personal attention
to each client are essential to our common success..

Our Goals:
 Maintain superior service quality for existing customers and expand your range of services.
 Be honest, courteous and honest in all business dealings.
 Maintain a high level of dedication, professional development and satisfaction for all
employees.
 The number, scope and quality of customers continue to grow..

Our Values:
Strong values have been at the core of AHKC since its creation. We believe our strength is engrained
in our seven core values. They guide us in our daily actions – how we behave and make decisions.
They shape the culture and define the character of our Firm.

Honesty
We always dealing with our clients and colleagues in a fair minded and ethical manner, acquisition
trust through our actions.

Independence
We always deliberate independently, our rules and regulation as auditor and advisors .we always
follow the act independently.
 Culture
We always maintain a work environment in which our culture supports the importance of staff
development, career advancement and colleagues, helping each other friendly and working in
balance.

Professionalism
Confirm that by combining our expertise, experience and the energy of our staff, our client accepts
close personal and professional attention.

Self-respect and Dignity

We always try to treat every individual and relationship with dignity and respect.

Excellence
We are ascertain continues growth and struggle to achieve the highest level of performance in all
activities.

Our Philosophy:

 We have submitted the best appraisal, financial statements, tax and management advice and plan
the needs of the clients.
 Make it a permanent place for someone who is willing and able to work.
 Contribute to the public and the professional respect of our clients in treatment their matters
to the best of our ability in a strictly confidential manner.
 We are use in dynamic with the professional management and system techniques.
 Our position is grow day by day not lose the personal relationship with clients that are
groundwork

Important Enlistment:

AHKC, an Exclusive Correspondent Firm of PKF International Limited, UK, a Global Network of
Independent Accounting Firms, by its quality assurance, has achieved the following enlistments:

 One of the leading CA Firms duly enlisted by.

 Bangladesh Bank in ‘A ‘Category (Positioning 8th position).
 One of the leading CA Firms duly enlisted by.
 Insurance Development & Regulatory Authority (IDR).
 One of the leading CA Firms duly enlisted by the Microcredit Regulatory Authority.
 One of the leading CA Firms in Bangladesh duly enlisted by the Regional Inspector General
of USAID in Manila in 2001 to conduct audit of USA Funded Projects in Bangladesh.
 Our International Affiliation:

Quality, honesty and the origin of clarity in a complex regulatory environment. Provides world-class
analysis and clear solutions in the field of insurance, consulting, taxation and business services for
companies PKF is a global family of legally independent companies, linked by a common
commitment to the world.

The PKF family includes more than 400 offices, operating in 150 countries crosswise five regions.
Basically it provides quality measurement, financial reporting, tax and business advice solutions to
international and domestic organizations in every market.

PKF family around the world offer a wide range of business advice services as a result client get
benefit and fulfill the client demand in local market. When a client user member of the PKF network
then client get benefit the extra opportunity. PKF member firms give service sector is the top market
place. Each team is led by a partner who will deal with the client straight and be its regular point of
contact.

Logistic Support:
The firm has 03 (three) office in Dhaka namely Dhanmondi, Baridhara and Uttara having satisfactory
space with all modern facilities for performing the professional activities imparting training to the
articled students of the firm. The firm is well prepared with all types of modern logistic supports such
as personal Computer, IPS (Jumbo), UPS, Security System (CC Camera) etc.to render professional
services to our valued clients timely in an efficient manner.

AHKC Chartered Accountants and its services:

As a popular licensed accounting firm, AHKC Chartered Accountants has received a wide range of
quality services for its clients for over a period of over thirty years. Over the years, the company has
managed to fascinate a large number of customers with a wide range of carefully designed services,
designed to add value and increase the usefulness of the client's internal control system. These key
services provided by AHKC Chartered Accountants are:
 Audit and Assurance
 Taxation and VAT
 Advisory

Audit and Assurance:

Statutory Audit and BEFRS

Statutory audit means the statute under companies Act in which auditor to the members of the
company. Statutory audit are compulsory external audit conduct annually to meet a specific set of
requirements by the regulators.
Under Bangladesh regulatory framework companies produce their financial statement in line with the
requirement of:

 The Companies Act 1994, and

 Bangladesh Financial Reporting Standards (BFRS)

Risk based Internal Audit

Internal risk-based audit (RBIA) is an internal approach in which it focuses primarily on the
impact associated with an activity or system and provides assurance that the risk is controlled by
management based on the desired level of risk. It oversees risk management processes and seeks at
all levels to promote the role of management and BOD (Board of Directors) for risk management.
Special / Forensic Audit

AHKC have senior and experienced members of the firm having skill and experience in carrying out
special/forensic audit. AHKC team carefully considers what they have been asked to achieve and
plan their work accordingly.

 Categorizing the type of fraud that has been operating within the entity.
 How long it has been operating for.
 In what manner the fraud was concealed for the duration.
 Ascertaining the fraudster(s) involved.
 Computing the financial loss suffered.
 Obtaining evidence to be used in court proceedings (if any)

Governance, Risk and Compliance Services

AHKC has always been committed to providing its customers with risk management, risk and
compliance (GRC) solutions to the problems of corporate governance, business risk
management. Trade and corporate relationships.

Investigation and argument services

AHKC helps clients deal with the compound issues of fraud, regulatory compliance and
business disputes that could otherwise peculate from client labors to achieve their company’s
goals.

Risk based evaluated of mortgaged property

AHKC professional consulting services provide risk-based evaluation of mortgage property

with effective quality control and compliance solutions to our valued clients.
 Employee benefit audit plan

The AHKC maintains a dedicated leadership team to assist companies in resolving their
Workers' Benefit Statement (EBP). Our specialists have specialized experience with all types
of plans and shipping policies:

 Defined involvement retirement plan

 Defined profit pension plans
 Union-represented plans
 Multiemployer plans
 Multiple Employer plans

Taxation and VAT:

Corporate Tax Service and Tax Planning

AHKC office give the service of corporate tax planning and related consulting services. Our clients
and try our best to allocate cost-minimizing and creative solutions that will reduce corporate income
tax liabilities relieve them of the administration load of fulfilling with regulation our solutions will:

 To find out the effective tax structure for the business operation of the client.
 Take full advantage of tax opportunities and issues under legal jurisdiction.
 Realize the best capital or revenue tax treatment.
 Make the highest of tax opportunities to the company.

Tax Services for individual evaluate

At present the tax authorities have become more aware in increasing number of tax payers for wide
contribution in national revenue collection of the government. The tax rules and laws are temperately
compound and the tax payer’s lack of applicable knowledge in taxation and its obedience in
determining taxable income and subsequently cunning tax liability.

As the tax government becomes more complex and more emphasis is placed on the individual
responsibilities of taxpayers, anyone subject to taxation needs professional advice and assistance to
complete their tax position and ensure that they meet compliance requirements.

International Double taxation Solution

International businesses inspire double taxation issues. Therefore, income can be taxed in the country
where it is reputed and earned and then taxed again when it is exiled to the country of origin of the
business. The total tax rate, in some cases, is so high and makes international business too exclusive
to pursue. Double Taxation Agreement (DTA) with foreign countries for the approval of foreign
direct investment in Bangladesh. DTA, a contract between two countries for the avoidance of double
taxation which defines the taxation rights of each country in respect of cross-border income streams,
which provides for tax credits or exclusions for the elimination of double taxation.
 Services for VAT and AIT

Our VAT Authorities are ready to reader services to the clients:

 Advice on VAT registration and planning

 VAT control and reconciliation
 Completion of VAT returns
 VAT inspections and queries from the concerned authority

Estimate advance tax for an assessed who is required to pay advance tax:
 Corporate tax compliance
 Owner managed business
 Tax structuring
 Transfer pricing
 VAT, Customs and Excise

Advisory:

Business Consultancy Services

AHKC works with the leading organization in the country to deliver business consultancy services
for cooperative solutions to business with advanced ideas that are included by their clients. Our
business consulting is the exercise of helping entities to progress their performance, operating
principally through the analysis of existing organizational problems and the development of plans
growth and improvement.

MIS and IT solution

The management information system (MIS) and IT solution is a combined, high-tech and machine
user system providing the required information to support the operation and choice making of my
organization. AHKC provides MIS and IT solutions services through a MoU achieved with a firm
name SUNHILL WORKS is leading information technology consulting, services and business
process subcontracting organization that intended and prompted the adoption of the supple business
performs.
 Risk Management Advisory

Reformation: A commercial organization appearances financial and operational challenges while

operational in the industry. Because matter of rearrangement issue rises for the organization to
achieve lasting strategic, operational and financial change for the benefit of all stakeholders.
AHKC’s partners and experts have experience and knowledge to support organization, traders and
borrowers for regenerating value and improving financial and operational performance for the long
period of time.

Project Probability study

AHKC’s panel of consultant’s performance project probability studies to measure individual or

numerous development mixes and gives endorsement and suggestions on best development plan
taking into account of financial and applicable market dynamic forces.

Training and Development

Trainings provide employees with the opportunity to gain knowledge or skills as a result of working with
the right staff in their place. Growth makes employees more motivated and productive in the future, not a
career-changing task. Today, training and outreach is an integral part of any human resource
development organization. Because of the quality of training and development to help users get the right
customer experience and benefits, AHKC team of professional trainers provide training and support to
users based on their needs. yes. As a result, staff members learn the big lessons in the job environment.
 Chapter 3

Literature Review
 Definition of Auditing:

Arenas and Loebbecke, 1998 defines Auditing as:

“Audit is defined as an investigation of some statements of figures involving examination of certain
evidence, so as to enable an auditor to make a report on the statement.”
The definition includes several key words and phrase. To understand the definition, different terms
are discussed below;

Competent, Independent Person

The auditor should be qualified to recognize the criteria used and capable to know the types and
amount of evidence to gather to reach the proper conclusion after the evidence has been examined.

The auditor must also have an independent mental characteristic. It is not good to have a capable
person who is biased, gathering evidence when neutral information and objective thinking are needed
to make decisions and decisions.

Collecting and Evaluating Evidence

Evidence is defined as any material used by the auditor to control whether the quantifiable
information that is audited is declared in accordance with familiar criteria.

Evidence will take many forms, including the evidence of investigators (consumers), written
communication with third parties, and evaluation by an analyst. It is important to obtain sufficient
evidence and the amount of evidence to meet the objectives of the assessment. The process for
determining significant expenses and assessing whether the assets are subject to the accredited
liability is a risky venture for all auditors.
Computable Information and Established Criteria

To do an audit, there must be evidence in a verifiable from and some standards (criteria) by which
the auditor can measure the information.

Quantifiable information can and requires many procedures. It is possible to audit financial
statements, such as the financial statements of a company, the amount of time required as an
employee for a given task, the total cost of a government structure contract, and a person's tax return.

Economic Entity

Whenever an audit is performed, the scope of the auditor's responsibility needs to be clarified. Here
the primary method involves the important economic entity and the time period. In most examples,
the economic entity is also a legal entity, such as a corporation, a government business unit, or a
property.
 Reporting
The final stage of the audit process is the audit report - the message of the findings to users. The
reports differ in nature, but in all cases must notify the bookworms of the degree of correspondence
between the calculable information and the established criteria.

Distinction between auditing and accounting:

Many people use financial information and members of the general public to analyze the finances
with accounting. This understanding is ambiguous because the majority of analysts are concerned
about financial information and many researchers have a wide range of skills. Although assessment
and evaluation were closely related, they differed from one another.

Accounting and Auditing Contrast

(Larry F. Konarth, “Auditing: A Risk Analysis Approach)

Accounting involves identifying, collecting, summarizing, reporting economic activities and

interpreting financial data. Accounting is the process of recording, classifying and summarizing
economic events in a logical manner for the purpose of financial information for decision making.
 Types of Audit:
There are various types of audit. Such as:
 Audit of Financial Statements
 Operational Audit
 Compliance Audit
 Internal Audit
 Interim Audit
 Performance Audit
 Governmental Audit

Audit of Financial Statements

An analysis of the financial statements was conducted to determine whether the financial statements -
key documents were interpreted - were reported in accordance with the correct procedures. The terms
of the financial statements are usually the terms of the financial position, the statement of income and
the terms of the cash, including additional notes.

Operational Audit
Operational audit means the study of business operations in order to provide guidance on the
economic and efficient use of resources, the effective achievement of business objectives and
compliance with company policies.
As a conclusion of an operational audit, references to management to improve operations are
generally predictable. The purpose of the operational audit is to help managers ease their
management responsibilities and increase profitability.
Compliance Audit
The administration always wants to know if its bylaws have been met or if there are external
decisions. The results of a legal audit are often communicated to someone in the office who has been
audited, preferably by a user control panel. Management, unlike external users, is a key concern of the
team, adhering to certain procedures and policies. Here, a significant percentage of these tasks are
performed by analysts hired by self-employed organizations Compliance audit involves:
1. Examining dealings and detailed records
2. Identifying softness

Internal Audit

Internal audit is the self-assessment of an organization in order to evaluate and evaluate its
performance as a service to the organization. The purpose of internal audit is the responsibility of the
members of the organization to work out their best practices. To this end, internal research, followed
by inspections, measures, recommendations, information and documents related to the inspection
work
 Interim Audit

An interim essentially related to the preliminary audit activity that is conducted before the end of a
client's fiscal year. Interim audit responsibilities are performed to cover the time required to complete
the final audit. The interim audit can provide an opportunity to make financial statements. An interim
audit helps the auditor, because time is available here.

Performance Audit

Performance appraisals focused on the economic performance, efficiency and benefits of the
electrical department. Business management and performance can be used to measure whether goals
have been achieved and to identify ways to improve and improve the process. Evaluating plans
includes definitions.

1. The range to which the wanted results or benefits established by the government or other
organizing body are being understood.
2. The efficiency of organizations, program, activities or roles.
3. Whether the entity has satisfied with laws and regulations appropriate to the program.

Governmental Audit

Government inspections are defined as testing and reporting on insurance as well as laws and
regulations. This is government funding. Federal audits do not acknowledge that third-party auditors
are responsible for establishing compliance with laws and regulations when participating in state and
local investigations, and other non-profit sources. which received government financial support.
Government observers participate in many state, county, and government activities.

AICPA generally Accepted Auditing standards:

Assessment standards are general rules that help researchers do their best work in the field of
financial history. These include consideration of work skills, such as competence and independence,
alert needs and evidence.

The process consists of ten general acceptance guarantees (GAAS). These models were developed by
the AICPA in 1947, with minor changes, still in place. These standards are not explicitly provided to
provide useful guidance to practitioners, but are the basis on which AICPA can be defined.

The three Generally Accepted Auditing Standards are follows:

General Standards:

1. If an auditor have enough technical knowledge then audit performance will be high. It is
basically verify person to person.
2. All matters connecting to the assignment, independence in mental insolence is to be kept by
the auditor or auditors.
3. Because diligent care is trained through the presentation of research and preparation
information.

Field Work Standards:

1. Tasks are required to be adequately staffed and serviced, if any be well managed.
2. An understanding of the internal control structure should be seen to provide for the planning
and monitoring of the regularity, timing and scope of the measures required.
3. Evidence of eligibility must be obtained through inspection, evaluation, inquiry and
authorization to qualify.

Reporting standards:

1. The report is required to disclose financial information presented in accordance with the
Acceptable Acceptance Standards (GAAP).
2. The report shall exclude cases where this content has not been consistently approved in the
current period up to the previous period.
3. Reporting results in the financial statements is to monitor the applicability unless otherwise stated in
the report.

Audit Risks:

First of all auditors should find an understanding of accounting and internal control systems. Then
find enough to plan the audit and develop a real audit tactic. Auditors should use professional results
to assess audit risk and conduct strategic audit procedures to protect it, which is reduced to an
appropriate low level.

Audit risk is defined as "the risk that the auditor will accidentally fail to properly adjust his or her view
of financial statements that are materially misstatement". Therefore, the audit risk is the risk that auditors
will give an inadequate audit opinion when the financial statements are declared to be materially
incorrect. Audit risk has three mechanisms:

“Inherent risk” is the risk that exposure to a trade-off balance may be materially significant,
individually or when combined with misstatements of other balances or classes, claiming that there
were no related internal controls.

“Control risk” is the risk that an offense may occur in a balance or in a class exchange and that may
occur individually or in combination with an imbalance in another charge or class; will not restrict or
search; and are repaired in a timely manner by accounting and management personnel.
“Detection risk” is the risk that the examinee's poor performance will not detect any violations in
the balance or in a class change that could be significant, alone or when includes inaccuracies in
other values or classes.

Audit Evidence:

Audit evidence includes those facts and implications that affect the auditor's attention to the financial
presentation.
The purpose of the cooperation of all audit procedures is to gather sufficient evidence capable of
forming an opinion on the impartiality of the financial statements as a whole.

Characteristics of Audit Evidence:

It is an important part of the auditors appreciate the several features of audit evidence and the
dependence that can be placed on each type. Audit evidence can be characterized as:

1. Engendered and held by the NGO.

2. Received from external parties and held by the NGO.
3. Received directly by the auditor by independent parties.

Gathering Audit Evidence:

Basically, audit evidence gathering technique can be put into the following categories:

1. Observation
2. Validation
3. Calculation
4. Analysis
5. Review
6. Judgment
It is probable that all six methods will be used.

Rights and Duties of an Auditor (Company’s Act 1990):

An auditor to perform his duties must have confident controls deprived of which it may not be
imaginable for him to perform his responsibilities fairly and thereby he might be held
accountable for any loss which the company may suffer. The company’s act 1994 has put down
the powers and duties of an auditor which are detailed below:
Rights and powers of an auditor:
 As an auditor right of access at all times to the books, accounts and vouchers of the
company. (Sec- 213)
 As an auditor right to collect information and clarification from the directors and officers
of the company. (Sec-213)
 As an auditor right to receive all information in meeting and join to the general meeting of
the company. (Sec-217)
Duties of an Auditors:
 Authorization of statutory Report.
 Making a report upon the performance of company for attachment in the catalogue.
 Audited Accounts and Proposal of Report to the Shareholders.
 Reporting on the Company’s affairs in support of a director’s declaration concerning
the affluence of the Company.
 Interpretation Assistance to the Advocate- General in connection with the prosecution
of Directors.
 Chapter – 4

Audit Procedures Followed

By Aziz Halim khair
Choudhury
 Engagement Procedures:
Before deliberating the audit, the procedures followed by AHKC, I try to focus on the hiring
procedures through which AHKC is hired by the client to perform the audit. AHKC faces three types
of situations in the involvement process:
 First of all engagement with new client.
 Second is engagement with existing client.
 Third one is directly conduct with the client. Before the audit work, some letters are
exchanged between AHKC and clients.

In case of new client:

4 (four) letters are exchanged between AHKC and client including receipt letters of selection at the
time of involving with the new client. Following stages are followed by both AHKC and client:

STAGE -1

First of all Client require for technical and financial proposal from the AHKC:

The client normally offers the circular with the newspaper or the direct audit offer from the audit
firm. Sometimes, in the case of the direct offer, it requires the audit firm to provide an estimate for
the cost of the client's audit. Then state the specific date to confirm the audit firm's decision and the
date of the audit deduction. The client describes here the key areas of the audit. He ensures that if
AHKC audits the client's company, it will provide the formal terms of the audit mandate to regulate
the conduct of the audit.

STAGE – 2

Second stage is the technical and financial proposal is sent by AHKC to the client:

After reviewing the client's letters, the audit firm writes a letter of proposal to the client. Here, it
contains technical and financial proposals for carrying out the subject of the audit. AHKC
approximates its personal costs later from the mandates to be applied and using the minimum hourly
rate of fees, as described by The Instituted Chartered Accountants of Bangladesh. The estimated cost
of the audit may vary depending on the number of orders.
STAGE – 3

Third stage is acceptance by the client on the basis of proposal of AHKC – A Letter of contract

After receiving the proposal letters from several audit firms, then the client chooses the firm that is
favorable to them. Then call the audit firm for audit. AHKC's technical and financial proposal the
client company knows the nature of the audit (such as independent, external) to assess the
organization's internal control system in managing the audited issue.
 STAGE – 4

Last one is a letter is sent by AHKC to the client approving to work with the client- confirmation
letter

In here, the acceptance letter from the client, AHKC provides confirmation letter describe the firm’s
willingness to work with the client.

In case of last year’s client:

Three letters are exchanged between the AHKC and client:

 Willingness letter for the reappointment: This letter AHKC wants to audit this year. It can
demand to increase audit fee or change some other issues.
 AHKC accept this appointment.

Sometimes directly appointed by the client:

The client is interested in working with AHKC, then sends direct meeting letters to the company and
describes all the terms and conditions. If all terms and conditions are favorable to AHKC, then it
accepts the selection and sends a letter to the client as auditor.

Audit Procedures Followed By AHKC:

AHKC follow PKF International Audit procedures. If AHKC appointment with any client then
provide to the opinion on Financial statements in accordance with Bangladeshi auditing standards as
well as international auditing standards. AHKC also aims to provide effective and efficient audit and
business consulting services. There are seven steps included in the procedures:

1. Identity General Goals.

2. Collect the information.
3. Measurement General Risks.
4. Assess Account- Specific Risks.
5. Mature Effective and Efficient Audit plan.
6. Audit Testing.
7. Assess and Communicate Audit Results.
 Audit Risks:

It defines the nature, timing and extent of the required substantive procedures to reduce the audit risk
to an acceptable level in that we, the auditor, consider the measured levels of inherent and control
risks. In this regard, we consider:

a) Nature of procedures.
b) Timing of procedures.
c) Extent of procedure.

Illustration of the Interrelationship of the Components of Audit Risk

This table show how the acceptable level of detection risk:

High Medium Low

Auditors High Lowest Lower Medium

assessment of
inherent risk Medium Lower Medium Higher

Low Medium Higher Highest

Consideration of Fraud and Error:

Auditor must provide reasonable assurance that materials errors and irregularities are observed. The
probable for financial fraud is on every engagement. Write down the risk of potential fraud:

 Our audit procedure is identify of risk.

 We are consider variable the nature, timing and extent of our work.
 We are perform our audit with appropriate professional doubts and due processional care.

Financial statement sometimes made by misstated which can be intentionally mistake or other
causes. We are normally consider the following three types:

 Generate the revenue and recognize where none exists.

 Inappropriate deceleration of revenue recognition.
 Underestimation of and shifting of costs and expenses.
 Inquiries of Management:

When we are planning the audit then inquiries of management:

a) Acquiring an understanding of:

i. Management's assessment of the risk of the financial statements appearing to be materially

distorted as a result of fraud
ii. Management has established accounting and internal control systems to address this risk;

b) Towards obtain information of management’s understanding concerning the accounting and

internal control system in place to prevent and detect error;

c) To find out whether management is aware of any knows fraud that has affected the entity.

d) To determine whether management has exposed any material errors.

Documentation:
During the audit and fraud risk factors are known as an auditor because the auditor believe that audit
procedure are necessary and auditor describe the risk factor and auditors answer to them.

Management Representations:
Auditor should find out and written representations from management that:
a. It recognizes its accountability for the application and operations of accounting and internal
control systems that avoid and detect fraud and error.
b. Auditor should disclose the result of it assessment of the risk of financial statement may be
materially misstated as a result of fraud.

Communication:

When the auditor finds a distortion of fraud or error, it is the auditor's responsibility to communicate
it to management, those who stimulate governance and, in certain circumstances, regulatory and
enforcement authorities.
 Development of effective and efficient audit plan:

A list of procedures to be performed to perform the audit. The program covers the objectives of the
audit and should have adequate details to be involved in the audit and, as a result, to monitor the
proper implementation of the task.

In AHKC, use different types work programs of account head. Basically Work plans were make for
several types of business and for several types of account heads. Write down the audit program
contains:

 Client background information and procedure.

 Audit objectives.
 Audit procedures.
 Performance and results of work.
 Conclusion.

The audit plan helps auditors confirm the quality of audit tasks. It provides essential guidance for
auditing tasks and how to investigate all account heads in an appropriate method. When a new
student enters the company, then the manager's responsibility to present him with different types of
work programs.

 Accounting procedure of client.

 Client internal controls.
 Unexpected results in the testing.

All procedures involved in the work program must be completed and reviews in the program, made
during testing must be sufficiently clarified and accepted by the senior or manager.

Conduct Audit Testing:

After finishing work program, the audit team conducts two types of tests:

 Test of Controls
 Control Outlines

Test of Controls:

Test of control based on the GRE, SRA and evaluation of internal control system, we take decision
whether to perform test of control.

The audit team should test any dependent internal control system to reduce the likelihood of
misstatement of the financial statements, and the reduced substantive test has been decided.
For the effective and efficiency of audit work, we conduct Test of Control at least in the following
three major accounting areas:

Type of test Account level test covered

1) Cash Receipts Test Cash, Bank, Sales, Revenue, Receivables.

2) Cash Disbursement Test Cash, Bank, Inventory, Purchase, Fixed Assets

Payables, Expenses.
3) Payroll Test Payroll expenses, Cash, Bank.

Control Outlines:

There are three types of test form tests that can be adapted to include additional items, to delete some
inapplicable items, and also to tailor the best ones for each type of customer. Internal controls may be
considered when developing forms for internal control tests.

 Approval controls are prevention- oriented. This are designed to prevent misstatements form
occurring as a result of illegal or inappropriately authorized transactions.

 Transaction processing controls are also prevention-oriented. These are proposed to prevent
distortions during the processing of transactions.

 Confirmation and evaluation controls are detection- oriented. They are usually address
groups of transactions rather than separate transactions.

 Physical Protection Controls are prevention- oriented and consist of separation of duties and
other techniques to limit access to assets, records procedures.

Substantive Tests:

Substantive tests are procedures performed to detect misstatements in the balances of financial
statements. We perform the following two types of substantial. Tests:

 Analytical procedures

 Detail Tests
 Analytical procedures

Analytical procedure means the analysis of important reports, including the resulting investigation of
variations and relationships that vary with other relevant information. The auditor should apply
analytical procedures to the planning and the entire evaluation stage of the audit.

Analytical procedures include the replication of comparisons of the entity’s financial information
with, for example:

a) Similar information for prior periods.

b) Expected results of the entity, such as budgets, or expectations of auditor such as

approximation of depreciation.

Detail Tests

Detailed tests may include the following steps:

a) Approval of third parties- Bank, A/P, A/R

b) Observation of asset- Inventory count, FA, Cash Count, Payroll cheque distribution
c) Tests of reconciliation- Bank reconciliation.
d) Analysis of account
e) Vouching
f) Cut off test
g) Inquire
h) Valuations test
i) Interpretation of FS
j) Meeting with of stockholder, directors and committee.

Evaluate and communicate audit results:

Final stage of audit, the audit team submit the audit report to the management and the stakeholders of
the company. The audit team matters two types of reports:

1. External Report known as the “Auditor’s report”

2. Internal Report known as “Management Letter”

We are three areas to deal with:

--- The unqualified audit reports.

--- Qualifications in audit reports.
--- The management letter (also known as letter of weakness or letter of comment).
 External Report/ Auditor’s report:

Basic Elements

External audit report auditor’s includes the following basic elements, ordinarily in the following
layout:

a) Title;
b) Addressee;
c) Opening or initial paragraph
1. Identify of the financial statements audited;
2. Statement of the responsibility of the entity’s management and the responsibility
of the auditor;

d) Scope paragraph :

1. A reference to the BSA;

2. A explanation of the work the auditor performed;

e) Opinion paragraph containing:

1. A reference to the financial reporting framework.

2. An expression of opinion on the financial statements;

f) Date of the report;

g) Auditor’s address;
h) Auditor’s signature.

Internal Report/ Management letter:

Internal audit report as a value-added service to the client AHKC gives a management Letter to its
audit clients. This letter purpose of the management understand the company condition where
weakness is and take necessary action.
Purpose of Management Letter:
 The main purpose of this report to management is to allow the auditor to present his
observations on the accounting records, systems and controls examined. Significant areas of
weakness of systems and controls that can lead to material errors brought to the attention of
management.

 Secondary purpose, an auditor describes management to provide other positive advice. The
auditor could, for example, suggest areas where savings and resources could be effective.

 A letter to management is also valuable material for communicating materials that have come
to the auditor's attention and could have an impact on future audits.
Contents:

Normally, the following matters, arising out of the audit, will be included in a letter to management:

a) Weaknesses in the structure of accounting systems and internal controls;

b) Weaknesses in the functioning of accounting systems and internal controls;
c) Inadequate accounting policies and practices;
d) Non- compliance with accounting standards or legislation.

 Management response:

The research agency shall request answers to all statements, indicating practices that the
administration has benefited from in the context of the written statement. It must be true in the
statement that its investigators examine at least one acknowledgment of the letter or, if it deems it
appropriate, the presiding officer of the letter should be written on the board.

 Basic Elements of the Management Letter:

The management letter includes following basic elements:

a) Address
b) Transmittal letter
c) Title
d) Background information
e) Scope of work, e.g.
1. Compliance
2. Authorization
3. Accuracy
4. Monitoring
5. Safeguarding

f) Findings: All finding consists of four different sections. As under:

 Fact
 Effect
 Recommendation
 Management Response

g) Date of the report;

h) Auditor’s address; and
i) Auditor’s signature.
 Chapter – 5

Case Study
Of
NGO-“Barcik”
 Internship Program:

I did my Internship program at Dhanmondi Road 12/A in Aziz Halim Khair Choudhury. I
visited all most all the Audit department of that NGO – “Barcik”.

Responsibilities and Learning in the Audit department of AHKC auditors of

(NGO - Barcik)

: AUDIT PLAN:

When receiving the require information and document then one of the senior makes an audit
plan include audit program. The audit program covers the detail of the work such as projected
time period, delivery of work among the memberships of audit team.
When you confirm the audit plan, the senior forms an audit team. The senior provides the
member with important information about the client and the work they need to do. Then
distribute the paper among team members and assign different initials and different flags.
Seniors and the director intermittently manage the work to verify whether the work is being
carried out according to the audit plan or not.
In the audit planning the following things are deliberated with detail:
1. Business address and Details.

2. Knowledge of business of the client.

3. System notes and areas.

4. Audit program.

5. Risk assessment.

6. Timeliness and staff involved.

7. Materiality assessed by variance analysis.

8. Strategy.

9. Audit procedure.

10. Previous year's outstanding points.

11. Current year's pinots to be carried forward.

 CHECKING OF BOOKS OF ACCOUNTS:

First of all the audit activity starts at the beginning, the accounts are checked for defects, such
as due to incorrect entries, omission of the transaction, total and incorrect transmission, etc.
sometimes the verification of the accounts may or may not include the verification of the
elements, it may involve an examination test.

OPERATION OF AUDIT:

The audit team was operated with the help of following techniques.

Vouching:

First one is vouching, It is a common part of the audit during the period. When secured, each
transaction is verified with this documentary evidence. Documentary evidence, such as
vouchers, invoices and entry and exit notes for goods, cash notes and receipts. All documents
and each transaction are authorized by a suitable person, who has the power, must be carefully
checked.

Verification:

Second one is vouching is then complete the audit team's audit of assets and liabilities. The
company's assets are confirmed by inspection, if the assets are inside others, then a letter is
printed to confirm their presence and title. A letter is written to authorize the major debtors to
confirm the balance owed to them. Then check the bank account balance, the statement is
received from the client's banker.
Posting Check:

Submitting a newsletter is a check to see if a change in business is true and is posted in the
ledger. Special examination of the placement of the personal depositor in the required
registration and registration of the account; other incorrect submissions will remain invisible.
Cross Checking:

Cross-examination is an important part of the investigation. It is the difference between the

entries in two or more books or the entries in a book with its supporting evidence or check.
My seniors have helped me at this stage. The accuracy of the cross cross plays an important
role in the identification process.
 Trial Balance Checking:

The trial balance of the route is the significant balance carefully checked and noted in the
working documents for reference. If different events are seen during the audit, then they are
noted and the explanations requested by management and asked to make the necessary
adjustments. If an irregularity is found during the audit, it is also described to management
and reported in the auditor's report.

Analytical Procedure:

In this part approved to confirm the accuracy and correctness of the results obtained from the
measures, from the profit and loss account and from the balance sheet. In the analytical procedure,
the results are compared with the results of the previous period, the reports, the foreseeable results
and the business information. Any key changes are analyzed. Here are the stock assessment, physical
variations, financial report and analysis of variance.
 Chapter- 6

Findings &
Recommendation
 FINDING NO 6. 1

Work plans are not monitored accurately.

• Fact:

Work plans cover the step by step by step instructions for performing the audit activity. At AHKC,
we have different work schedules. But in most cases, work schedules are not followed properly. In
some cases, we've bitten each head, but we don't go deep to save our time.
• Effect:

Because of evidence work plans, we are not found proper idea about each account head.
We can sometimes miss some important issues to be discussed.

FINDING NO 6. 2

Limited time to whole cover an audit engagement.

• Fact:

We are try to complete our audit tasks inside a limited time period. Sometimes, Client creates

problem to complete the audit and deliver the audit report within very partial time as it he/she

has to submit the audit report and audited financial statements.

• Effect:

Sometimes we are not properly justify the accounts head because of time limitation. Then we
complete the audit engagement and provide the audit report very speedily. So, we are cannot give
ensure the quality of the audit work.
 FINDING NO 6. 3

Difficulties in finding mandatory audit evidences.

• Fact:

The audit standard proposes the correct collection and observance of appropriate and well-informed
audit evidence. Due to the time limit, it is not possible to test all transactions. We identify some
sample bases of transactions and test them and ensure our trust based on these transactions. Then we
try to collect all the evidence related to those transactions. Sometimes, customer management is not
interested or does not want to provide all the necessary documents. As a result, we have to wait 2/4
days to get our required documents.

• Effect:

If the client cannot provide properly the necessary and important documents, it is problematic for us to give
an appropriate audit opinion and appropriate audit report.

Recommendations

1. Manager or in charge give limited time during the course of audit.

2. Short term idea about the client.

3. Work plans must be correctly presented to the juniors and must be followed as much as
possible in each audit appointment.
Chapter- 7

Conclusion
7.1 Conclusion
PKF The international audit procedure gradually defines the instructions for an audit of the
financial statements. This procedure is satisfactory for AHKC. It is possible to audit financial
statements if they are followed up correctly. But in some cases, AHKC auditors disrupt some
auditing standards and do not perform their audit tasks properly. As a result, the quality of the audit
work cannot always be guaranteed. But if all these problems can be eliminated, AHKC. He will be
able to continue his current status and improve his position towards the client. So all AHKC
partners and articulated students need to be aware of this issue.
 Glossary
DIU= Daffodil International University
CA = Chartered Accountants
FCA = Fellow of Chartered Accountants
NGO= Non- Government Organization
ISA= International Standards on Auditing
BSA= Bangladesh Standards on Auditing
ICAB= Institute of Chartered Accountants of Bangladesh
BSA= Bangladesh Standards on Auditing
AHKC= Aziz Halim Khair Choudhury
GAAP=Generally Accepted Accounting Principle
GAAS= Generally Accepted Auditing Standards
EBP= Employee Benefit Plan
BFRS=Bangladesh Financial Reporting Standards
IDR= Insurance Development & Regulatory Authority
ICAB= Institute of Chartered Accountants of Bangladesh

Bibliography

Bangladesh Standards on Auditing (BSA)

Bangladesh Accounting Standards (BAS)
Audit Practice Manual by (ICAB)
www.google.com
www.ahkcbd.com
www.wikipedia.com
www.pkf.com