Naveen (Student) (37 Points)
05 January 2014What an ideal Audit Programme should include for the audit of medium size company in sequence i.e After doing preliminary homework e.g nature/Knowledge of business, discussion with management etc, where one should start?
Step 1 :- Opening balance verification
Step 2 :-.......................
Step 3 :-..........................
.....................................
Please provide your valuable input.
Tahnks.
naveen kumar
(student)
(57 Points)
Replied 06 January 2014
1.Opening balance verification
2.vouch cash for mere book entries
3.check BRS of banks
4.Statutory compliances like TDS,VAT,Professional tax etc
and others like ledger scrutiny ,vouching of purcases and sales etc will follow
CA Saroj Kumar
(Keen to learn something new every moments)
(2588 Points)
Replied 07 March 2014
Irrespective of ur company size i think u should planned ur audit in details
Like
1. Collect all the financial statements and other records prepared by the company like- B/S, P&L/ , T/B, Cash Flow, Other statements such as VAT Returns, Service Tax return, Income Tax return.
2. Now start with Trial Balance- same time with the previous year Balance sheet and T.B match the opening balance and closing balance first.
3.While u cheking trial balance keep note book with u mark down the item wise for whihc u need to check in details.
4. Now start matching the figures with Software balances with trial balance, while u can watch the etry movements in the ledgers write down if any adjustments and unsual transaction u may come across.
5. After checking T.B once make sure that all the figures represented in TB are also posted and correctly moved in B.S and P& L.
6.Now u look on the company procedural aspects like- Contracting, Outsourcing, Hiring and legal proceddings if any.
7. while u going through the Item-6 note down parties significant for checking by the amount involve or no of contracts attended by the parties.
8. Now go for selcetd contracts and agreements with their Ledgers and Bank balances about remittence or payments. Check whether the payments are as per terms and conditions and scedule of payments.
9. Now start vouching with the details u earlier noted while viewing ledger and T.B. make condiering those items.
10. Make surprise check for cash and bank. (Consider carefully if the company self printing Bank statements then u are reuired to make sure that no alteration have been made in bank statements hence its better in that condition either check online entries or obtain authenticated statements by the banks. BCz there is chance of fraud by altering bank statements).
And so on....
Milind M. Kulkarni
(Practicing CA)
(580 Points)
Replied 10 March 2014
Before starting any audit, you need to be aware of nature of client's business - manufacturing or service, applicable laws to their industry, including provisions of the new Companies Act. Discuss the audit programme with your seniors in the firm - don't try to control the audit yourself, unless you are experienced enough and are expected to do so. Even in that case, do consult your experienced colleagues in the firm.
Your audit programme should include evaluation of internal controls in critical risk/ major areas. Based on your findings in this, you can base your extent of chekcing.
While applying methodologies and procedures mentioned above (by others in their replies), do not apply them in isolation, but carry out those procedures, keeping in mind various applicable laws, such as Companies Act, Income Tax Act, FEMA, Service Tax, VAT, etc. Also, be updated with various Accounting Standards issued by ICAI and ensure that they are applied correctly while passing entries/ disclosing in financials.
You must also go thorugh previous year's audited financials to get acquainted with presentation of amounts. While checking current year financials, ensure consistency with previous year accounting and disclosure practices.
While devising your audit programme, keep in mind the ultimate output, i.e., Audit Report and CARO for which you are doing all this. Hence, your audit procedures should be properly documented with findings so that the comments in final Audit Report are supported by appropriate working papers.
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