You are on page 1of 19

An Overview of External

Audit Processes

WHAT TO EXPECT IN AN
AUDIT
Introduction
Companies are subject to the scrutiny of several different
auditing bodies. In addition, several companies have
their own review department called Audit & Management
Advisory cell.
Routine Audit Focus- usually budget and finance but
may also include programmatic and support areas.
Business Officers are responsible for management of
companys resources. They generally provide the
justification for appropriateness of costs incurred and
financial transactions executed by departments / units
they represent.
Definition of Audit
A formal process where activities and
records are examined and compared to
predetermined audit criteria such as :

Statutory regulatory requirements
SECP policies and procedures
Management goals and objectives
External Audit
Planning Process
High Risk Audits
Special Reviews/Management Requests
Audit Committee Representation as
Requested
Internal Control Education
Internal Audit Coordination
Financial Process Self-Assessment
Types of Audits
Planned Audits - Audits on the annual plan.
Special Request Audits- Audits requested by
Clients management as needed.
Investigations-Audits conducted in accordance with
Auditing and Accounting Standards (ISA & IAS).
Types of External Audit Services

Small Consultations

Other Advisory Services

Business Process Self-Assessment
(BPSA)
External Audit
Audits can be broadly grouped into two
categories. Both may include the
evaluation of systems of internal control.
Financial Audits
Determine the reliability and accuracy of financial
records
Performance Audits
Determine the economy and efficiency of
resources
Audit Agencies



Securities and Exchange Commission of
Pakistan (SECP)

Regulatory Bodies

Audit Agencies



Accounting Bodies, ICAP, ACCA, ICAEW
Taxation Authorities
Lenders/ Finance Providers


Audit Agencies
Audit Service Providers
Price Waterhouse Coopers Firm
Ernst & Young
Delloite & Touche
KPMG

While each agencys audit
process is specific to its
own environment, most
audit processes are similar
to those listed in the
following steps:
The Audit Process
The Audit Process
Notification

Initial Discussion

Audit Plan

Opening Conference
The Audit Process

Field Work is performed to:
Collect detail information based upon audit scope
Record findings in audit working papers
Interview Client personnel as appropriate
Review departmental files and support documents
Review of applicable policies and procedures & regulatory
requirements
Conduct sample selection and testing of transactions
The Audit Process

Interim Findings or Draft Report is based on
field work conducted, and usually contains the following:
An evaluation of the effectiveness and appropriateness of
Clients control systems if an external review and
departmental control processes if an internal review
Compliance with established policies and procedures and /
or applicable regulatory requirements
Closing Conference
The Audit Process

Final Audit Report

Action Plan

Follow -up Audit / Review
The Audit Process
A Word About Documentation

During an external audit, is very common for an
auditor to request copies of Clients
documentation. The collection of data is a
normal part of an auditors fieldwork and
supports the opinions that he/she will render.
The Audit Process
Remember the following concerning
documentation:

Provision of documentation may be subject to
negotiation between Client and the audit Firm

Management should be informed of and approve
release of any documents requested by the
auditor
The Audit Process
Copies of documents should be retained
in your files or by Client if determined
appropriate

Never send documents to an external
audit Firm that is not part of an official
approved audit
Where Do I Go For Help?
Contact Firm or Discuss within the
Management for assistance on any matter
involving an audit

Firm is responsible for external audit
coordination and for formulating Clients
official audit response

You might also like