This presentation covers the types of audit, its practical implications, tools for conducting audits, how to plan an audit, and what the outcomes of audit planning and finally how to execute an audit.

1. AUDIT- THE PRACTICAL
SIDE
BY SYED MUHAMMAD IJAZ, FCA, LL.B. ADVOCATE HIGH COURT
PARTNER HUZAIMA IKRAM & IJAZ

2. Table of contents
 Types of Audit
 Overview
 Accepting a client
 Audit Planning
 Outcomes of Audit Planning
 Execution of Audits
 Use of Technology and other Tools
 Quality Assessment of Audit
 Q & A session

3. Types of Audit

4. Types of Audit
 Statutory Audits or External Audits
 Financial Audits
 Cost Audits
 Tax Audits
 Assurance Assignments/Agreed Upon Procedures-AUPs
 Internal Audits
 Forensic Audits

5. Overview

6. Statutory Audits
 Mandatory by law/Statute
 Require reasonable assurance or even more
 All Audits are assurances but not all assurances are audits
 Examples are;
 Financial Audits under Companies Act 2017 earlier Companies Ordinance 1984, Banking
Companies Ordinance 1962 and Modaraba Companies Ordinance, 1980
 Tax Audits under various tax laws where some times CAs and CMAs are given special powers to
conduct audits on given parameters
 Cost audits Under Companies Act 2017

7. Assurance/Agreed Upon Procedures
(AUPs)
 Not Mandatory
 Mandatory in some cases
 Require specific or less than reasonable assurance
 All Audits are assurances but not all assurances are audits
 Examples are;
 Various certificates to be issued under various statutes e.g. Share deposit money certificate
 Payroll Audits
 System’s Audits
 Control Audits/Assessments

8. Internal Audits
 Not Mandatory
 Done in house
 Detailed audits of processes, Controls, procedures and executions
 Detection of loop holes in system, minimizing any risks of fraud and pilferages
 Staff normally reports to an independent Committee namely the Audit
Committee/Internal Audit Committee
 Targeted to specific goals
 Watch dog functions for the shareholder’s wealth

9. Forensic Audits
 Audits done for detection of white color Crimes e.g.
 Corruption
 Assets beyond means
 Assets and Funds misappropriations
 Kick Backs
 Transfer Pricing
 Layering
 Financial Statement Frauds
 Benami Transactions and Money Laundering
 Cooked Books-May include all or any of above

10. Forensic Audits
 Recent Cases
 Habibullah Case-Amnesty for 1.4 either PKR or USD still not clear- Involves breach of trust of shareholders
 Hussain Lawai Case-Money laundering and benami Transactions
 Panama Case investigation-Assets beyond means and corrupt practices
 Recent Movies
 The Accountant- Ben Affleck
 Catch me if you can- Leonardo De Caprio and Tom Hanks
 The Wolf of Wall street- Leonardo De Caprio
 Old Cases
 The penny Fraud
 Enron, Cendant, and WorldCom are examples of massive companies torn apart by financial fraud and scandal
 Ponzi or Pyramid scheme

11. Accepting a Client

12. Pre-Audit Process
 Accepting a client
 Initial Communications
 Terms of Engagements
 By Law
 By Client
 Conflict of Interest Check Pass
 Initial assessment of documents and Terms of References [TORs] vs Skill availability and
deployment
 Engagement Letters- the Auditor’s [TORs]
 Acceptance or Decline

13. Audit Planning

14. Audit Planning

15. Thinking out of Box-When planning
Thinking out of
Box

16. Planning outcomes

17. Outcomes of Audit Planning

18. Execution of Audits

19. Execution of Audits

20. Audit Tools

21. Tools for Audit Planning and Audit
 IFAC guidelines
 Requirements of Local Laws and Statutes
 ICAP check Lists
 Regulatory Guidelines
 Auditing Software
 Internet, information gathering and Data mining
 Print media
 IFRS and IAS
 Pathological Support
 Chemicals, DNAs, Reports, Finger Prints
 Interviews/Meetings and Questionnaires
 Use of Technology- e.g. Surveillance tools

22. IFACs guidelines and Standards
https://www.ifac.org/global-knowledge-gateway/audit-assurance?overview
 International Standard on Quality Control 1 (ISQC 1)
ISQC 1 sets out an accounting firm’s responsibilities for its system of quality control and applies
to all audits and reviews of financial statements, and other assurance and related services
engagements, performed by the firms‘ professional accountants.
 100-999 International Standards on Auditing (ISAs)
ISAs are to be applied in the audit of historical financial information.
 2000-2699 International Standards on Review Engagements (ISREs)
ISREs are to be applied in the review of historical financial information.
 3000-3699 International Standards on Assurance Engagements (ISAEs)
ISAEs are to be applied in assurance engagements other than audits or reviews of historical
financial information.
 4000-4699 International Standards on Related Services (ISRSs)

23. Quality Assessment and
Control

24. Quality Controls-Pre and Post Audits

25. CONCLUDED- THANK
YOU VERY MUCH
Syed Muhammad Ijaz
Partner
Huzaima Ikram & Ijaz
www.hii.com.pk
0332-8655096
info@hii.com.pk