Punya Ney

4. How to make audit working paper:

 The things that has to be noticed is what accounts which are materials and analyze what the
assertions which can be get from each material accounts. From those assertions then can be
decided what procedure is the most appropriate to be applied in auditing the account.
 If the client has been audited by the Public Accountant Firm in the previous year, usually
there are some working paper from the previous year.

5. What will the Public Accountant Firm do if there are some findings?

 First, discuss the findings with the client by giving some suggestions, if the findings are
immaterial and have no significant impact then, there is no need to make an adjustment
regarding the account. The materiality is decided by the materiality rate counted
beforehand. If the account is material then the adjustment has to be made. If the client
refuse to adjust the account then the finding will be shown on the audit opinion and discuss
the misstatement regarding the account.

Punya Fahri

The audit client is get through the business partner, bank partner, website, e-mail

Engagement letter contains

a. Work scope
b. General responsibility
c. Fraud Detection responsibility
d. Tax audit responsibility
e. Disobedience detection responsibility
f. Internal Control evaluation responsibility
g. Financial report responsibility
h. Management representative
i. Audit fee
j. Electronic communication
k. Responsibility limitation and compensation

The Process from engagement letter until audit opinion

a. Preliminary meeting with the manager

b. Communicate with the previous auditor if the previous audit was done by another auditor
c. Write the engagement letter
d. Make the audit program
e. Arrange the audit team
f. Interview the client / staff in-charge of the account
g. Inspect the field work
h. Discuss the audit findings with the management or audit committee or the internal auditor
i. Meet the third party (e.g. law firm) if there is a problem needed to be discussed
j. Make the audit working paper
 k. Meet the audit team regarding the audit draft
l. Compile the audit report draft
m. Meet the client’s management regarding the arrangement of the final audit report
n. Publishing the audit report and the audit opinion

Making the audit program

1. Understanding the internal control

2. Evaluate the inherent risk
3. Determine the scope of test of control
4. Calculate the materiality
5. Design the test of control and substantive test regarding the transactions in order to fulfill
the audit objective regarding the transactions.
6. Test of account balances which has been designed include the audit procedure, sample size,
chosen item, and the audit timeline

Audit team consists of:

a. Partner (the one who sign the audit opinion)

b. Quality Control (the one who checked before the audit report is published)
c. Manager (Person in charge of field work)
d. Senior auditor (the one who do the field work)
e. Junior auditor (the one who do the field work)
f. Administration in-charge of the documentation and typing the audit report

How long the audit process

1. Depends on the extensive, complexity, and the size of the company being audited, usually
one until three months

How to make working paper

a. Make the template according to the accounts in the Statement of Financial Position and
Income Statement
b. Each accounts has to be supported with the related documents
c. Collecting the audit evidence as the attachment of the working paper:
a. Confirmation letter, interview, field observation, recalculating the monetary amount
b. Documents of testing and document sampling
c. Documents and meeting minutes of the board of director
d. Legal Documents and company licensing
e. Taxation documents
d. Make the Trial Balance and Adjustment
e. Write the Financial Report which consist of:
a. Statement of Financial Position
b. Income Statement
 c. Statement of Changes in Equity
d. Cash Flow Statement
e. Notes to Financial Statement

What is done regarding the audit findings? Same with BDO

Ways in giving the audit opinion

a. Is the financial report has been stated based on the Audit Standard applied
b. Are the internal control procedures have been done accordingly?
c. Is there any fraud/misstatement?
d. Are the employee benefits liability and tax liability has been paid accordingly?
e. Has the company follow the rules stated by certain regulator accordingly (e.g. OJK)?
f. Has the company follow the other relevant regulations?
g. If all the 6 aspects above are not violated or if there is an insignificant violation and does not
affect the decision making then the opinion will be unqualified
h. If all the 6 aspects above are violated and it affect the decision making then the opinion
given will be adverse

There has never been a law suit until now

How to determine the audit fee

1. Level of difficulty of each accounts presented in the financial report

2. The size of the asset or company’s income
3. The strength of the structure of company’s internal control
4. The style of management’s leadership
5. The Public Accountant Firm’s fee structure
6. The amount of audit team and the audit working hours