Professional Documents
Culture Documents
NON-ACCOUNTANTS
INTRODUCTION
YOUR NAME
YOUR COOPERATIVE
YOUR POSITION
YOUR EXPECTATION
I.
Review of Auditing
II. Fundamentals
To Business
To Public
To Govt
ADVANTAGES TO BUSINESS
1. Independent Opinion
2. Verification of Books
3. Satisfaction of Owner
4. Detection and Prevention of Errors
5. Detection and Prevention of Frauds
6. Moral Check
7. Protection of the Rights and Interests of Shareholders
8. Reliance by Outsiders
9. Loan Facility
10. Easy Valuation
11. Up to Date Record
12. Reliance by Partners / Shareholders
ADVANTAGES TO PUBLIC
Exercise of judgment
Material misstatements
Failing of internal control system
TYPES OF AUDIT
Legal bases
Time of execution
Specific Objectives
LEGAL BASES
Statutory Audit (BIR, SEC, BSP, IC, etc)
TIME OF EXECUTION
Annual Audit
A. Advantages
B. Disadvantages
Interim Audit
A. Advantages
B. Disadvantages
SPECIFIC OBJECTIVE
Internal Audit
Management Audit
Cost Audit
Social Audit
Due Diligence Audit
Environment Audit
Financial Audit
Proprietary Audit
System Audit
AUDITOR
Meaning
Definition
Work
TYPES OF AUDITOR
Operational Audit
also known as Management or Performance
audits.
design to determine the effectiveness and efficiency
of management operations.
expected output are the recommendations for
improvements
General Types of Audit
Compliance Audit
performed to determine whether specific
procedures or rules are being followed.
the auditee generally determines the standard to be
followed.
the output is directed to a specific user rather than
a broad spectrum of users
General Types of Audit
Fraud Audits
- the investigation of anomalies
- gathering of evidence of fraud
- the legal goal is conviction
General Types of Audit
Planning
Fieldwork
Audit Report
Audit Follow Up
AUDIT
PROCESS
AUDIT
PROCESS
Client Comments
Audit Planning
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Conduct in office review
49
Review documents (criteria) related to the client
(laws, regulations, guidelines etc.)
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Confirmation: Getting evidences from third
parties where necessary.
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Evidence
63
Defn: Refers to all matters that supports a
point/position assumed by auditor
Qualities of an evidence
Evidence must be:-
Suffient ie. Adequate and convincing.
Competent ie. Reliable and best attainable.
Relevant ie. Supporting the observations and
recommendations; consistent with objectives.
Useful ie. Help the organization to meets its objective.
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Evidence.
Types of evidence
Inspection
- examining records, documents or tangible assets.
Inspection of records and documents provides audit
evidence of varying degrees of reliability depending on
their nature and sources and the effectiveness of internal
control over their processing.
Documentary evidence may be :
Created by entity and held by third parties
Created by third parties and held by the entity
Created by and held by the entity
Tracing
Dear :
93
During Planning
95
Substantive Analytical Procedures
96
Substantive Analytical Procedures
97
Investigating Results of
Analytical Procedures
99
Analytical Procedures When
Forming an Overall Conclusion
101
AUDIT ASSERTIONS
Categories of financial statement assertions
Occurrence
Completeness
Accuracy
Cutoff
Classification
Assertions about account balances at the
period end
Existence
Rights and Obligations
Completeness
Valuation
Assertions about presentation and
disclosure
WHY PREPARE
AUDIT WORKING PAPERS?
Why Prepare Audit Working Papers?
Working Papers
(Cont.)
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2
0
Current Index File (Cont.)
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2
1
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Basic Contents
Name of client
Basic Contents
The conclusions
reached
Basic Contents
Evidence of review
Basic Contents
Every working paper should include the
following information:
The conclusions reached
Evidence of review
PBC
2013 2014 _
Balance Beginning of Year P130,089 1 P151,691
Write-offs ( 71,087) 2 ( 62,439)
Provision 92,689 83,994_
Balance End of Year 1 P151,691 P173,246
========= =========
B B
DETAIL OF CURRENT WRITE-OFF
Date Customer Amount _
4-21-14 Lion King P 25,081
4-29-14 Jose Pedal 5,377
5-18-14 Atty. Ong 17,341
5-20-14 Sec. Bunye Original 10,093
Various amounts under P1,000 4,547_
2014 Write-Offs 2 P 62,439
==========
Examined write-off form approved by the controller noting agreement of date, customer and amount all
write-offs over P1,000.
Accumulated write-offs under P1,000 from detail maintained by the credit manager noting agreement.
Traced to Prior Year Audit Working Papers noting agreement.
Footed by XYZ & Co. and agrees.
XYZ COOPERATIVE
List of Outstanding Checks
Audit: 12-31-14
PBC
Amount _
P 991.90 NOTE 1> Reviewed the list of outstanding checks noting no unusual
15,000.00 or significant items except for A & B as discussed below.
2,001.03
12,576.13
A Per review of the vendor invoices and receiving reports, this
2,790.29 check is for lumber and supplies purchased for the additions to
1,745.75 the building site. See extracts from the board of directors
8,941.86 meeting minutes at XX for further discussion.
49,810.73
15,439.75 B B Per discussion with Gen. Garcia, Comptroller, these checks
4,989.51 P25,962.90 dated 12/30/04 were not released to the vendors until 1/2/05 as
5,533.64 ========= all authorized check signers were on vacation. Based on the
P122,410.43 dates these checks cleared the bank per our review on the
========== January 2005 bank statement, this explanation is reasonable.
Thus the following adjustment is proposed to properly state
cash and accounts payable at 12/31/04:
Examined cancelled checks returned by bank
together with the December 2005 bank statement, PAJE <1>
noted in order. Cash P25,962.90
Accounts Payable P25,962.90
Examined check register and noted that these were
not acknowledged received by the payee in
December 2004.
Footed by QCB & Co. and agrees.
SUBSTANTIVE PROCEDURES
CASH
Why is Cash Considered a Significant
Account Balance to be Audited?
144
Objectives in Auditing Cash Balances
Receipts/shipment
In-transit
Cutoff between inventory
Bill and hold
Coordinate with other audit
Test Final Inventory Listing
1.Add the revised Corrective Action Plan to the Draft Report to prepare the Final Report.
2.Submit report for review & clear review notes.
3.Distribute the final report.
Any Questions?