Professional Documents
Culture Documents
There are seven key stages, as highlighted in bold below, to the planning process. Generally the steps should be performed in the
order they appear.
This checklist cross references to standard forms but these should NOT be completed if the objective can be achieved by an
alternative eg. short narrative notes etc.
Objective: To ensure that a cost effective audit is planned in accordance with the ISA+s and Ethical Standards.
APPOINTMENT
2. For new clients, ensure that the new client and other customer due diligence N/A
checklists (see PF1) have been fully completed and approved by the Responsible
Individual.
4. Complete acceptance of appointment / reappointment form (see B12 and, if PF-4 & Consultancy agreement
necessary, complete / update PF4) to identify whether there are any Ethical B12
Standards threats.
6. Where applicable (ie. where Ethical Standards threats have been identified), confirm N/A N/A
that sufficient safeguards are in place to enable us to continue this appointment
(see B13).
8. Consider whether an Engagement Quality Control review will be required and, if so, - Not required
ensure B14 is completed.
10. For clients where we were not auditors in the previous period, consider whether Audit carried out from
sufficient appropriate evidence (including, if applicable, from previous auditors) can inception.
be obtained to confirm opening balances (see PF1 new client checklist and record
approach on B32-2).
12. Agree the terms of engagement in writing. For recurring assignments, assess PF-1 Consultancy agreement
whether the terms need to be revised or the client needs to be reminded of these
terms. (NB. Where preconditions of an audit have not been met or the client
imposes a limitation in scope that would result in a disclaimer, we should not accept
appointment.)
4. Review previous years audit file for points forward and report to management. Done
5. 6. Obtain and record further information on the client by discussion with the PAF Done
Responsible Individual / manager.
7. 8. Speak to management (see B21-1) and, if different, those charged with governance B21-1 Done
(see B21-2), to understand the entity and environment in which the client operates.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
11.12. In carrying out 4 and 5 above and other observation and inspection, complete /
update:
the summary of information on the entity and environment (see PF1). PF-1 Done
the overall and fraud risk analyses (see PF3). PF-3 Done
13.14. Determine materiality and performance materiality (see B41). B41 Done
15.16. Complete the preliminary assessment of going concern (see B31). B-31 Done
2. Review the level of involvement in non-audit work and update as necessary (see PF-4 Non-audit work :
PF4). Administrative work in
preparation of financial
statemetns
3. For each individual area, assess the risk of material misstatement (including an B33 Done
assessment of the systems and controls) and record the audit approach. Use B33 /
PF5 as a guide if required.
4. Based on the individual section audit plans, develop detailed work programmes. B33 Since standard programs do
Either produce a bespoke programme or tailor the standard programme. not address specific
requirements of this audit
we produced bespoke
programs
ADMINISTRATION
1. Allocate staff required according to their knowledge and experience and the B23 Done
complexity of the assignment.
2. Decide level of supervision required based upon knowledge and experience of audit B23 Done
team and the complexity of the assignment.
4. Plan dates for manager and Responsible Individual review. B61 Done
5. Review time summaries and variances from previous year. Consider whether there Done
was any wasted/inefficient time last year.
TEAM MEETING
1. Hold a meeting of the engagement partner and other key members of the audit B23 Done
team to discuss the key risks of the audit and to clarify everyone’s role in the
assignment (see B23).
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Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
2. Following the meeting, make any necessary amendments to risk assessments (B31 B23 Done
and B32), overall plan (B33 / PF5) and tailored audit programmes.
CLIENT SERVICE
1. Review the current range of services we offer. Consider whether we can make any N/A None.
useful recommendations to the client.
CLIENT COMMUNICATION
1. Explain to the client any changes in the nature and scope of the assignment B21 No changes
(including any limitations) or, where there are to be no significant changes, this fact
and confirm the schedules / information to be prepared by the client (see B21).
I have reviewed the planning section, supporting schedules and planned work programmes and approve the work as planned.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Objective: To identify Ethical Standards threats and to ensure the firm can accept appointment / reappointment.
The items marked with an asterisk indicate that there is a potential benefit arising from Provisions Available for Small Entities (PASE)
– see B13-2 for more guidance.
Where any of the answers below are yes, provide details on B13. Yes / No
1. Are there any matters outstanding from completion of a New Client Checklist? (Ensure there is a copy of the No
checklist on the permanent file).
2. Has the audit engagement partner acted for more than 10 years (listed company: 5 years)? No
3. Are there any other audit staff in senior positions who have a long association with the audit (listed company: No
7 years)?
NON-AUDIT SERVICES
4. Does the firm provide any non-audit services to the client?* (This includes bookkeeping and payroll services Yes
as well as preparation of statutory accounts, tax computations etc.) If so, complete PF4.
5. Where the answer to 4 above is “yes”, does the client lack informed management?* N/A
6. Where the answer to 4 above is “yes”, is it probable that a reasonable and informed third party would regard N/A
the objectives of the non-audit service as being inconsistent with the audit objectives?
7. Are the fees for non-audit services substantial and greater than the annual audit fees? N/A
8. Does the firm provide a service that has involved acting as an advocate for the client (either restructuring No
services or a tax service standing before an appeals tribunal or court)?*
FINANCIAL RELATIONSHIPS
9. Does the firm or any individual† in the firm have, either beneficially or as trustee: No
10. Has the firm or any individual† in the firm made or received a loan or guarantee of borrowings to or from the No
client?
BUSINESS RELATIONSHIPS
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
11. Does the firm or any individual† in the firm have a material business relationship with the client or its No
management?
12. Is the client able to influence the firm, for example, does the client or its shareholders and directors own a No
significant part of the firm?
EMPLOYMENT RELATIONSHIPS
13. Does the firm employ anyone who is also employed by the client, including in a partner or director capacity? No
14. Are there, or have there been, any loan staff arrangements in place with the client in the current or previous No
year?
16. Have any partners or auditors left the firm, or informed the firm of their intention to leave the firm, to work No
for the client in the last two years?*
17. Are we aware of any immediate or close family of the firm’s partners or staff who are employed by the client No
in an accounting, management or director role?
18. Have any of the client’s senior staff joined the firm in the last two years? No
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Where any of the answers below are yes, provide details on B13. Yes / No
19. Have we been informed of any other family or close personal relationships between partners and / or No
professional staff and the client?
20. Have we appointed any external consultants to assist with the audit? No
21. Is there a risk that insufficient staff time and skill has been allocated to the audit, irrespective of the fee? No
22. Is the audit or any other professional work being undertaken on a contingent fee basis? No
24. Do total fees for the client / group of clients regularly exceed 15% (listed: 10%) of: No
where profits are not shared on a firm-wide basis, of the part of the firm by reference to which the audit
engagement partner’s profit share is calculated.
25. Do total fees for the client / group of clients regularly exceed 10% (listed: 5%) of No
where profits are not shared on a firm-wide basis, of the part of the firm by reference to which the audit
engagement partner’s profit share is calculated.
If so, for non-listed clients an external independent quality control review is required before the audit report
is finalised.*
26. Is there an audit partner in the audit team who is employed exclusively or principally on this audit? No
27. Is there an audit partner in the audit team who is remunerated on the basis of the performance of part of the No
firm which is substantially dependent on fees from this client?
28. Is the firm involved, or likely to become involved, in any legal action with the client? No
29. Has any individual in the firm or their immediate family received goods, services or hospitality from the client No
that are anything other than insignificant in value?
OTHER CONSIDERATIONS
30. Are there any other factors that could (or could be seen to) affect the firm’s objectivity and independence? No
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
31. Are there any concerns regarding the integrity of this client? No
32. Are there any other reasons why we should not accept appointment ‡/reappointment‡? No
Conclusion
ALL answers above are ‘no’. Therefore the firm is able to accept appointment .
One or more answers above are ‘yes’. Therefore B13 records my conclusion.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Objective: To document and explain the firm’s compliance with the APB Ethical Standards.
Issue(s) arising from B12, PF4 or other procedure that identified a threat or potential threat:
None
Guidance on potential threats can be found in the firm’s procedures manual and in the ethical standards themselves.
Self interest
Management
Advocacy
Intimidation
Notes of discussions with the ethics partner (where required or considered necessary):
Explanation and reasoning of i) the significance of the threats; and ii) the safeguards implemented.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Non-audit work : Only admin work done to ensure presentation is as per IFRS. No
Other: management decisions are made.
Does the entity qualify for Yes / No If yes, do we want to rely on Yes / No If yes, see B13/2
PASE (see section A, part 4 PASE?
of the procedures manual)?
Conclusion
Based on the above, the threats to objectivity and independence (tick as appropriate):
can be addressed by appropriate safeguards and the firm may accept* / continue with* the audit
cannot be overcome and the firm must resign from* / not accept* the audit
The client has been informed of any significant issues involved and how the firm has resolved these, in
* Delete as appropriate.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
The discussions can be as a result of one or more formal meetings, telephone conversations or correspondence by letter or e-mail.
Where notes of more than one discussion are recorded on one schedule, ensure it is clear when each discussion took place.
Where new senior management or Change in management during the reporting period. PF-1
shareholders, consideration of customer due
diligence update.
Central laws and regulations and instances of All laws and regulations complied with RERA regulations and
non-compliance. checks on them are carried out
How business risk is affected by the client’s No business risk – notional trust accounts
plans.
Impact of changes in the accounting systems. Ensure accurate transfer of records. Excel to Condo Manager
How client assesses, identifies and responds to Sound internal control procedures are in place. No fraud PF-3
fraud risk. reported.
Ethical Standards
Significant threats for which you are satisfied No significant threats. Audit files are reviewed by an
there are adequate safeguards independent second partner or a senior member of staff.
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Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Nature of assignment
NB. Communication with those charged with governance, where different from management, should be recorded on B21-2.
Conclusion: All matters have been appropriately considered with management and PF1, PF2 and PF3 have been updated as
necessary.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Objective: To conduct preliminary analytical procedures to obtain an understanding of the entity and its environment and to
assist in planning other audit procedures.
Cross refer this schedule to the working papers that record your preliminary analytical review and summarise the key findings below.
Specifically highlight any results that suggest a risk of material misstatement due to fraud.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Conclusion: All matters from the above review have been reflected in the risk assessments on B31 and B32 and in the audit
plan at B33 / PF5.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Objective: To ensure the Responsible Individual and other key members of the team 1 understand the potential for material
misstatements in the financial statements and how the results of their work may affect other aspects of the audit.
In attendance:
Areas assigned Experience / knowledge of the client
Names
Expenses, Payables, Accruals, Cash and All individuals have considerable audit and
Bank, Revenue, Receivables, Planning and industry experience.
Shariq file completion.
Adil
Final review
MPK / Sheen
Responsibilities of each
member All staff members were given adequate awareness of these matters. No formal meetings held
or minutes of the meeting recorded. Planning of each section was done after a detailed
Nature of the entity’s discussion with the relevant staff member.
business
Susceptibility to material
misstatements, including due Ref : B/32 and PF3
to fraud
Application of applicable
financial reporting framework
Susceptibility to misstatement
due to fraud or error resulting
from related party
relationships and transactions
Level of professional
scepticism throughout the
audit
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Not in attendance:
Areas assigned Extent of separate briefing
Names
Conclusion: All relevant members of the audit team have been properly briefed on the potential risks of material
misstatements within the financial statements and the consequences of these risks.
1
– The requirement (ISA+ 315; para 10) is for the RI and other key team members to hold a discussion and then for the RI to determine
which matters are to be communicated to other team members.
NB. Where notes of more than one discussion are recorded on the same schedule, ensure it is clear when each discussion took place,
who was present and what was discussed.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Objective: To form an initial assessment of the appropriateness of the going concern basis.
Discuss with management whether they have performed a preliminary assessment of going concern.
Consider whether there are events or conditions that individually or collectively may cast significant doubt on the entity’s ability
to continue as a going concern.
Factors include:
Financial
Net liability or net current liabilities disclosed by draft accounts, trial balance or other initial information.
Actual or likelihood of default on terms of loan agreements and potential breaches of covenant.
Facilities due for renewal in the next year and no alternative arrangements planned if current facilities are not extended.
Major debt repayment falling due where refinancing is necessary to the entity’s continued existence.
Finance secured on assets that have decreased in value below the amount of the facility.
Operating
Fundamental changes in the market or technology to which the entity is unable to adapt adequately.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Suppliers unable to provide essential goods / services and unable to find alternative supplier.
Other
Major litigation.
Any other matters which might indicate concern regarding the appropriateness of the going concern basis.
Comments:
Going concern is not an issue for the Owners’ Association as it is a notional company and all service charges will be paid up at some
given point as either when selling the apartment clearance letter will not be issued till fee is paid or if a legal case is issued the value of
the apartment is much higher than the service charge. Also there have been no specific laws and regulations breached to a have a
going concern.
Conclusion: Based on the above factors and discussions with management the preliminary assessment is [no / some /
significant concern]* regarding the appropriateness of the going concern basis. The going concern work
programme (A42) has been tailored accordingly.
* Delete as appropriate.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Objective: To assess the risk of material misstatement in the financial statements and to record the resulting planned approach.
Consider the information obtained from the following. On the basis of the findings, what are the key areas of risk (consider likelihood
and size of misstatement) and what is the effect on the audit approach? Identify any significant risks 1. (NB. Where any of the sections
below did not highlight any risks or where the effect on approach is covered by another line of this form, nothing further need be
noted.)
Entity and environment (PF1-1&2) Business Risk - Liquidation of Developer. Review the financial liabilities or assets of
the association related to the Developer.
Analysis of factors affecting overall risk Client operates a industry specific Review for unusual transactions
of material misstatement (PF3-1) accounting system and an automated
system for invoicing and receipts
Areas identified from the preliminary Expenses – see b22. Contracted and non All expense to have detailed substantive
analytical review (B22) contracted expenses are high risk by testing. Non contracted expense to be
nature tested 100%
Matters discussed among the audit Liquidation of Developer, treatment of Review all legal documents relating the
team (B23) balances due to and from the Developer. liquidation.
Revenue recognition (NB. Where Unrecorded revenue– low risk Recalculation of revenue and comparison
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Conclusions: Based on the above, the assessment of risk of material misstatement at the financial statement level:
The response to these identified risks is set out in the individual area audit plans at B33/PF5.
* Delete as appropriate.
3
– Materiality on the financial
statements as a whole relates to the
level at which misstatements
(including omissions) individually or
in aggregate would affect the
decisions of users of the financial Tailored by : SQ
statements. Materiality is not
affected directly by audit risk but
some of the factors in determining
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
MATERIALITY B41
2011 2012
AED AED
658,465 (225,192)
Profit / (Loss) before tax
N/A N/A
Adjustments for unusual transactions or items
658,465 (225,192)
Adjusted profit before tax
4,583,377 5,348,752
Turnover
MATERIALITY
45,834 53,488
Turnover 1%
45,834 53,488
COMMENTS
Planning materiality is based on 1% of turnover. Stakeholders are more concerned about the results of the annual operations rather
than the statement of financial position. In non-profit oragnisation turnover is used to calculate materiality.
* For guidance on the superscript references, refer to the notes for completion in front of this form.
Tailored by : SQ
Client Name : Fortune Executive Tower OA Accounting Period : 31 December 2012
Conclusions
The planned levels of materiality are appropriate for this audit. The final level of materiality is appropriate for this audit.
Tailored by : SQ