WHAT TO EXPECT IN AN

AUDIT

An Overview of External
Audit Processes
Introduction
 Companies are subject to the scrutiny of several different
auditing bodies. In addition, several companies have
their own review department called Audit & Management
Advisory cell.
 Routine Audit Focus- usually budget and finance but
may also include programmatic and support areas.
 Business Officers are responsible for management of
company’s resources. They generally provide the
justification for appropriateness of costs incurred and
financial transactions executed by departments / units
they represent.
Definition of Audit
 A formal process where activities and
records are examined and compared to
predetermined audit criteria such as :

 Statutory
regulatory requirements
 SECP policies and procedures
 Management goals and objectives
External Audit
Planning Process
✜ High Risk Audits
✜ Special Reviews/Management Requests
✜ Audit Committee Representation as
Requested
✜ Internal Control Education
✜ Internal Audit Coordination
✜ Financial Process Self-Assessment
Types of Audits

 Planned Audits - Audits on the annual plan.

 Special Request Audits- Audits requested by
Client’s management as needed.
 Investigations-Audits conducted in accordance with
Auditing and Accounting Standards (ISA & IAS).
Types of External Audit Services

 Small Consultations

 Other Advisory Services

 Business Process Self-Assessment

(BPSA)
External Audit
 Audits can be broadly grouped into two
categories. Both may include the
evaluation of systems of internal control.
 Financial Audits
 Determine the reliability and accuracy of financial
records
 Performance Audits
 Determine the economy and efficiency of
resources
Audit Agencies

 Securities
and Exchange Commission of
Pakistan (SECP)

 Regulatory Bodies
Audit Agencies

 Accounting Bodies, ICAP, ACCA, ICAEW

 Taxation Authorities
 Lenders/ Finance Providers
Audit Agencies
Audit Service Providers
 Price Waterhouse Coopers Firm
 Ernst & Young
 Delloite & Touche
 KPMG
The Audit Process

While each agency’s audit

process is specific to its
own environment, most
audit processes are similar
to those listed in the
following steps:
The Audit Process
 Notification

 Initial Discussion

 Audit Plan

 Opening Conference
The Audit Process

Field Work is performed to:

 Collect detail information based upon audit scope
 Record findings in audit working papers
 Interview Client personnel as appropriate
 Review departmental files and support documents
 Review of applicable policies and procedures & regulatory
requirements
 Conduct sample selection and testing of transactions
The Audit Process

 Interim Findings or Draft Report is based on

field work conducted, and usually contains the following:
 An evaluation of the effectiveness and appropriateness of
Client’s control systems if an external review and
departmental control processes if an internal review
 Compliance with established policies and procedures and /
or applicable regulatory requirements
 Closing Conference
The Audit Process

 Final Audit Report

 Action Plan

 Follow -up Audit / Review

The Audit Process
A Word About Documentation

During an external audit, is very common for an

auditor to request copies of Client’s
documentation. The collection of data is a
normal part of an auditor’s fieldwork and
supports the opinions that he/she will render.
The Audit Process
Remember the following concerning
documentation:

 Provision of documentation may be subject to

negotiation between Client and the audit Firm

 Management should be informed of and approve

release of any documents requested by the
auditor
The Audit Process
 Copies of documents should be retained
in your files or by Client if determined
appropriate

 Never send documents to an external

audit Firm that is not part of an official
approved audit
Where Do I Go For Help?
 Contact Firm or Discuss within the
Management for assistance on any matter
involving an audit

 Firm is responsible for external audit

coordination and for formulating Client’s
official audit response
Where Do I Go for Help ?
Your are not alone -
Give Your Firm a Call
whenever you need

Audit & Management

Advisory Services
ABC Firm & Co