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) Bodies

 Regulatory

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

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.