audit program-msbpl.doc

26 June 2002

Hoda Vasi

Chowdhury & Co McDonald Steel Building Products Limited

Audit ProgramMcDonald Steel Building Products LimitedGeneral

ParticularsY/N/NAW/P Ref.Initial & Date

Assess the general internal control structure by administering structured questionnaires (ICQ)

Identifying weaknesses in internal control and related procedures

Assessing maintenance of required books of account and adequate records

Review of process of evaluation of accounting estimate and justification

Identifying non-compliance specially with respect to tax, agreement, IFRS/BFRS, local laws and regulations

Recording of commitments and contingencies after ascertaining the value involved

Generally Accepted Accounting Practices (GAAP);

International Accounting Standards (IAS) as adopted by ICAB;

Any other document that seems to be relevant.

Other related works to achieve the objectives of the assignment

Obtain all books and records underlying the financial statements with sufficiency and appropriateness;

Obtain written representations from management concerning the financial statements and particular matters;

Prepare the draft audit report;

Prepare a list of comments on important audit findings for discussion with management and prepare a draft of management letter; and

Test whether applicable BAS/BFRS are duly complied with.

Books and Records

ParticularsY/N/NAW/P Ref.Initial &

Date

Obtain draft copy of financial statements for the year ended 31December 2011, 2012, 2013 and 2014;

Obtain general ledgers as well as subsidiary ledgers;

Confirm that the prior year's final balances of general ledgers/trial balance have been correctly brought forward to the current year's general ledgers;

Scrutinize the general journal for the year and investigate any unusual entries. Pay particular attention to entries near the cut-off date;

Observe that the current years general ledgers / trial balance at the end of the year, after all adjustments, are in balance and are in agreement with the financial statements;

Go through the minutes books of McDonald Steel Products Limited (MSPL) and summarize the facts relating to the financial statements of the relevant years;

Obtain list of Directors, notice of meetings, Agenda, Minutes books, registers of Directors & Mangers etc.;

Check the following books:

a) Shareholders Register;

b) Register of Directors, Managers; andc) Directors attendances register.

Confirmation of Opening and Closing balances


Confirm all opening balances of General Ledger whether derived from the audited financial statements finally adopted by the previous auditors as per Bangladesh Standard on Auditing (BSA)-510; and

Confirm Closing balances of General Ledger with financial statements.

Analysis of Financial Statements


Analyze trend of all income as well as all assets;

Analyze trend of all expenses as well as all liabilities;

Analyze variances of all income as well as assets between current year and prior year;

Analyze variances of all expenses as well as liabilities between current year and prior year;

Analyze industry profitability; and

Take sample to verify based on the above analysis, i.e. those balances take maximum part of the total assets, liabilities, income and expenses need more meticulous attention.

Accounting & internal control systemsParticularsY/N/NAW/P Ref.Initial & Date

Review the internal control systems of the Company;

Find out major internal control weaknesses;

Check whether remedial actions have been taken against internal control weaknesses, if any;

Verify the reliability of computer-processed accounts (Tally) by means of:

a) Review of internal control

b) Test runs

c) System check

d) Others

Confirm whether any material accounting changes have been made during the year.

Summarization and Reporting


Prepare reporting requirements as per engagements with MSBPL;

Comply with reporting deadlines and requirements and communication protocols mentioned in the audit Engagement Letter;

Summarize report/observations including their instances;

Prepare draft auditors report including draft financial statements and submit for discussion with MSPLs management;

Send initialled report and financial statements for approval by the Board of Directors of the Company;

Draft management report and send the same for management responses;

Obtain approved financial statements and submit the report for signature;

Obtain management report with management responses;

Send signed report with financial statements ; and

Send signed management report with management responses.

Property, Plant and Equipment (PPE)ParticularsY/N/NAW/P Ref.Initial & Date

Perform the procedures mentioned in the BSA 510 Initial Audit Engagements Opening Balances for opening balances of PPE;

For subsequent years, confirm the opening balances with last years audited financial statements;

Obtain PPE register and item-wise fixed assets schedule;

Obtain approved budget for capital expenditure;

Check the purchase invoices of PPE and other relevant documents to ensure that all relevant costs have been included in the cost of PPE at the time of recognition;

Review the payment procedures including deduction of Tax and VAT if applicable and whether supporting documents are adequate or not;

Review the basis of valuation at cost or revaluation (Accounting policy);

Understand the mode of acquisition and disposal procedures;

Check whether depreciation method is followed consistently;

Check depreciation policy on newly acquired assets;

Check depreciation policy on assets disposed off;

Check whether insurance policies taken on assets;

Confirm whether the repairs and maintenance costs have been treated as revenue expenses;

Review the allocation of depreciation between administration and production;

Verify the ownership of assets;

Verify the documents like registered deeds up to date rent receipts and other related documents (if any);

Check whether any disputes/ Claims against the ownership (if any);

Confirm the physical possession of the assets (through physical verification);

Obtain the list of purchaser and mode of disposal of fixed assets;

Understand the process of recognition of property, plant & equipment from CWIP;

Check whether the transfer being made are accounted for under the appropriate head;

Check whether any assets being fully depreciated but still in use;

Enquire whether any physical verification being made during the year;

Obtain the physical verification report and review it to identify any matter for which further audit procedures are required;

Check the commitment for any capital expenditures;

Confirm the carrying amount of assets where more than one basis is used;

Confirm gross carrying amount and accumulated depreciation at the beginning and at the end of the years;

Test the existence and amount of restrictions on title of assets or any assets have been pledged as security;

For revaluation of assets (if being made during the year):

- Read BAS-16 meticulously

- Check the basis used for revaluation;

- Confirm whether independent valuer was involved

Identify the condition of asset and there usage in case of impairment

For impairment of assets(if being made during the year): (discuss with manager and note down the prescribed procedures to go ahead)

- Read IAS-36 meticulously

- Confirm whether expert was involved

Intangible Assets


Confirm the opening balance with last years audited financial statements;

Check the basis of valuation at cost or revaluation (Accounting policy);

Check amortization procedures in case of definite useful life (Accounting policy);

Test impairment in case of unlimited useful life;

Test de-recognition of assets (Accounting policy);

Check amortization rates applied category wise;

Obtain item-wise intangible assets schedule;

Check allocation, if any, of amortization between administration and production;

Verify the ownership of assets;

Verify the documents like registered deeds up to date rent receipts and other related documents;

Matching of subsidiary balance with that of general ledger

Disputes/ Claims against the ownership if any

Carrying value of assets where more than one basis is used

Gross carrying amount and accumulated amortization at the beginning and at the end of the year

Reconciliation of gross carrying amount at the beginning and at the end of the year

Commitment relating to intangible assets if any

For re-valued assets (if applicable):

- Basis used for revaluation;

- Whether independent valuer was involved

The carrying amount of each class of assets (re-valued) that would have been included in the financial statements had the assets been carried at cost less amortization

The existence and amount of assets whose title is restricted

The gross carrying amount of any fully amortized assets that is still in use

The carrying amount of assets retired from active use and held for disposal

Fair value of assets, when it is materially different from carrying amount

Review of disclosure (as per ISA 38)

Confirm the closing balance with GL & TB

InventoriesParticularsY/N/NAW/P Ref.Initial & Date

Perform the procedures mentioned in the BSA 510 Initial Audit Engagements Opening Balances for opening balances of inventories;

For subsequent years, confirm the opening balance with last years audited financial statements;

Review the overall inventory process and identify for any lapses therein;

Observe physical security of inventories and environment in which they are held and whether they are properly insured;

Test procedures for recording of inventory movements;

Obtain a list of inventories and review the documents which are maintained for inventories;

Test authorisation for adjustments of inventories and written off scrapping of inventories

Test whether materials are categorized on the basis of ABC analysis;Test whether goods are properly received at the gate and their records are properly maintained;Check whether GRN are prepared on the receipt of goods itself and by the authorized person at stores;Test whether goods received are inspected by the inspection department and have duly approved the GRN;Test whether GRN are timely entered in store ledger immediately after the approval of GRN;Check whether proper discrepancies memo are being prepared for any rejection / short receipt of the material;Check the procedures for the issue of materials (store to production dept., users, buyer, etc.);Test whether the same are properly documented regarding date, timing, qty and department receiving the material;Also test whether inventories are physically verified periodically;

Check whether the issue of materials are properly entered in the store ledger;Review the policy regarding slow moving, non-moving, obsolete inventories;Test whether sufficient provision for such material are created in accounts;

Obtain aging analysis of materials stored;Check the reconciliation of raw materials, Finished goods and Work in progress

Inspect reconciliation of inventory counts to inventory records (this gives overall comfort on the adequacy of controls over the recording of inventories);Perform comparative analysis between standard production and actual production and

Other related works to achieve the objectives of the assignment.

Check whether any creation of charge/lien on investment (Notes to financial statements)

Comply with BAS 2 Inventories for valuation of inventories;

Check and consider the disclosure requirements; and


Stores (Goods) in TransitParticularsY/N/NAW/P Ref.Initial & Date

Obtain detail list of goods in transit;

Review the recording systems of goods in transit;

Check transit items with related supporting;

Inquire the concerned person (s) for each items of goods in transit to confirm the present condition of those items;

Also confirm subsequent position of transit goods.

Advances and DepositsParticularsY/N/NAW/P Ref.Initial & Date

Perform the procedures mentioned in the BSA 510 Initial Audit Engagements Opening Balances for opening balances of advances and deposits;

Review the advance policy/process;

Test whether up to date lists are available regarding advance against salary, purchase, tax and others for regular monitoring;

Check advance register, recording and adjustment;

Obtain aging report for advances and prepayments and comment on long outstanding items

Review the agreements in case of advance to any parties for procurement of any kinds of inventories and fixed assets as well as movement (adjustment) thereof and identify any lapses therein;

Identify the reasons for non-recovery and non-adjustments of long pending advances;

Inquire the concerned persons for non-recovery;

Review periodical confirmation of balances;

Pay special attention on approval of deposits and internal control procedures thereof; and

Consider whether provisions are required for long outstanding and doubtful balances.

Cash and Cash Equivalents


Cash receives

Conduct independent verification of cash receipts;Test the evidence of a sequence check on any pre-numbered cheques;Test authorisation of cash receipts;Test the evidence of arithmetical check on cash received records; andTest all physical money receipts (from customers and cash withdrawn from bank) duly included in cashbook.

Cash payments

Inspect current cheque books for:

Sequential use of cheques

Controlled custody of unused cheques

Signatures on blank cheques

Test (to avoid double payment) to ensure that paid invoices are marked with the paid symbol sign; andTest the evidence of arithmetical checks on cash payment records, including cashbook.

Cash at bankInspect the evidence of authority for current standing orders and direct debits;Inspect the evidence of regular bank reconciliations, at least once per month;

Examine evidence of impendent checks of bank reconciliation (e.g. a signature);Identify the stale cheques (above six months);Examine evidence of the follow up of outstanding items on the bank reconciliation. Pay particular attention to old outstanding reconciling items that should be written back such as old and un-presented cheques;

Review timely deposit of collections (bank draft and pay order, if any) are regularly deposited to bank with the usage of deposit slips;

Check the recording of bank draft and pay order procedures ;

Check the reporting procedures from commercial department to the accounts department;

Aging of cheque issued not presented for payment;

Check the FCR accounts and exchange rates;

Send confirmation letters directly to banks for bank balances and check those balances with bank books;

Review the post dated cheque issued against bank loan and subsequent adjustment, recording, etc. thereof; and

Obtain Board Resolution for closing any bank account along with bank statement.

Petty cash

Test petty cash vouchers for appropriate authorisation.

Test cancellation of paid petty cash vouchers.

Test for evidence of arithmetical checks on petty cash records

Test for evidence of independent checks on the petty cash

Perform a surprise petty cash count and reconcile to petty cash records.

Spoiled currency notes (if any).

Comparing system cash book with manual/computerized cash book balances

Insurance cover of cash in safe, fidelity guarantee and also cash in transit.

Petty cash limit fixed and strictly followed

Sales and Accounts receivableParticularsY/N/NAW/P Ref.Initial & Date

Sales invoices and sales register, recording and documentation system of each selling place

Cycle of moving the goods from storehouse to sales centre/distributors and vice versa for return.

Major local, inter company transfer and issue for gift to anybody (if any) and processing system as well as authorization and documentation therein

Procedure of receipt of order, cross check and comparison of prices in the invoices with that of approved price of the company

Check whether formal records of receipt of orders are maintained.

Negations with customers by the concerned person of the Company in case of direct sales, and preparation of sales invoice as well as recording system of inventory in the storehouse.

Whether unprocessed sales orders are reviewed on regular basis

Pending process of sales orders and its aging with reason identification thereof.

Plan & procedure laid down for the execution of the order.

Whether commission rates charged to agents independently checked and approved before the invoices are despatched

Whether separate serial number for sales invoices as well as money receipts are maintained

Whether there were proper procedures to ensure that all sales returns are physically received and restored to stocks

Identify reasons for sales returns

Review the marketing strategy (if responsible for marketing)

Check the transportation system and identification lapse therein

Perform the procedures mentioned in the BSA 510 Initial Audit Engagements Opening Balances for opening balances of advances and deposits;

Go through the sales policy including credit sales;

Obtain the list of the customers;

Confirm whether the Company is reliant on few major customers;

Review bank guarantee and other security of credit sales (if any);

Obtain and review pricing policy and pricing list;

Test sales procedures from sales order to goods despatch;

Test customers recognition policy and its compliance;

Review authorisation procedures

Check transactions on test basis;

Check bank statements to confirm whether sales proceeds are duly deposited into the Companys bank accounts;

Identify stale cheques and reason thereof;

Review the movement of debtors balance

Send direct confirmation letter to major customers;

Consider whether provisions are required for bad and doubtful debts;

Accounting of sales & debtors and recognition of sales

Whether credit notes only issued on an appropriate authority

Collection against sales and deposit to bank with deposit slip and its time interval

Whether reconciliation differences promptly resolved

Reporting procedures of sales and collection against sales to the head office by sales centre

Obtain the list of the customers

Go through the sales policy

Ageing analysis of debtors and checking with ledger

Bank guarantee and other security of credit sales (if any)

Pricing policy and pricing list


Sales procedures from sales order to goods despatch

Customers recognition policy and its compliance

Authorisation procedures

Check transactions on test basis (both live test and dead test)

Check with bank account

Identification of steal cheques and reason thereof

Movement of debtors balance

Identification of debtors outstanding for more than six months. And extension received if any for the same from concerned authority

Bad debts write offs authorised by someone with suitable degree of authority

Marching of subsidiary balance with that of general ledger balances

Direct balance confirmation

Accounting of sales & debtors and recognition of sales

Collection against sales and deposit to bank with deposit slip and its time interval

Reporting procedures of sales and collection against sales to the head office by sales centre

Other related works to achieve the objectives of the assignment

Inter-company Payables /ReceivablesParticularsY/N/NAW/P Ref.Initial & Date

Check the movement of balances during the period;

Test origin of transactions and scrutinize the supporting documents;

Obtain confirmation of balances from inter-companies;

Check reconciliation of balances and clearance of outstanding items within a prescribed time limit;

Review management decisions on long outstanding items;

Confirmation of counter checking

Confirm opening balances with last year's audited accounts/working paper.

Obtain summary list of inter-company transactions.

Check the entries in the payable/receivable book with correspondence and any other documents and evidence available.

See that the proceeds of the invoices are properly accounted for and the account of the relevant party with the amount.

Check newly payable/receivables created during the year.

Check payment made during the period against accounts payable.

Check significant items and new items included in accounts during the period.

Find out the reasons for such transactions of the company.

Check whether any set guideline for making transactions.

Check the procedure of payments to parties.

Check the balance at the end of the period agrees with General Ledger.

Check whether transactions made in cash or on credit.

Check whether policy strictly maintained for inter-company transactions

Share Capital


Confirm the opening balance with last year Auditors report

Authorised, issued, subscribed and paid-up capital by reference to MA & AA

Understand the composition of share capital

Obtain the share capital position as of reporting period from the legal department which is supplied by McDonald Steel Building Products Ltd.

Check the amount with the share register and addition with reference to minute books of the Board of Directors.

Check whether any movement has made among the positions

Extend the audit procedures if there is any movement among the position of shareholders other than in the head Others

Observe any increase or decrease of share capital and if so then discuss with our manager for further audit procedures


Bank Overdraft


Review of bank loans, related securities and agreements with banks

Checking of limit of bank overdraft and use of limit

Review the calculation of interest on loans or borrowing ensuring correct charge to the accounts

Follow up of adjustments of over-charge of interest, penalty and other charges

Review of authorization and preservation of bank documents

Review of bank loans, related securities and agreements with banks

Balance confirmation and reconciliation of difference, if any

Checking of post dated cheques against loan

Check and confirm of any mortgage redemption at the end of lease period and renamed of title of respective assets

Confirm the opening balance with last year Auditors report

Check whether the repayment has been made in accordance with the pre-defined mode and date

Obtain the bank overdraft facility for the current year

Obtain the list of banks from which overdraft facility is availed

Obtain the agreement or other correspondences for drawing bank overdraft

Understand the purpose for which bank O/D is taken

Check whether overdraft amount exceed the approved limit

Check whether the transaction is authorized by the appropriate level of authority

Understand the nature of security arrangement and confirm whether sufficiently disclosed in the FS

Understand the nature of interest fixed or floating

Compare the interest rate among other OD and short term borrowing rate (if any)

Understand the mode of repayment

Check whether the repayment has been made in accordance with the pre-defined mode and date

Review whether the repayment is being made through arranging another bank OD

Check the calculation of interest and its accounting

Confirm the closing balance with GL and TB

Obtain bank confirmation and reconcile the balance

Purchases/ Procurement and creditors


Review the overall procurement process and identifying lapses therein

Review of process of product specification and supplier selection

Check whether purchase requirement is properly indented by the user dept. mentioning qty & date and description and it is properly approved

List of pending indent and check whether pending indent is periodically reviewed.

Test whether purchase department invites Quotation from parties

Comparatives are prepared if any

Purchase order is properly approved by the concerned authority

Check LC opening, Margin, retirement of LC

Check of LC charges, interest charge for credit against LC and verify with agreement

Recording, verifying and checking of bills received against supplies of goods

List of pending purchase orders and reason therein

Lead-time / Minimum level / maximum level / Reorder level defined (if any) and whether maintained is strictly

Check whether Imported goods were properly insured

Payment procedures (with suppliers, approval) including deductions of tax and VAT in applicable cases

List of creditors along with ageing and checking with ledger balance

Movement of creditors balances

Accounting and reconciliation of party balances on bills payable

Evidence of authorisation of adjustments to payables ledger control account

Whether all payment made to creditors are acknowledged by directors

Reporting of payable accounts and periodic review thereof

Confirm the opening balances with last years audited financial statements.

Other Liabilities


Confirm the opening balances with last years audited financial statements.

Obtain the individual different schedules under this head

Observe the movement of balances therein if available

Obtain the agreement and note down salient features

Whether secured or unsecured and against what

Check whether the payment has been made in accordance with the agreement

Obtain aging analysis and identify the long outstanding balances

Also identify the long outstanding balances and no longer payable and note the reasons behind them

Confirm the closing balances with GL & TB

Current Income Tax Liabilities


Confirm the opening balance with last years audited financial statements.

Check the provision being made during the year in the FS

Check the computation of deferred tax

Check whether the calculation has been made in accordance with Bangladesh Income Tax Ordinance,1984 and IAS-12


Short term bank loanParticularsY/N/NAW/P Ref.Initial & Date

Confirm the opening balance with last years audited financial statements.

Check the provision being made during the year in the FS

Check the computation of accrued interest

Check the purpose of the short term loan

Collect loan repayment schedule

Checked whether the repayment made accordingly to the repayment schedule.

Collect the update bank facility offer latter and complied therein

Check whether the loan transactions are properly accounted for in the book of accounts


Non operating income/ Other Income


Compare the figure with corresponding period of last year

Obtain the details list of other income

Understand the nature of income and justification of regarding as non-operating income

Consider whether it is recurring or incidental


Recognition of other income

Cash collection against other income and its deposits

Accounting entries etc.

Cost of SalesParticularsY/N/NAW/P Ref.Initial & Date

Check the calculation procedures

Valuation of inventory and the adjustment of change in inventory with purchases to determine the cost of sales

Verify the cost of sales with the help of back calculation of selling unit and per unit inventory cost

Check the other direct cost relating with cost of sales

Test whether the cost of sales are properly matched with sales

Check whether proper cut off procedures are maintained

Reconcile the quantity base information of store house and accounts department

Any other related work if required

Administrative, Selling and Distribution Expenses


Salaries and Wages

Review service policy, if any including leave and employees tax

Check whether payments of salary and benefits are in accordance with terms of the appointment letters or employment contract

Review of procedure of payroll processing, disbursements and recording

Adjustments of advances and loans against salary

Review the final settlement practices and liability accounting systems

Verify attendance and leave with payroll sheet

Gratuity accounting and procedure & final settlement of outgoing employees

Compliance (legal and constructive obligation) regarding gratuity and investment of funds

Test whether attendance cards are punched by the employees on a regular basis and correctly.

Approval of late arrival of the employees.

Monthly attendance reports to be crossed with the salary sheets.

List of new joiners & left employees

Appointment letter to be reviewed and cross their actual salary paid with their contracts on a test check basis.

Policy regarding appraisal of the employees, basis of such appraisal, effectiveness of such appraisal procedure, authorization/ approval for the same.

Salary registers whether updated, procedure of updating of such register.

Check whether policies framed by the company relating to leave, medical is properly adhered.

Check payroll system

Check the service agreement with the employee.

Check the salary structure of the company.

Check overtime calculation system and payment procedure

Verify the signature in payroll sheet with the specimen signature in appointment letter

Check the worker leave register

Verify the attendance register of the worker with payment register

Check any kind of increment.

Check tax deduction at sources.

Check payment procedure of payroll and comply with service agreement

Check the total expenditure against this account head with the trial balance

Check casting, posting and referencing.

Travelling and Conveyance

Obtain the policy and review it


Review the percentage of change or variance

Consider the materiality

Check whether the employees are entitled to this facility and on what terms and conditions

Check all supporting documents to identify any discrepancy

Check whether applicable VAT & TDS are deducted and accounted for

Check whether the transaction as well as payment is properly authorized by the appropriate level of authority

Check whether approval from Bangladesh bank is attached with the voucher in case of foreign payment (if applicable)

Check whether adequate provision has been made to conform with accrual concept


Rent and Rates

Check agreement with the landlord

Obtain summary list rent & utilities

Check correspondence with the third parties, (if any)

Check the adjustment procedure

Obtain the schedule of rent advance

Check the utilities provisions made procedure

Check casting, posting & referencing

Legal and Professional Charges

Read the agreement and note the salient features (terms and condition) including, validity, parties concerned, value, payment conditions, nature of services etc.

Check payments and verify with correspondences.

Check whether Tax and VAT has been deducted at source.

Check whether services has been received and classified.

Ascertain unpaid obligation, if any.

Insurance


Review the percentage of change or variance

Understand the nature and purpose and mode of renewal

Cross check with the prepayment insurance whether appropriate amount of adjustments have been made (if any)

Check whether adequate provision has been made to conform with accrual concept


Other Expenses

Compare the figures with corresponding period of last year

Obtain the agreements (if any) and summarize it

Cross check the amounts which originates from the adjustment of prepayment or reclassification

Check whether the transactions are properly authorized by the appropriate level of authority

Consider TDS & VAT implication while making payment in light with agreement and in accordance with ITO, 1984

Check all supporting documents rigorously and note down any irregularities

Check whether all utility bills are duly paid

Review the correspondences regarding any bills which remained as unpaid for long time

Check whether adequate provision has been made to confirm with accrual concept


Directors Current Account:ParticularsY/N/NAW/P Ref.Initial & Date

Review the purpose of taking loans from the company by the Managing Director and Directors

Obtain the balance confirmation direct from the Managing Director and Directors

Review the calculation of interest on loans taking by Managing Director and Directors

Review the reconciliation statement, if any

Vouch the transaction on a sample basis

Review the general ledger and subsidiary ledger whether

the transaction regarding loans and its interest dully accounted for or not

Tally the subsidiary ledger with general ledger

Provision for Expenses:


Acquiring policy for provision for expenses

Estimation of provision for expenses and financial charges- accurately and adequately

Accounting treatment

Subsequent adjustment (if necessary)

Tax and VAT:ParticularsY/N/NAW/P Ref.Initial & Date

Review the process of tax and VAT planning, if any

Review of procedures of tax and VAT deduction at source on applicable items

Check of VAT register, current account, Mushak (VAT), mode of payment and reconciliation between input tax and output tax

Check of calculation tax liability, advance tax and tax return

Accounting of tax and VAT

Advance tax calculation and compliance thereof as per tax laws

Ascertaining the contingent liabilities for income tax and VAT

Whether tax provision are dually accounted for in the financial statements

TA and DA:ParticularsY/N/NAW/P Ref.Initial & Date

Review of policy (rate, entitlement, purpose, budget, bill checking, approval authority, etc.)

Register, recording, adjustments

Accounting of TA, DA

Reasons for non-adjustments of long pending items

Expenses (Overall)ParticularsY/N/NAW/P Ref.Initial & Date

Vouching of payments and confirm whether all relevant supporting of documents are available

Justification of expenses and to ascertain whether any questioned costs are included

Provisions are made adequately in periodical accounts

Comparative and matching analysis

Cost benefit analysis

Verification of purchases, C&F expenses, freight charges, conveyance, utilities expenses, transport, LC expenses, repairs & maintenance, financial charges, bank charges & commissions and extraordinary items

Approval procedures of expenses

Accounting treatment and classification

Analysis of prior budget for expenses and comparison with actual expenses

Trend analysis of expenses with corresponding revenue trend and identification any mismatch of trend and reason therein

Corporate Affairs and rules:ParticularsY/N/NAW/P Ref.Initial & Date

Holding of Board meetings, AGM, issue of notice, minutes and preservation of such records as per Corporate Law

Submission of annual returns with RJSC and certified copies

Compliance of all rules, regulations, circulars and directives

Ascertaining the level of penal actions and risk exposure for non-compliances, if any

Insurance Policies:


Identify all policies of insurance (General liability, Fire, theft, and other casualty, life insurance/group, product liability, etc.)

Review of policy taken up, premium, payment of premium, unpaid premium

Review of insurance coverage

Accounting treatment

Documents and certificates:ParticularsY/N/NAW/P Ref.Initial & Date

Existing Groups Organogram and Key Management Set up

Fund management

Cash and Bank Operating System

Financial reporting systems (MIS) of Head Office;

Accounting and Internal Audit Manuals, if any.

Administrative & Operational Manual. If any

Financial policies and procedure guidelines

Procurement policies & procedures at Head Office;

HR related policy and practices in Head office

Land title deed and up to date rent paid receipts

Up to date municipal tax, holding tax and rates paid documents

Copies of Memorandum and Articles of Association

Review and copies of board meetings and general meetings minutes books

Check share register and share transfer ledgers

Change in ownership agreements, voting agreements, and other agreements tied to direct and indirect ownership of

securities of any other companies

Review corporate management

List of directors and officers

Identify and review all material agreements/contracts along with related documents

Review and copies of all contracts and agreements executed by the Company which are present in force

Review and copies of all expired contracts and agreements executed by the Company, which were implemented, or not.

Confirm company has all necessary consents, licenses,

Permits and registrations necessary for doing business

Trade license

TIN certificate

VAT registration certificate

Import registration certificate

Export registration certificate

Details of any patents, trademarks held/applied for.

Chambers membership and certificate.

BOI registration

Business Analysis:ParticularsY/N/NAW/P Ref.Initial & Date

Review and analysis of performance & efficiency and compare year to year, industry and investment growth

Analysis of financial projections, cash flow,

Capacity and market sharing

Market Potentiality of business

Break even analysis as well as target profit projection

Reporting and Deliverables:

Reports will, inter-alia, cover the followings

Weaknesses in the internal control systems

Identifying the questioned costs or major expenses not supported by relevant documents and not authorized

Non-compliance of policies & guidelines Fraud & irregularities in financial matters

Recommendations on the respective observations Recommending an Action Plan for future course of actions.

During our audit we would complete the following tasks:

Review, study and document the existing operation systems; Identify any problems in the existing operation systems; Report any irregularities discovered; and Make appropriate recommendations.Audit Program

Prepared by: Audit Team

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