MUHAMMAD WALEED L1F10BSAA0064

ASAD ADIL L1F10BSAA2056

FAREED UD DIN L1F10BSAA0038

HUSSIAN SHAHID L1F10BSAA2055

Group Members

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.

Contents of Project

Audit DocumentationWorking Papers –ObjectivesCharacteristicsWork Paper ElementsWorking Paper-Example

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

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

Audit Documentation

Audit Standard: 2330-1Working Paper FilesTypical Working Paper FormatStorage of Working PapersOwnership of Working Papers

Audit Documentation

Standard 2330-1: “Internal auditors must document relevant

information to support the conclusions and engagement results”.

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.

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.

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.

Key X-teristics of Work Papers

CompleteConciseAccurateOrganised

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.

Characteristics

Accurate: High quality work papers include statements and

computations that are accurate and technically correct.

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.

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.

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.

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.

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

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:

Tick Mark -Example

Ricky Corporation Cash Reconciliation

Prepared by: Reviewed by:Date: Date:1st Savings 234 @@ = Traced to bank reconciliation

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.

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.

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.