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AUDITING FOR

NON-ACCOUNTANTS
INTRODUCTION

YOUR NAME
YOUR COOPERATIVE
YOUR POSITION
YOUR EXPECTATION
I.
Review of Auditing
II. Fundamentals

Auditing and Governance


III.
Preparation of Audit plan or program
IV.
Audit procedures V. Samples of highly effective
and techniques audit procedures
VI.
Preparation of audit report and recommendations
INTRODUCTION
WHAT IS AUDIT?

Inspection of the organizations accounts


To check & verify the accounts
To check the authenticity of financial
statement
To state TRUE & FAIR VIEW
Auditing defined

It is a critical and systematic examination or


review of accounting reports, documents, records,
procedures and controls, for the purpose of
determining whether they conform with prescribed
criteria, or to enable the expression of an opinion
on the propriety of financial statements.
HISTORY
HOW AUDIT CAME INTO EXISTENCE?

Derived from Latin word AUDIRE


Audire means TO HEAR
1ST started in England in 1314
by W. EXCHEQUER
AUDIT IN ACCOUNTING

To ascertain the validity and reliability of


information
Audit is a vital part of accounting
An audit is an independent assessment
Performed by Auditor
To express an opinion on
person/organization/system
PURPOSE
OBJECTIVES
PRIMARY OBJECTIVES
To judge the reliability of the financial
statements
To give opinion whether the accounts
disclose a true and fair view of the state of
company's affairs
Adequate and Appropriate
recording of books of accounts
SECONDARY OBJECTIVES

DETECTION & PREVENTION OF ERRORS


A. Clerical errors:
i. Errors of Commission
ii. Errors of Omissions
iii. Compensating Errors
B. Errors of Principles:

DETECTION & PREVENTION OF FRAUDS


SCOPE OF AUDIT
ADVANTAGES OF AUDIT

To Business

To Public

To Govt
ADVANTAGES TO BUSINESS
1. Independent Opinion
2. Verification of Books
3. Satisfaction of Owner
4. Detection and Prevention of Errors
5. Detection and Prevention of Frauds
6. Moral Check
7. Protection of the Rights and Interests of Shareholders
8. Reliance by Outsiders
9. Loan Facility
10. Easy Valuation
11. Up to Date Record
12. Reliance by Partners / Shareholders
ADVANTAGES TO PUBLIC

1. Safety from Exploitation


2. Facility for Prospective Investor
3. Satisfaction about Business Operations
ADVANTAGES TO GOVERNMENT

1. Easy Assessment of Tax

2. Quick Recovery of Taxes

3. Leading to Economic Progress


LIMITATIONS OF AUDITING

Exercise of judgment
Material misstatements
Failing of internal control system
TYPES OF AUDIT

Legal bases

Time of execution

Specific Objectives
LEGAL BASES
Statutory Audit (BIR, SEC, BSP, IC, etc)
TIME OF EXECUTION

Annual Audit
A. Advantages
B. Disadvantages
Interim Audit
A. Advantages
B. Disadvantages
SPECIFIC OBJECTIVE
Internal Audit
Management Audit
Cost Audit
Social Audit
Due Diligence Audit
Environment Audit
Financial Audit
Proprietary Audit
System Audit
AUDITOR

Meaning
Definition
Work
TYPES OF AUDITOR

A. External auditor / statutory auditor


B. Internal auditors
C. Consultant auditors
D. Quality auditors
AUDIT IN COMPUTERIZED ENVIRONMENT

Auditing around the Computer


Auditing with the Computer
Auditing through the Computer
Computer use in Internal Auditing
General Types of Audit

Financial Statements Audit


an independent / external audit
involves the basic financial statements
designed to obtain reasonable assurance
expresses an opinion on the FS as a whole
General Types of Audit

Operational Audit
also known as Management or Performance
audits.
design to determine the effectiveness and efficiency
of management operations.
expected output are the recommendations for
improvements
General Types of Audit

Compliance Audit
performed to determine whether specific
procedures or rules are being followed.
the auditee generally determines the standard to be
followed.
the output is directed to a specific user rather than
a broad spectrum of users
General Types of Audit

Fraud Audits
- the investigation of anomalies
- gathering of evidence of fraud
- the legal goal is conviction
General Types of Audit

Information Technology Audits


- assessing the proper implementation, operation and
control of computer resources
- establishes congruence on the major
management assertions
Types of Auditors

Certified Public Accounting Firms


Internal Auditors
Specialized Auditors CIA, CFA,CISA
Government Auditors
- Commission On Audit
- Bureau of Internal Revenue
Benefits of Independent Audit

adds credibility and reliability to the FS


- basis for tax returns
- basis for financial assistance
- basis for additional investments
improves business operations
commission of fraud is minimized
General Principles Governing an
Audit of Financial Statements

An auditor should comply with the Code of Ethics


for Professional Accountants issued by IFAC.
An auditor should conduct an audit in accordance
with Philippine Standards on Auditing.
Audit Process
AUDIT
PROCESS

Planning

Fieldwork

Audit Report

Audit Follow Up
AUDIT
PROCESS
AUDIT
PROCESS

Planning Fieldwork Audit Report Audit Follow-Up

Engagement Transaction Discussion Draft Follow-up


Letter Testing Review
Initial Meeting Advice & Informal Exit Conference Follow-up
Communications Report
Preliminary
Audit Formal Draft Audit Annual
Survey
Summary Report to the
Internal Control Board
Working Final Report
Review Papers
Audit Program Client Response

Client Comments
Audit Planning

Audit Planning means developing a general


strategy and a detailed approach for the
expected nature, timing and extent of the
audit. The auditor plans to perform the
audit in an efficient and timely manner.
PURPOSES
Adequate planning of the audit work accomplishes
among others the following:

i. It ensures that appropriate attention is devoted


to important areas of the audit
ii. It enables the auditor to identify potential
problems
iii. It enhances completion of audit expeditiously
iv. It assists in proper assignment of work to
assistants and in coordination of work done by
other auditors and experts
Audit planning considerations
Knowledge of the business
Understanding of the Accounting and Internal
Control System
Assessment of Risk and Materiality
Nature, Timing and Extent of Audit Procedures
Coordination, Direction, Supervision and
Review
Other matters such as assessment of the going
concern assumption, related parties and the
Analytical procedures in the
audit planning stage

Consist of evaluations of financial information


made by a study of plausible relationships
among both financial and non financial data.
The purpose of applying analytical procedures
in planning the audit is to assist in
understanding the business and identifying
areas of potential risk.
Audit plan inclusions

1. Description of the structure and nature of the cooperative


2. Audit objectives
3. Description of the nature and extent of other services
4. Timetable of the audit work
5. Work to be done by management
6. Assignment of audit members
7. Target completion dates of the major segments of the
engagement
8. Preliminary evaluation and judgment about materiality levels
9. Any special problems to be resolved in the engagement
particularly those revealed by analytical procedures
10. Conditions that may require changes in audit tests
Other critical matters
in audit planning

Assessment of the Going Concern Assumption


The auditors are required to evaluate whether
substantial doubt exists about an entitys ability
to continue as a going concern based on
procedures planned and performed to obtain
evidence about the managements assertions
embodied in the financial statements.
Examples of conditions that may cast
significant doubts about the going concern
assumption

Net liability or net current liability position


Fixed term borrowings approaching maturity without
realistic prospects of renewal or repayment or
excessive reliance on short term borrowings to
finance long term assets
Indications of withdrawal of financial support by
debtors and other creditors
Negative operating cash flows indicated by historical
or prospective financial statements
Adverse key financial ratios
Substantial operating losses
Arrears or discontinuance of dividends
Inability to pay creditors on due dates
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Planning of Audit

Appointment of audit team: The appointed team


(by Audit Executive) should do the following:
Conduct team first meeting
Document preparations for audit
Set engagement objectives (audit objective)
Determine the scope of audit.

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Conduct in office review
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Review documents (criteria) related to the client
(laws, regulations, guidelines etc.)

Advantages of in-office review


Gain good understanding of the client
Help to establish audit risk and materiality of issues (relevant
criteria).
Help to identify criteria and establish compliance requirements
Clarify audit objectives (operating objectives).
Enable the team to prepare relevant questions to the client
during entrance meeting.
Help the team to understand well the criteria (what is to be done;
by whom and when).
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Entrance Conference
50 Should be conducted prior to preliminary survey
Head of Internal audit should meet with key
personnel of the client
Points to be discussed in entrance meeting
Scope and objective of audit
Emphasize that the purpose of audit is to add value to
the organization.
Determine who will be the contract person from the
client (it should not be the director or person of too
high level).
Brief overview of the process from preliminary survey to
reporting.
Tentative audit event timeline estimated dates of
fieldwork, interim meeting, exit meeting, audit report
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(draft and final) and follow-up audits.
How audit findings will be handled (resolution of minor
findings; agreement on the action plan to implement the
51 audit recommendations etc.)
Collective review of draft report.

Method of distribution of final audit report.


Identification of areas of special concern by client
Working hours, access to records, available work area,
clients work deadline requirements (i.e. Auditor should
fit into the clients office routine with minimal
disruption to client).
Arrange for tour of the facility for familiarization.
Arrangement for auditors to meet other personnel who
will be working with during audit.
Note: Effective Communication at the beginning of
audit engagement will significantly influence the
atmosphere in which the entire audit is conducted.
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Conduct Preliminary survey
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This refers to the process for gathering information without
detailed verification on the activity being examined
(audited)

Why Preliminary Survey


To understand well the activity under review.
Identify significant areas that worth special emphasis.
Obtain relevant information for use in actual audit.
Determine whether further audit is necessary (nature,
timing and extent of detailed audit work).

Note: i) No fieldwork should be started unless preliminary


survey has been conducted.
Survey work may be more extensive for activities that are
audited for the first time than for areas that were audited
previously. 7/1/2017
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Phases of Preliminary Survey
i. Familiarization

Obtaining significant back ground information and


practical working knowledge of applicable laws,
regulations policies, and procedures, management
and financial controls, organizations statues and
staffing; and unusual challenges faced.
Documents to be reviewed includes; previous audit
reports/programs, working papers, laws, regulations,
operating manuals, organization charts, financial
statements, flow charts, budget, operating reports
etc.
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Identification of potential
areas for improvement

Identifying areas for audit emphasis (risk area).


These include:-
Areas identified/documented in risk. Register.
Area of high possibility of fraud or mis management
Where there is large volumes of transactions.
Where management has expressed concerns.
Where prior audit disclosed major
weakness/deficiencies

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Confirmation: Getting evidences from third
parties where necessary.

Planning the detailed audit


Preparation of audit program in areas that
worth for further audit
Audit program should be recorded
It basically show, what is to be done; by
when; by who; for how long and how will it
be done.
This is a link between preliminary survey
and field work. 7/1/2017
Audit Program
Benefits/Advantages of Audit Program
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Set a systematic approach to audit. Gives specific
steps to be taken by auditor.
Provide precise instruction to obtain precise audit
information.
Provide for more focused audit hence serve time
for audit engagement.
As a bases of or duty/assignment to audit
assistants.
Help the supervisor to monitor the audit
Provide summary of work to be done.
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Evidence Gathering
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Is the systematic process of gathering evidence
about entitys operations, evaluating it and found
out whether those operations meet the acceptable
standards.
Here auditor perform the procedures as in the
audit program by doing the following:-
Concentration on transaction testing and informal
communication.
Determine and evaluate whether internal controls are
operating properly and in manner described by
management.

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Evidence
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Defn: Refers to all matters that supports a
point/position assumed by auditor
Qualities of an evidence
Evidence must be:-
Suffient ie. Adequate and convincing.
Competent ie. Reliable and best attainable.
Relevant ie. Supporting the observations and
recommendations; consistent with objectives.
Useful ie. Help the organization to meets its objective.

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Evidence.
Types of evidence

Physical - direct inspection/observation


documented as memoranda, charts, maps, photographs
etc.
Documentary - created information eg. Accounting
records, invoices, letters contracts etc.
Testimonial - responses to inquires interview
(needs to be confirmed).
Analytical - analysis or verification of information
computations, comparisons of operations; standards,
law/regulations, and evaluation of physical or
documentary information. 7/1/2017
AUDIT TECHNIQUES (PSA 500)
- practical methods we do in the course of
audit.
a. Inspection
b. Observation
c. Inquiry
d. External Confirmation
e. Scrutiny and review
f. Recalculation
g. Reperformance
h. Analytical procedures
Inspection

Inspection performed as test of controls

Inspection of documents (Existence)

Inspection of tangible assets (Existence)


Audit procedures

Inspection
- examining records, documents or tangible assets.
Inspection of records and documents provides audit
evidence of varying degrees of reliability depending on
their nature and sources and the effectiveness of internal
control over their processing.
Documentary evidence may be :
Created by entity and held by third parties
Created by third parties and held by the entity
Created by and held by the entity
Tracing

- involves establishing completeness of


transaction processing by following a
transaction forward through the accounting
records.
Example : compares information from receiving
reports to purchases journal
Vouching

- involves following a transaction back to


supporting documents from a subsequent
processing step.
Example : to verify occurrence of purchase
transaction, the auditor starts with the
purchases journal to supporting evidence such
as paid checks and receiving reports.
Observation

Consists of examining a process or procedure


being done by others.
for example
- observation of inventory counting and
(PSA 501)
- observation of the performance of control
activities.
Inquiry

This consists of seeking information of


knowledgeable persons, both financial and
non-financial, throughout the entity or
outside the entity.
External Confirmation

This is a specific type of inquiry, and is the


process of obtaining a representation of
information or of an existing condition
directly from a third party.
Confirmation

- Response to inquiries may provide the auditor with


information not previously possessed or with
corroborative audit evidence.
- Confirmation consists of the response to an inquiry to
corroborate information contained in the accounting
records.
- There are two types of confirmation requests: the
positive form and the negative form. Some positive forms
request the respondent to indicate whether he or she
agrees with the information stated on the request.
Information frequently confirmed
and its Source

a. Cash in bank- bank


b. Accounts receivable customer
c. Notes receivable maker
d. Inventory out on consignment consignee
e. Cash surrender value of life insurance policy
insurance company
Information frequently confirmed
and its Source

f. Accounts payable creditor/supplier


g. Bonds payable issuer
h. Shares Outstanding registrar and transfer
agent
i. Contingent liability companys legal counsel
j. Bond indenture agreement issuer/trustee
Two Types of External Confirmations

Positive the respondent is asked to reply to


the auditor in all cases
Negative the respondent is to asked to reply
only in the event of disagreement with the
information provided
(Date)
(Customers name and address)

Dear :

In connection with an audit of the financial statements of (insert


name of client) as of December 31, 2015 and for the year then
ended, please examine the enclosed statement carefully.

If it does not agree with your records, please report any


differences directly to our auditors:

(insert name and address of auditors)

DO NOT SEND ANY PAYMENTS TO OUR AUDITORS. Thank


you for your anticipated timely cooperation with this request.
Respectfully,
(Name of client)

(Clients authorized signature and title)


Scrutiny and review

Scrutiny tests can be performed in relation to


review of documents and certain other
accounting records like ledger accounts and
cash books.
Recalculation

Consists of checking the mathematical


accuracy of documents or records and can be
performed through the use of information
technology
Re-performance

This is the auditors independent execution


of procedures or controls that were originally
performed as part of the entitys internal
control
Reconciliation

- involves establishing agreements between two


sets of independently maintained but related
records.
- for example, reconciliation between subsidiary
ledger and general ledger
- bank reconciliation
- inventory reconciliation
Analytical Procedures

Consist of evaluations of financial information


made by a study of plausible relationships
among both financial and non-financial data
Commonly Used Audit Procedures
and Examples of their Applications

a. Analyze account transactions


b. Compare beginning balances with last
years audit figures
c. Confirm Accounts receivable, cash in bank,
AP
d. Count inventory, cash
e. Examine authoritative documents such as
invoices, checks
f. Extend multiply inventory quantity
g. Foot total cash received column
h. Inspect certificate of stocks
i. Interrelate interest expense with liabilities
j. Observe inventory count
k. Reconcile cash balance per ledger and per
bank
l. Test cash transactions
m. Trace bookkeeping procedures
n. Verify rent income against lease contract
o. Vouch cash disbursement
PSA 520
Analytical Procedures
Analytical Procedures

Analytical procedures means evaluations of


financial information through analysis of
plausible relationships among both financial and
non-financial data.

Analytical procedures also encompass such


investigation as is necessary of identified
fluctuations or relationships that are inconsistent
with other relevant information or that differ from
expected values by a significant
91 amount
Objectives of the auditor:

To obtain relevant and reliable audit evidence


when using substantive analytical procedures;
and
To design and perform analytical procedures
near the end of the audit that assist the auditor
when forming an overall conclusion as to
whether the financial statements are consistent
with the auditors understanding of the entity
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PSA 520 Analytical Procedures

The auditor should apply analytical procedures as


risk assessment procedures to identify aspects of
the entity of which the auditor was unaware and
may assist the auditor in assessing the risk of
material misstatement in order to provide a basis
for designing and implementing responses to the
assessed risk.

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During Planning

Perform an analysis of the INTERIM financial


statements obtained for planning purposes
by computing the following financial ratios:
Gross profit percentage
Cost of sales to inventory
Number of days sales in receivables
Number of days purchases in accounts payable
Current ratio
Acid test
94
During Planning

Consider also non-financial information that may indicate


discrepancies with related financial data.
Compare results of the computations with corresponding
figures from the prior periods. Relate such computed
ratios with our understanding of the Companys
business.
Incorporate in the proposed work programs to be used
during audit fieldwork the audit procedures to investigate
accounts or transactions that are expected to cause or
have caused any variations in the ratios.

95
Substantive Analytical Procedures

The auditor shall determine the suitability of


particular substantive analytical procedures for
given assertion, taking account of the assessed
risks of material misstatement

Evaluate the reliability of data from which the


auditors expectation of recorded amounts or
ratios is developed taking account of source,
nature and relevance of information available

96
Substantive Analytical Procedures

Develop an expectation of recorded amounts or


ratios and evaluate whether the expectation is
sufficiently precise to identify a misstatement
that may cause the financial statements to be
materially misstated

Determine the amount of any difference of


recorded amounts from expected values that is
acceptable without further investigation.

97
Investigating Results of
Analytical Procedures

If analytical procedures performed identify


fluctuations or relationships that are inconsistent
with other relevance information or differ from
expected values by a significant amount, the
auditor shall investigate such differences by
Inquiring of management and obtaining
appropriate audit evidence relevant to
managements responses; and
Performing other audit procedures as necessary
in the circumstances
98
Analytical Procedures When
Forming an Overall Conclusion

The auditor shall perform analytical procedures


near the end of the audit that assist the auditor
when forming an overall conclusion as to
whether the financial statements are consistent
with the auditors understanding of the entity

99
Analytical Procedures When
Forming an Overall Conclusion

Investigate significant or unusual trends and


obtain adequate explanations and appropriate
corroborative evidence.
Consider whether any variances or trends
indicate potential fraud that requires further
investigation
Determine whether the financial statements as a
whole are consistent with our knowledge of the
companys business.
100
Analytical Procedures When
Forming an Overall Conclusion

The conclusion drawn from analytical


procedures performed near the end of the
audit are intended to corroborate conclusions
formed during the audit of individual
components or elements of the financial
statements
The conclusion assists the auditor in
determining the appropriate audit opinion

101
AUDIT ASSERTIONS
Categories of financial statement assertions

Assertions about classes of transactions and


events for the period under audit.

Assertions about account balances at the period


end.

Assertions about presentation and disclosure.


Assertions about classes of transactions and
events for the period under audit

Occurrence
Completeness
Accuracy
Cutoff
Classification
Assertions about account balances at the
period end

Existence
Rights and Obligations
Completeness
Valuation
Assertions about presentation and
disclosure

Occurrence and rights and obligations


Completeness
Classification and understandability
Accuracy and valuation
AUDIT WORKING PAPERS
INTRODUCTION

WHY PREPARE
AUDIT WORKING PAPERS?
Why Prepare Audit Working Papers?

The standard (i.e., PSA 230) requires that the


auditor should document matters which are
important in providing evidence to support the
audit opinion and evidence that the audit was
carried out in accordance with Philippine
Standards on Auditing.
Why Prepare Audit Working Papers?

Working papers may be in the form of


data stored on paper, film, electronic
media, or other media.
Purposes of Working Papers

Working papers prepared during the audit should:

1. Provide a record that we have


followed auditing standards (i.e.,
PSAs) in the audit of the financial
statements.
Purposes of Working Papers

Working papers prepared during the audit should:

2. Assisting members of the


engagement team responsible for
supervision to direct and supervise
the audit work.
Purposes of Working Papers

Working papers prepared during the audit should:

3. Retaining a record of matters of


continuing significance to future
audits.
Purposes of Working Papers

Working papers prepared during the audit should:

4. Enabling the conduct of quality control


reviews and inspection in accordance
with PSQC 1.
Purposes of Working Papers

Working papers prepared during the audit should:

5. Enabling the conduct of external


inspections in accordance with
applicable legal, regulatory or other
requirements.
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1
Purposes and Uses of
6

Working Papers

Serve as basic tools to assist the auditor in the


conduct of the audit.
Support the auditors opinion on the financial
statements.
Substantiate the competence of the auditors
examination.
Serve as guides in subsequent audits.
Aid in giving advice on tax and business matters
Provide a basis for evaluation of staff members
performance. 7/1/2017
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Permanent File Index

I. Information About the Clients Business


II. Internal Control System Documentation
III. Organization and Equity Capital
Articles of Incorporation
By-Laws
Minutes or Resolution of Continuing
Interest
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Permanent File Index
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1

(Cont.)
8

IV. Financing and Other Significant Agreements


and Contracts
Bank and Other Financing Agreement
Bond Indentures, Mortgages and Trust
Agreements
V. Other Information of Continuing Relevance
Certificates of Registration with Govt. or
Regulatory Bodies
Tax Information
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Current Index File


1
9

I. Auditors Report, Financial Statements and


General Matters
II. Planning and Administration
PA Initial Planning Audit Program
PA1 Initial Planning Memorandum
III. Compliance Test Documentation

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2
0
Current Index File (Cont.)

IV. Substantive Tests


WORKING TRIAL BALANCES AND ADJUSTMENTS
ST Substantive Test Program Summary
WBS Working Balance Sheet
WPL Working Profit and Loss
TB Trial Balance
AJE/RJE Summary of Adjusting/Reclassifying Journal
Entries
PJE Summary of Passed Journal Entries

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2
1

Current Index File (Cont.)

ASSETS (Single Capital Letters)


A Cash
B Trade Receivables
C Other Receivables
D Inventories
E Prepayments
F Investments
G Property, Plant and Equipment
H Deferred Charges
I Intangible Assets
J Other Assets
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2
2
Current Index File (Cont.)

LIABILITIES (Double Capital Letters)


AA Notes Payable and Bank Loans
BB Accounts Payable
CC Acceptances Payable and Related Accounts
DD Accrued Liabilities
EE Income Taxes
FF Other Current Liabilities
GG Long-Term Debt
HH Other Non-Current Liabilities
II Contingent Liabilities and Commitments
JJ Stockholders, Partners or Proprietors Equity
KK Retained Earnings 7/1/2017
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2
3
Current Index File (Cont.)

INCOME AND EXPENSES (Two-Digit Numbers)


10 Sales
20 Cost of Sales
30 Selling Expenses
40 Administrative Expenses
50 (60 or 70) Other Groupings of Expense Accounts
80 Other Income or Expenses

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Basic Contents

Every working paper should include the


following information:

Name of client
Basic Contents

Every working paper should include the


following information:
Name of client

Period under audit


Basic Contents
Every working paper should include the
following information:
Name of client
Period under audit

Work paper reference


number (index)
Basic Contents

Every working paper should include the


following information:
Name of client
Period under audit
Work paper reference number (index)

Initials of the preparer


Basic Contents
Every working paper should include the
following information:
Name of client
Period under audit
Work paper reference number (index)
Initials of the preparer

Date the work was


performed
Basic Contents

Every working paper should include the


following information:
Name of client
Period under audit
Work paper reference number (index)
Initials of the preparer
Date the work was performed
Basic Contents
Every working paper should include the
following information:

The objective of the


audit procedure
Basic Contents
Every working paper should include the
following information:
Objective of the audit procedure

Nature of the audit


procedure
Basic Contents

Every working paper should include the


following information:
Objective of the audit procedure
Nature of the audit procedure

Timing of the Audit


Procedure
Basic Contents
Every working paper should include the
following information:
Objective of the audit procedure
Nature of the audit procedure
Timing of the audit procedure

Extent of the Audit


Procedure
Basic Contents
Every working paper should include the
following information:
Objective of the audit procedure
Nature of the audit procedure
Timing of the audit procedure
Extent of the audit procedure
Findings of the audit
procedure
Basic Contents
Every working paper should include the
following information:
Objective of the audit procedure
Nature of the audit procedure
Timing of the audit procedure
Extent of the audit procedure
Findings of the audit procedure
Basic Contents

Every working paper should include the


following information:

The conclusions
reached
Basic Contents

Every working paper should include the


following information:
The conclusions reached

Evidence of review
Basic Contents
Every working paper should include the
following information:
The conclusions reached
Evidence of review

The meaning of any


symbols or tick marks
used.
Basic Contents
Every working paper should include the
following information:
The conclusions reached
Evidence of review
The meaning of any symbols or
tick marks used.
XYZ COOPERATIVE
Analysis of Provision for Doubtful Accounts
Audit: 12-31-14

PBC
2013 2014 _
Balance Beginning of Year P130,089 1 P151,691
Write-offs ( 71,087) 2 ( 62,439)
Provision 92,689 83,994_
Balance End of Year 1 P151,691 P173,246
========= =========
B B
DETAIL OF CURRENT WRITE-OFF
Date Customer Amount _
4-21-14 Lion King P 25,081
4-29-14 Jose Pedal 5,377
5-18-14 Atty. Ong 17,341
5-20-14 Sec. Bunye Original 10,093
Various amounts under P1,000 4,547_
2014 Write-Offs 2 P 62,439
==========

Examined write-off form approved by the controller noting agreement of date, customer and amount all
write-offs over P1,000.
Accumulated write-offs under P1,000 from detail maintained by the credit manager noting agreement.
Traced to Prior Year Audit Working Papers noting agreement.
Footed by XYZ & Co. and agrees.
XYZ COOPERATIVE
List of Outstanding Checks
Audit: 12-31-14

PBC
Amount _
P 991.90 NOTE 1> Reviewed the list of outstanding checks noting no unusual
15,000.00 or significant items except for A & B as discussed below.
2,001.03
12,576.13
A Per review of the vendor invoices and receiving reports, this
2,790.29 check is for lumber and supplies purchased for the additions to
1,745.75 the building site. See extracts from the board of directors
8,941.86 meeting minutes at XX for further discussion.
49,810.73
15,439.75 B B Per discussion with Gen. Garcia, Comptroller, these checks
4,989.51 P25,962.90 dated 12/30/04 were not released to the vendors until 1/2/05 as
5,533.64 ========= all authorized check signers were on vacation. Based on the
P122,410.43 dates these checks cleared the bank per our review on the
========== January 2005 bank statement, this explanation is reasonable.
Thus the following adjustment is proposed to properly state
cash and accounts payable at 12/31/04:
Examined cancelled checks returned by bank
together with the December 2005 bank statement, PAJE <1>
noted in order. Cash P25,962.90
Accounts Payable P25,962.90
Examined check register and noted that these were
not acknowledged received by the payee in
December 2004.
Footed by QCB & Co. and agrees.
SUBSTANTIVE PROCEDURES
CASH
Why is Cash Considered a Significant
Account Balance to be Audited?

Cash is the most liquid of assets


Offers the greatest temptation for theft,
embezzlement, and misappropriation.
The volume of transactions affecting Cash.
Assist in substantiating other items in the
financial statements.

144
Objectives in Auditing Cash Balances

To determine whether all cash on the statement


of financial position is held by the entity or by
others (e.g., a bank) for the entity. (Existence)
To determine whether all cash owned by the
entity at the reporting date is included on the
statement of financial position. (Completeness)
To determine whether cash is stated at its
realizable value. (Valuation)
Objectives in Auditing Cash Balances
(continued)
To determine whether the entity owns, or has a
legal right to, all the cash on the statement of
financial position at the reporting date. (Rights
and Obligations)
To determine whether all cash is free of
restrictions on use, liens, or other security
interests, or whether such restrictions, liens, or
other security interests, if any, are properly
disclosed. (Assertion about presentation and
disclosure. Occurrence and rights and
Obligations, Completeness and Accuracy and
Valuation )
Objectives in Auditing Cash Balances
(continued)

To determine whether cash is properly


classified, described, and disclosed in the
financial statements, including notes, in
conformity with acceptable reporting
framework. (Assertions about presentation
and disclosure. Classification)
Primary Substantive Procedures
Cash Balance

Confirm cash held by others (3.g. bank


balances and/or overdrafts); count or confirm
cash on hand if significant. (External
Confirmation)
Examine the clients bank reconciliations. To
verify the appropriateness of the reconciling
items obtain cutoff bank statements or
subsequent month bank statement. (Scrutiny
and review)
Substantive Procedures
Cash Balance (continued)

Test cutoff of cash receipts, cash


disbursements, and transfers at the reporting
date. (Scrutiny and review)
Additional Substantive Procedure

Review the cash accounts in the general


ledger for unusual items.
Review the cash disbursements and cash
receipts journals for unusual items;
investigate any such items observed.
Review bank confirmations, minutes, loan
agreements, and other documents for
evidence of restrictions on the use of cash, or
of liens on or security interests in cash.
Additional Substantive
Procedure(continued)

Examine agreements relating to any escrow


funds, compensating balances and sinking
funds, and determine compliance with the
agreements and whether necessary
disclosures have been made.

Confirm compensating balance agreements.


Analytical Review
Cash

Compare the list of cash accounts with those


of prior periods and investigate any
unexpected changes (e.g., credit balances,
unusually large balances, new accounts,
closed accounts) or the absence of expected
changes.

Review interest received and/or paid in


relation to the average cash balances and/or
Receivables
Principal Objectives in Auditing
Accounts Receivable

Accounts receivable on the reporting date are


real claims of the company. (Existence)

All real claims of the company for accounts


receivable are included on the statement of
financial position. (Completeness)
Principal Objectives in Auditing
Accounts Receivable (continued)

Accounts receivable are carried at amortized


cost. (Valuation)

The company owns, or has legal rights to all


accounts receivable on the Statement of
Financial Position at the reporting date. All
receivables are free of liens, pledges, or other
security interests or, if not, such liens,
pledges, or other security interests are
identified. (Rights and Obligations)
Principal Objectives in Auditing
Accounts Receivable (continued)

Accounts receivable are properly classified,


described, and disclosed in the financial
statements, including notes, in conformity
with acceptable financial reporting
framework. (Assertions about presentation
and disclosure)
Substantive Procedures Accounts
Receivables

Confirm accounts receivable. (Existence)


For accounts confirmed at an interim date.
Perform roll-forward analysis from the
confirmation date to the reporting date.
Investigate unusual items: consider
confirming (at the balance sheet date)
significant new accounts and those accounts
with significant increases or decreases
between the confirmation date and the
reporting date.
External confirmation procedures
The auditor shall maintain control over external
confirmation requests:
Determining the information to be confirmed or
requested.
Selecting the appropriate confirming party.
Designing the confirmation requests including
determining that requests are properly addressed
and contain return information for responses to
be sent directly to the auditor and
Sending the requests, including follow-up
requests when applicable, to the confirming
party.
Result of External Confirmation

Positive confirmation responses categorize as


follows:
Confirmed
With Exception/Unable to confirm
No reply (or NR for No Reply)

We rarely use negative confirmation.


Substantive Procedures Accounts
Receivables (continued)

For Confirmation with no replies we examine


(Existence)
Subsequent cash receipts.
Or if not yet collected subsequently we
inspect shipping records, sales contracts, and
other evidence to verify the validity of
accounts receivable.
Substantive Procedures Accounts
Receivables (continued)

Test the cutoff by inspecting the sales register,


billings, shipping documents, and other
supporting documents immediately before
and after the cutoff date, and determine that
the transactions were recorded in the proper
period; compare the receivables cutoff to
cutoffs in related areas (e.g., sales and
inventories). (Cutoff)
Evaluate the adequacy of the allowance for
doubtful accounts. (Valuation)
Additional Substantive Testing
Accounts Receivable
Review evidence or obtain information
concerning credit worthiness for large new
accounts.
Trace the totals of accounts receivable in the
customers ledgers to the general ledger control
accounts or accounts receivable summary;
investigate reconciling items.
Inquire about management, salespersons, or
others receiving products without billing or
payment.
Substantive Testing of Accounts
Receivable (continued)

For large or unusual sales contracts


uncompleted at year end, request confirmation
from customers as to pricing, discount, payment,
and warranty terms.
Examine details of accounts or notes receivable
from officers, directors, shareholders, and other
related parties; investigate unusual items as well
as significant reductions or increases at the
balance sheet date; determine that necessary
disclosures are made.
Analytical Review of Receivable

Compare the list of receivables with those of


prior periods and investigate any unexpected
changes (e.g., credit balances, unusually large
balances, new accounts, closed accounts) or
the absence of expected changes.
Auditing Inventories
Inventories Audit Objectives

The principal objectives in auditing inventories are


to determine whether:
All inventories included on the Statement of
Financial Position are held by the entity or by
others for the entity; (Existence)
All inventories owned by the entity at the
reporting date are included on the Statement of
Financial Position; (Completeness)
Inventories are carried at the lower of cost or net
realizable value. (Valuation)
Inventories Audit Objectives
(continued)

The entity owns, or has a legal right to, all the


inventories on the balance sheet. (Rights and
Obligation)

Inventories are properly classified, described, and


disclosed in the financial statements, including
notes, in conformity with acceptable reporting
framework. . (Assertions about presentation
and disclosure)
Substantive Procedures Accounts
Inventory Count Observation
Observed the Clients Conduct of its Physical
Inventory. (Existence)
Perform Test Counts during and after the
Conduct of Physical Inventory. (Completeness)
Test the Summarization of the Inventory at Year
end.
Test the Cost assigned to Inventory to Underlying
records and test the Inventories Net Realizable
Value (Valuation)
Inquire and Inspect Documents and determine
whether there are any liens attach to the
inventory.
Additional Procedures during
the Inventory Count

Ascertain that the count teams are following


the clients inventory count procedures
Observe whether supervisory personnel are
performing their prescribed functions.
Make test counts
Compare test counts to the clients perpetual
records, if appropriate
Procedures Performed During
the Inventory Count (continued)

Check receiving, production, and shipping


cutoff
Consider whether the clients procedures are
being followed for:
Identify potentially obsolete and slow-moving
goods
Identifying consigned inventory
Tracking the movement of goods during the count
Testing Cutoff

Receipts/shipment
In-transit
Cutoff between inventory
Bill and hold
Coordinate with other audit
Test Final Inventory Listing

Agree test counts (if deemed necessary)


Compare final listing to tags or sheets
Determine whether unused, voided, or no-
quantity accounted for
Test adjustments to final inventory
Reconcile to general ledger
Audit of Prepaid Expenses
Substantive Procedures
Prepayments

Inquiry and recalculation test the reasonableness and


accuracy of prepayments.
Review prior year working papers;
Inquire regarding significant changes;
Determine that accounting policies are appropriate;
Consider whether audit evidence examined supports our
understanding;
Substantive Procedures Prepayments
(continued)

Select sample of additions and trace to


supporting documentation;
Re-compute the amortization expense;
Ensure expectation of future benefits is
reasonable
Analytical Procedures
Prepayments

Develop expectations of the current year balance


based on the prior year balance, balances at
preceding dates in the current year and prior and
current year expenditure and amortization

Compare the expectation to the recorded amounts


and ensure within the pre-determined threshold.
If not within the threshold, obtain corroborating
evidence for the differences.
Auditing Property,
Plant and Equipment
(PPE)
Audit Objectives
PPE

All property, plant and equipment in the


Statement of Financial Position(including
assets leased under capital leases) are held by
the entity or by others for the entity.
(Existence)
All property, plant, and equipment owned or
leased under capital leases by the entity at the
reporting date are included on the balance
sheet. (Completeness)
Audit Objectives
PPE

Property, plant, and equipment are carried at


the appropriate amount, taking into account
the accumulated depreciation, depletion, or
amortization. (Valuation)
Audit Objectives
PPE

The entity owns, or has a legal right to, all the


property, plant, and equipment on the
statement of financial position at the
reporting date. All property, plant, and
equipment are free of liens, pledges, security
interest, and restrictions or, if not, such liens,
pledges, security interest, and restrictions are
identified. (Rights and Obligations)
Audit Objectives
PPE

Property, plant and equipment and related


accounts are properly classified, described,
and disclosed in the financial statements,
including notes, in conformity with
acceptable reporting framework.
Substantive Procedures
PP&E

Testing the summary of PP&E transactions for


the period under audit
Testing Additions.
Testing Disposals and related gains/losses.
Testing depreciation expense (book and tax)
Testing for items improperly charged to
expense (e.g. Repairs and maintenance).
Testing for possible impairments
Substantive Procedures
PP&E (Continued)

Obtain Lapsing schedule from Client.

Trace the beginning balance column of each PPE


item to last years audit working papers.

Obtain from the client a listing of asset additions by


account (e.g., land, buildings, building improvements,
etc.). The listing should, at a minimum, contain the
acquisition date, amount, and a description of the
item capitalized.
Substantive Procedures
PP&E (Continued)

Inspect documents for PP&E additions and


disposals and physically inspect significant
additions.

Trace the ending balance in the lapsing schedule


to trial balance and the general ledger.

Additionally, the entire working paper should be


tested for clerical accuracy by footing and cross-
footing the totals.
Substantive Procedures
PP&E (Continued)

Examines the vendors invoice and compare it to


the listing for purchase date, cost, asset
description, and client name.
Determine whether the asset life and salvage
value set by the company are reasonable.
Substantive Procedures
PP&E (Continued)

Inquire about corresponding retirements


when the additions represent replacements of
existing assets.
Additional Procedures to Test
PP&E Additions
Ascertain the business reasons for unusual
additions.
Examine capital expenditures authorizations and
other data supporting additions of PP&E during
the period.
Examine the lease agreements to determine
whether leases are appropriately classified as
capital or operating; determine whether the
proper accounting has been performed; and
determine whether appropriate disclosures are
Additional Audit Procedures to Test
PP&E Additions (continued)

Compare the actual costs of additions with


the authorized or estimated amounts;
investigate the reasons for any significant
differences.
Review minutes, agreements, and other
documents for evidence of liens, pledges, or
restrictions on PP&E or for evidence of plans
or commitments for future additions.
Audit Procedures to Test
PP&E Disposals

Obtain a schedule of all disposals by account


classification.
Examine evidence that key item disposals
were properly approved in accordance with
company policy.
Support the sales price of disposals by
reference to contracts, sales invoices,
remittance advices, correspondence, or cash
receipts records.
Audit Procedures to Test
PP&E Disposals (continued)

Support the cost and accumulated


depreciation amounts of disposals by
reference to the companys detailed property
records.
Support the gain or loss computation. If the
company uses different methods of
depreciation for tax and book purposes, the
computation should be tested under both
methods.
Audit Procedures to Test
PP&E Disposals (continued)

Determine whether the cost of assets acquired


through trade-ins of key items was recorded
correctly (net book value of asset traded in
plus additional consideration required).
Gather all information needed to prepare
schedules for the corporate income tax return.
Analytical Procedures
PP & E

Compare the cost and accumulated


depreciation of PP & E with those of prior
periods (e.g., additions, depreciation and
disposal) and investigate any unexpected
changes.
Auditing Accounts Payable
Objectives in Auditing
Accounts Payable

Accounts payable on the Statement of Financial


Position are real debts due to suppliers or other
creditors for good received or services performed.
(Existence)

Accounts payable owed at the reporting date are


included on the Statement of Financial Position.
(Completeness)
Objectives in Auditing
Accounts Payable (continued)

Accounts payable are stated at amortized cost.


(Valuation)
Accounts payable on the Statement of Financial
Position represent obligations of the company as
of that date. Accounts payable are not secured by
liens on assets, security interests, or other
collateral unless otherwise indicated. (Rights and
Obligations)
Objectives in Auditing
Accounts Payable (continued)

Accounts payable are properly classified,


described, and disclosed in the financial
statements, including notes in conformity
with acceptable financial reporting
framework. . (Assertions about presentation
and disclosure)
Substantive Procedures
Accounts Payable

Test cutoff by inspecting the voucher register,


receiving records, vendors invoices, and
other supporting documents immediately
before and after the cutoff date.
Perform a search for unrecorded liabilities.
Perform External Confirmation.
Procedures for Search of
Unrecorded Liabilities

Reviewing transactions (e.g., cash disbursements,


purchases) recorded after the reporting date for
any significant transactions that apply to the
period under audit.

Reviewing files of unprocessed invoices and


unmatched purchase orders for items that should
be included in the period under audit.
Procedures for Search of Unrecorded
Liabilities (continued)

Examining files of unmatched receiving reports for


items received on or before the physical inventory or
reporting date.

Asking accounting and purchasing personnel about


any significant unrecorded liabilities.

Reviewing cutoffs in related areas such as purchases


and inventories, with attention to goods in transit.
Factors Affecting Search for
Unrecorded Liabilities

Nature of the clients business

Our evaluation of the effectiveness of controls over


the recording of liabilities

Timeliness of the recording of liabilities


Factors Affecting Search for Unrecorded
Liabilities (continued)

Known delays by vendors in submitting invoices

Results of other audit procedures, such as


confirming selected accounts or inspecting
vendors statements
Analytical Review on Accounts
payable

Compare the list of accounts payable with those


of prior periods and investigate any unexpected
changes (e.g., debit balances, unusually large
balances, new suppliers accounts and suppliers
closed accounts) or the absence of expected
changes.
Auditing Stockholders
Equity
Audit Procedures for
Stockholders Equity

Examine Stock and Transfer Book and confirm with transfer


agent and registrar to determine the number of shares issued
and outstanding.

Test dividends by reference to board of director meeting


minutes for dividend rate and capital stock records for
number of shares.
Audit Procedures
Stockholders Equity(cont.)
Review the Articles of Incorporation.

Examined the General Information Sheet from the SEC.

Review minutes of meetings, debt agreements and other


sources for disclosure on dividends and other capital stock
transactions.
Analytical Review for Stockholders
Equity

Analyze changes in equity accounts for the period and


examined supporting documents for the significant changes
Auditing Revenue and
Expenses
Substantive Procedures
Revenue and Expense
Accounts

Obtain schedule and agree with the general ledger and


trial balance.

Vouch revenue/expenses to supporting documents. (e.g.


official receipts or sales invoice.)
Substantive Procedures
Revenue and Expense Accounts

Perform test of reasonableness of revenue and expense


account by.
- Develop an expectation based on the sample chosen
- Compare the balance per expectation againts balance
per books
- Investigate cause of unusual difference.
Additional Substantive
Procedures Revenue and
Expense

If the auditor is concerned with the accuracy of amounts


of particular revenue and expense accounts (e.g.,
salaries and wages, representation), he should

obtain (or prepare) an analysis of the account involved,


or at least of the material items therein; and
Additional Substantive Procedures
Revenue and Expense(cont.)

Examine a sufficient number of the items to be satisfied


that there are no material misstatements.

If the auditor is concerned with a particular type of


transaction (e.g., when fraud could arise due to weak
controls over certain types of payments) rather than a
specific account balance, he should
Additional Substantive Procedures
Revenue and Expense(cont.)

identify or isolate the areas in the income or


expense account that might be affected by the
weak controls; and
select and examine sufficient material transactions of
the type he is concerned with from the account which
might be misstated.
Analytical Review
Procedures

Analytical review procedures - - involve the study


and comparison of relationships among data to
identify fluctuations that are not expected, the
absence of fluctuations that are expected, or other
unusual items.
Sources of Expectations From
Analytical Review Procedures
Financial information from prior periods
Anticipated amounts such as budgets and forecasts

Relationships among elements within the financial


statements
Industry averages and standards

Non-financial information such as number of units


shipped or square feet of shelf space
Exit Meeting
215
This is the meeting between audit team and the
client at the end of fieldwork.

The objective of the meeting is to share and


discuss the key noted findings.
It is the important forum for audit team to get
confirmation on the obtained/noted findings;
responses from the management and the tentative
corrective actions/action plans.
The minutes of the meeting should be well
documented and signed by both parties and these
forms parties of the working papers.
7/1/2017
AUDIT REPORT
.
W/P Est. Act.
Audit Step : To communicate the results of the audit to management No. Hrs. Hrs.

A. Prepare a Draft Report:

1.Write report introduction, background & scope.


2.Consolidate conclusion summaries into a report, x-ref
3.Write memo for less significant items.
4.Submit report for review & clear review notes.
5.Set up the Exit Conference and distribute Draft Report
6.Conduct Exit Conference to brief on the audit results and request a date for completion of the
corrective action plan. (Note: If any material changes to the audit report are identified, establish
the date for revised report to be issued.)

B. Obtain Corrective Action Plan

1.Analyze the Corrective Action Plan for adequacy and document.


2.Advise agency management of any apparent inadequacies in the Corrective Action
Plan & resolve.

C. Prepare a Final Report:

1.Add the revised Corrective Action Plan to the Draft Report to prepare the Final Report.
2.Submit report for review & clear review notes.
3.Distribute the final report.

REPORTING: Date Completed April 4, 20xx __________Total Hours:


Discussion Draft

At the conclusion of fieldwork, the auditor drafts the report.


Audit's goal is to complete the audit and issue a draft audit
report within 30 days after the completion of fieldwork.
Audit management reviews the audit working papers and
the discussion draft before it is presented to the client for
comment. This discussion draft is submitted to the client for
review before the exit conference.
Exit Conference
Internal Audit meets with the unit's management team to
discuss the findings, recommendations, and text of the
discussion draft.

At this meeting, the client comments on the draft and the


group works to reach an agreement on the audit findings.
Exit Conference
Is an opportunity for the auditor, department management,
process owners, and other to review and validate audit
outcomes.
The Exit Conference should accomplish the following:
1) Present observations and determine if the current operating
context might affect past transactions.
2) Confirm facts, observations, and conclusions, e.g., that the
findings are accurate.
3) Validate the cause leading to findings and present
recommendations.
4) Estimate the effect of the findings on operations or its risk
management.
5) Solicit draft management comments on the audit findings
and determine if alternative recommendations adequately
eliminate the cause of findings.
6) Define the timeline for issuing the final audit report and
implementing recommendations.
Audit Finding
Audit Findings
Reconciliation Supervisory Review (Urgent)

During our sample review of account reconciliations, it was noted that


many account reconciliations were not being reviewed by the supervisor
in Item Processing and Deposit Operations.
Recommendation
We recommend management review all accounts at least monthly.
Action Plan
The Supervisor of the Item Processing Department was advised of this
requirement and has implemented changes as requested.
The Deposit Operations Manager will sign and review all account
reconciliations. A secondary signature by the balancing associate and/or
supervisor will also be implemented. This procedure is currently in place.
Exit Conference Checklist
Procedure

Set the date, time, and location of the exit meeting.


The agenda should include the following:
Accomplishment of the audit objectives (theirs and ours).
Discussion of potential audit findings and
recommendations.
Discussion of when managements response
will be due.
Audit reporting process.
Follow up process.
Document results of the exit meeting.
Exit Conference
This section of the report summarizes the pertinent
information regarding the Audit Exit Conference. It
includes:

The date the conference was held.

The persons in attendance and their


titles.

A statement that a summary of the Findings


and Recommendations was discussed.
Audit Exit Conference WP
Audit Location (Faculty Division)-----------------------------------------------------------------
Audit Date------------------------------------------------------------------------------------------------------
Lead Auditor--------------------------------------------------------------------------------------------------
Audit team Member--------------------------------------------------------------------------------------
The main purpose of this meeting is to immediately present audit
observations to the senior management in a timely manner at the
end of the audit and in such a manner so as to ensure that they
clearly understand the results of the audit.
List Observations:
The lead auditor should present observations, taking into
account their perceived significance and identifying key
non-conformance areas.
Key Non-conformances:
The lead auditor should present the audit teams
conclusions .
Proposed Audit Score:
Audi tee response to observations, non-conformances and \
audit score proposed by the auditor.
Formal Draft
The auditor then prepares a formal draft, taking
into account any revisions resulting from the exit
conference and other discussions.
This report is issued to the audited requesting a
written response to any audit findings
and recommendations.
When the changes have been
reviewed by audit management
and the client, the final report is issued.
AUDIT REPORT
Our principal product is the final report in which
we present the audit findings and discuss
recommendations for improvements.
Once the fieldwork is completed, Internal Audit will
draft a report to include the result of the audit
including recommendations for improvement.
After the draft report is completed, it will be
forwarded to department management for review
and discussion at a scheduled exit conference.
Applicable Standards

PSA 315 Identifying and Assessing the Risks of


Material Misstatement through Understanding
The Entity and its Environment
PSA 320 Materiality in Planning and Performing
an Audit
PSA 330 The Auditors Responses to Assessed
Risks
PSA 500 Audit Evidence
PSA 505 External Confirmation
Issuing the Audit Report

The audit opinion is helpful in setting out the


scope of the audit, the accountants opinion
about the procedures and records used for
creating statements, and the accountants
opinion about whether or not the financial
statements present an accurate reflection of the
organizations financial condition.
Types of Audit Opinion
Unqualified opinion the unqualified opinion has no
reservations concerning the financial statements.

This is also known as a clean opinion meaning that the financial


statements appear to be presented fairly.
Qualified opinion this means that the auditor has taken
exception to certain current-period accounting applications or is
unable to establish the potential outcome of a material
uncertainty.
Disclaimer opinion this is a special type of audit report that
should be issued when the auditor permits his or her name to
be associated with financial statements that were not examined
in accordance with generally accepted auditing standards.
Adverse opinion this is a type of audit opinion which states
that the financial statements do not fairly present the financial
position, results of operations, and changes in financial
position, in conformity with generally accepted accounting
principles.
Thank You for Your Attention

Any Questions?