Audit the practical side
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The document is a comprehensive guide on various types of audits, including statutory, financial, internal, and forensic audits, detailing their purposes and legal frameworks. It covers the processes of accepting clients, audit planning, execution, and the use of technology in audits, alongside quality assessment protocols and tools. Additionally, it references several high-profile financial fraud cases and outlines relevant international auditing standards.
![Pre-Audit Process
Accepting a client
Initial Communications
Terms of Engagements
By Law
By Client
Conflict of Interest Check Pass
Initial assessment of documents and Terms of References [TORs] vs Skill availability and
deployment
Engagement Letters- the Auditor’s [TORs]
Acceptance or Decline](https://image.slidesharecdn.com/auditthepracticalside-180723094608/85/Audit-the-practical-side-12-320.jpg)
Audit the practical side
- 1. AUDIT- THE PRACTICAL SIDE BY SYED MUHAMMAD IJAZ, FCA, LL.B. ADVOCATE HIGH COURT PARTNER HUZAIMA IKRAM & IJAZ
- 2. Table of contents Types of Audit Overview Accepting a client Audit Planning Outcomes of Audit Planning Execution of Audits Use of Technology and other Tools Quality Assessment of Audit Q & A session
- 4. Types of Audit Statutory Audits or External Audits Financial Audits Cost Audits Tax Audits Assurance Assignments/Agreed Upon Procedures-AUPs Internal Audits Forensic Audits
- 5. Overview
- 6. Statutory Audits Mandatory by law/Statute Require reasonable assurance or even more All Audits are assurances but not all assurances are audits Examples are; Financial Audits under Companies Act 2017 earlier Companies Ordinance 1984, Banking Companies Ordinance 1962 and Modaraba Companies Ordinance, 1980 Tax Audits under various tax laws where some times CAs and CMAs are given special powers to conduct audits on given parameters Cost audits Under Companies Act 2017
- 7. Assurance/Agreed Upon Procedures (AUPs) Not Mandatory Mandatory in some cases Require specific or less than reasonable assurance All Audits are assurances but not all assurances are audits Examples are; Various certificates to be issued under various statutes e.g. Share deposit money certificate Payroll Audits System’s Audits Control Audits/Assessments
- 8. Internal Audits Not Mandatory Done in house Detailed audits of processes, Controls, procedures and executions Detection of loop holes in system, minimizing any risks of fraud and pilferages Staff normally reports to an independent Committee namely the Audit Committee/Internal Audit Committee Targeted to specific goals Watch dog functions for the shareholder’s wealth
- 9. Forensic Audits Audits done for detection of white color Crimes e.g. Corruption Assets beyond means Assets and Funds misappropriations Kick Backs Transfer Pricing Layering Financial Statement Frauds Benami Transactions and Money Laundering Cooked Books-May include all or any of above
- 10. Forensic Audits Recent Cases Habibullah Case-Amnesty for 1.4 either PKR or USD still not clear- Involves breach of trust of shareholders Hussain Lawai Case-Money laundering and benami Transactions Panama Case investigation-Assets beyond means and corrupt practices Recent Movies The Accountant- Ben Affleck Catch me if you can- Leonardo De Caprio and Tom Hanks The Wolf of Wall street- Leonardo De Caprio Old Cases The penny Fraud Enron, Cendant, and WorldCom are examples of massive companies torn apart by financial fraud and scandal Ponzi or Pyramid scheme
- 12. Pre-Audit Process Accepting a client Initial Communications Terms of Engagements By Law By Client Conflict of Interest Check Pass Initial assessment of documents and Terms of References [TORs] vs Skill availability and deployment Engagement Letters- the Auditor’s [TORs] Acceptance or Decline
- 13. Audit Planning
- 14. Audit Planning
- 15. Thinking out of Box-When planning Thinking out of Box
- 17. Outcomes of Audit Planning
- 20. Audit Tools
- 21. Tools for Audit Planning and Audit IFAC guidelines Requirements of Local Laws and Statutes ICAP check Lists Regulatory Guidelines Auditing Software Internet, information gathering and Data mining Print media IFRS and IAS Pathological Support Chemicals, DNAs, Reports, Finger Prints Interviews/Meetings and Questionnaires Use of Technology- e.g. Surveillance tools
- 22. IFACs guidelines and Standards https://www.ifac.org/global-knowledge-gateway/audit-assurance?overview International Standard on Quality Control 1 (ISQC 1) ISQC 1 sets out an accounting firm’s responsibilities for its system of quality control and applies to all audits and reviews of financial statements, and other assurance and related services engagements, performed by the firms‘ professional accountants. 100-999 International Standards on Auditing (ISAs) ISAs are to be applied in the audit of historical financial information. 2000-2699 International Standards on Review Engagements (ISREs) ISREs are to be applied in the review of historical financial information. 3000-3699 International Standards on Assurance Engagements (ISAEs) ISAEs are to be applied in assurance engagements other than audits or reviews of historical financial information. 4000-4699 International Standards on Related Services (ISRSs)
- 24. Quality Controls-Pre and Post Audits
- 25. CONCLUDED- THANK YOU VERY MUCH Syed Muhammad Ijaz Partner Huzaima Ikram & Ijaz www.hii.com.pk 0332-8655096 [email protected]