Audit project
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The document discusses audit documentation and working papers, outlining their objectives to support audit conclusions, provide evidence of work performed, and allow for reviews; it also explains the roles of the client in providing information and the auditor in providing an opinion, and provides an example of a working paper documenting a comparison of forms to master files.
Audit project
- 1. Group Members MUHAMMAD WALEED L1F10BSAA0064 ASAD ADIL L1F10BSAA2056 FAREED UD DIN L1F10BSAA0038 HUSSIAN SHAHID L1F10BSAA2055
- 2. Objectives of Audit The objective of an audit of financial statements is to 'enable the auditor to express an opinion' whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.
- 3. Contents of Project Audit Documentation Working Papers –Objectives Characteristics Work Paper Elements Working Paper-Example
- 4. Roles of Client and Auditor Role of the client: – Provide complete financial records – Prepare working papers – Provide supporting documents – Design and implementation of internal controls to prevent and detect fraud and error – Disclose any illegal or possibly illegal acts
- 5. Roles of Client and Auditor Role of the auditor: – Provide audit opinion – Understand client’s operations, accounting systems and information systems – Maintain strict confidence with respect to client’s information – Remain independent
- 6. Audit Documentation Audit Standard: 2330-1 Working Paper Files Typical Working Paper Format Storage of Working Papers Ownership of Working Papers
- 7. Audit Documentation Standard 2330-1: “Internal auditors must document relevant information to support the conclusions and engagement results”.
- 8. Audit Documentation Audit documentation is the principal record of auditing procedures applied, evidence obtained, and conclusions reached by the auditor. Audit Evidence is documented in Audit working papers. Internal Audit Management Reviews these Working papers to ensure quality is maintained.
- 9. Working Papers -Objectives Audit working papers achieve following objectives: Aid in the planning, performance, and review of audit work. Provide the principal support for audit report and conclusions. Facilitate third party/supervisory reviews.
- 10. Working Paper-Objectives Provide a basis for evaluating the internal audit activity’s quality control program. Document whether engagement objectives were achieved. Support the accuracy and completeness of the work performed.
- 11. Key X-teristics of Work Papers Complete Concise Accurate Organised
- 12. Characteristics Completeness: Each Work Paper should be completely self standing and self explanatory. All questions must be answered, all points raised by the reviewer must be cleared and a logical, well thought-out conclusion reached for each audit segment.
- 13. Characteristics Accurate: High quality work papers include statements and computations that are accurate and technically correct.
- 14. Characteristics Organisation: Work papers should have a logical system of numbering and a reader –friendly layout so a technically competent person unfamiliar with the project could understand the purpose, procedures performed, and results.
- 15. Characteristics Relevance & Conciseness: Audit work papers and items included on each work paper should be relevant to meeting the applicable audit objective. Work papers must be confined to those that serve a useful purpose.
- 16. Work Paper Elements Work papers should include the following key elements: Name of audit area Source: The name and title of the individual providing the documentation should be recorded to facilitate future follow- up questions or audits. Scope: The nature, timing, and extent of procedures performed should be included on each work paper for completeness.
- 17. Elements of W/Papers Reference: A logical work paper number cross referenced to audit program steps and issues should be included. Sign off: The preparer’s signature provides evidence of completion and accountability, which is an essential piece of third party quality review.
- 18. Working Paper-Example ABC Pension Audit as of 30/06/2011 Comparison of HRD 20 Forms to Master Files W/P NO. A-3 Prepared by: MN Name on HRD 20 Form Located Individual on Master File M. Kinyera Y G. Musoke N F. Namusisi Y Source: HRD 20 form files located in Pension Benefits Area Y=on master file, N = Name not located on master file
- 19. Working Paper Example2 Summary of Audit Findings (RAF) ABC Ltd – Pension Audit as of 30th June 2011 RAF No. C-3 Scope: W/P Ref: A-3 Audit Objective: Method of Sample Selection Results (Condition, effect, cause) Conclusion Recommendation: Risk Grade: Medium Prepared by: Date: Reviewed by: Date:
- 20. Tick Mark -Example Ricky Corporation Cash Reconciliation Prepared by: Reviewed by: Date: Date: 1st Savings 234 @ @ = Traced to bank reconciliation
- 21. Storage of Work Papers Permanent File: Keeps information that is relevant for multiple years on recurring engagements. Current File: Information relevant for a given audit project/engagement.
- 22. Working Paper Storage Can be stored in manual or electronic form. For electronic files: Back up frequently. Include the file name in the footer. Develop an organisation method.
- 23. Working Papers Mgt Policies The CAE must control access to engagement records – Std 2330.A1. The CAE must obtain the approval of senior management and/or legal counsel prior to releasing such records to external parties, as appropriate-Std 2330.A2. The CAE must develop retention requirements for audit records –consult legal counsel.