The document summarizes chapters from an auditing textbook presented by Mehroze Tariq. It covers the verification of various assets and liabilities, including fixed assets, current assets, capital, reserves, deferred taxation, debentures, loans, contingent liabilities and more. It also includes a suggested stock certificate for verification of stock quantities and values.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
This document discusses the auditor's procedures for verifying different types of assets. It explains that verification of assets involves examining records like the fixed asset register to check the accuracy of assets reported on the balance sheet. It provides examples of fixed assets like machinery, equipment, and vehicles. It also outlines the auditor's steps for verifying properties, checking for impairment, and ensuring proper valuation and disclosure of fixed assets in financial statements. The document provides similar guidance for verifying intangible assets like patents, trademarks, and copyrights.
Auditing ,rights and duties of an auditorfizaibrahim6
This document provides an overview of auditing and corporate reporting. It defines an audit as the independent examination of financial information of any entity to express an opinion. An auditor's role is to carefully check the accuracy of business records and ensure organizations maintain accurate financial statements. The document outlines the key features of an audit including critical review of systems and procedures, testing results and operations, and expressing an opinion. It also details an auditor's powers, rights such as access to books and ability to correct wrong statements, and duties like making a report on accounts and compliance with auditing standards.
The document summarizes key provisions relating to the duties and powers of auditors under Section 143 of the Companies Act 2013 in India. It discusses the following in 3 sentences or less:
- Section 143(1) outlines matters auditors must inquire into including loans/advances, personal expenses, asset sales, and share issuances.
- Section 143(2) requires auditors to report on accounts examined and compliance with accounting standards in reports to the company.
- Sections 143(3) and 143(4) specify the contents of audit reports, including compliance with laws and standards, transactions, director qualifications, and reasons for qualifications.
Income Tax Assessment Procedures - Section 143, 144 and moreSahil Goel
The document discusses various aspects of the income tax assessment procedure in India. It defines assessment as the procedure for determining a taxpayer's tax liability as per the taxation laws for a particular assessment year. There are different types of assessments - self-assessment, regular assessment, and best judgment assessment. It also discusses provisions around filing original and revised tax returns, notices issued by the assessing officer, and reopening of past assessments if income is found to have escaped assessment.
The document discusses procedures for verifying and auditing various expenses and incomes. It provides guidance on examining documentary evidence for transactions like payments of taxes, customs duties, salaries, travel expenses, capital receipts, interest income and verification of assets like plant and machinery, land and buildings, investments and more. The auditor is advised to check documents like invoices, bills, receipts, registers, title deeds to validate transactions and asset ownership, value and existence.
This document defines and explains endorsement of negotiable instruments. It begins by defining endorsement as signing over the right to receive payment from a negotiable instrument to another person. It then discusses the key parties in an endorsement - the endorser who signs and the endorsee in whose favor it is made. The document outlines the essential requirements for a valid endorsement and various legal provisions and rules regarding endorsement. It concludes by defining and explaining the different types of endorsements including blank, special, conditional, restrictive, sans recourse, facultative, forged, and partial endorsements.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
This document discusses the auditor's procedures for verifying different types of assets. It explains that verification of assets involves examining records like the fixed asset register to check the accuracy of assets reported on the balance sheet. It provides examples of fixed assets like machinery, equipment, and vehicles. It also outlines the auditor's steps for verifying properties, checking for impairment, and ensuring proper valuation and disclosure of fixed assets in financial statements. The document provides similar guidance for verifying intangible assets like patents, trademarks, and copyrights.
Auditing ,rights and duties of an auditorfizaibrahim6
This document provides an overview of auditing and corporate reporting. It defines an audit as the independent examination of financial information of any entity to express an opinion. An auditor's role is to carefully check the accuracy of business records and ensure organizations maintain accurate financial statements. The document outlines the key features of an audit including critical review of systems and procedures, testing results and operations, and expressing an opinion. It also details an auditor's powers, rights such as access to books and ability to correct wrong statements, and duties like making a report on accounts and compliance with auditing standards.
The document summarizes key provisions relating to the duties and powers of auditors under Section 143 of the Companies Act 2013 in India. It discusses the following in 3 sentences or less:
- Section 143(1) outlines matters auditors must inquire into including loans/advances, personal expenses, asset sales, and share issuances.
- Section 143(2) requires auditors to report on accounts examined and compliance with accounting standards in reports to the company.
- Sections 143(3) and 143(4) specify the contents of audit reports, including compliance with laws and standards, transactions, director qualifications, and reasons for qualifications.
Income Tax Assessment Procedures - Section 143, 144 and moreSahil Goel
The document discusses various aspects of the income tax assessment procedure in India. It defines assessment as the procedure for determining a taxpayer's tax liability as per the taxation laws for a particular assessment year. There are different types of assessments - self-assessment, regular assessment, and best judgment assessment. It also discusses provisions around filing original and revised tax returns, notices issued by the assessing officer, and reopening of past assessments if income is found to have escaped assessment.
The document discusses procedures for verifying and auditing various expenses and incomes. It provides guidance on examining documentary evidence for transactions like payments of taxes, customs duties, salaries, travel expenses, capital receipts, interest income and verification of assets like plant and machinery, land and buildings, investments and more. The auditor is advised to check documents like invoices, bills, receipts, registers, title deeds to validate transactions and asset ownership, value and existence.
This document defines and explains endorsement of negotiable instruments. It begins by defining endorsement as signing over the right to receive payment from a negotiable instrument to another person. It then discusses the key parties in an endorsement - the endorser who signs and the endorsee in whose favor it is made. The document outlines the essential requirements for a valid endorsement and various legal provisions and rules regarding endorsement. It concludes by defining and explaining the different types of endorsements including blank, special, conditional, restrictive, sans recourse, facultative, forged, and partial endorsements.
The document summarizes the key provisions around appointment and qualifications of auditors under the Companies Act. It discusses who can be appointed as an auditor, circumstances for disqualification, appointment of first, subsequent and casual vacancy auditors, appointment through special/ordinary resolution, remuneration of auditors, ceiling on number of audits, and provisions for special, cost and branch audits.
The document discusses debentures, which are a type of creditor security issued by companies to borrow funds. Debentures acknowledge a debt and provide the holder with a fixed rate of interest. They are issued for purposes like setting up new projects, expansion, or mergers. There are various types of debentures, including secured/unsecured, redeemable/perpetual, and convertible/non-convertible debentures. Debenture holders are creditors and do not have ownership or voting rights in the company. While debentures provide benefits like a steady return, there are also risks if the company defaults on interest or principal payments.
Presentation on vouching and verification for the benefit of B Com financial Audit students, topics covered are vouching of revenue items , verification and valuation of capital expenditure, receipts and valuation and verification of inventory
Every company has to mandatorily appoint statutory auditors for examining the true and fair view of the financial statements and to express an opinion on such financial statements. Apart from statutory auditors, there are other types of auditors to be appointed for monitoring the statutory compliances, risk / fraud management system, internal control system and for reviewing the overall performance of the management and various functions in an organisation. The webinar covers the aspects of provisions relating to appointment of statutory auditors/ internal auditors, qualification and eligibility criteria for appointment, statutory compliances and judicial precedents.
The document discusses the process of winding up or dissolving a company in India. It can be done either voluntarily through a resolution of shareholders/creditors or compulsory through an order of the court. The liquidator takes control of the company's assets and property to pay off debts and distribute any surplus to shareholders. Various grounds for voluntary and compulsory winding up are provided, along with priority of payments of liabilities and special provisions for different types of companies like government companies and foreign companies.
1. Origin Of Companies Act in India
2. What is a Company?
3. Definition & Characteristics
4. Different Type Of Entities:
a. On Basis Of Liability
b. On Basis Of Registration
5. Small Company
6. Private Company
7. Public Company
8. Unlimited Company
9. Foreign Company
10. Government Company
11. Holding, Subsidiary, Associate Company
12. Investment Companies
13. Promoters
14. Incorporation Of Registration
15. MOA, AOA
16. Tata Sons Vs Cyrus Mistry
17. Vodafone Tax Case
Audit Programme is prepared before the actual auditing procedure starts. it is essential for Auditors. There are numerous things that need to be considered while making an audit programme.
There are several special types of banking customers including minors, married women, drunkards, lunatics, partnership firms, joint accounts, and joint stock companies. Minors require a parent or guardian's assistance to open an account. Lunatics and drunkards may not be able to enter into contracts validly. Illiterate customers require thumbprints and photographs for identification. Married women can open personal accounts. Partnership firm and joint stock company accounts should be opened in the name of the business rather than individuals.
The document discusses techniques for verifying assets and liabilities during an audit. It outlines six key techniques: 1) verifying physical existence, 2) assessing correct valuation, 3) confirming ownership, 4) ensuring proper disclosure, 5) identifying any charges on assets, and 6) checking for proper authorization of transactions. Specific procedures are described for different asset types, including obtaining certificates from management and third parties. The auditor must also consider events after the balance sheet date and obtain a management representation letter.
This document discusses the appointment, remuneration, and qualifications of auditors for companies in India. It outlines that the first auditor of a company is appointed by the Board of Directors or members within 30 days and holds office until the first AGM. Subsequent auditors are appointed at the AGM based on nominations by the Board. Government companies have auditors appointed by the central government. Auditors may be appointed to fill casual vacancies by the Board or at an AGM. Only chartered accountants or firms are qualified to be auditors. Remuneration is determined by the authority that appoints the auditor.
1) The Life Insurance Corporation Act of 1956 nationalized the life insurance business in India and established the Life Insurance Corporation of India (LIC) to take over the business and assets of existing life insurers.
2) The LIC was given powers to carry on life insurance business both in India and abroad, invest funds, borrow money, and enter into arrangements to further its business operations.
3) The act also outlined the process for transferring existing life insurance policies, employees, assets, and documents of private insurers to the LIC.
The document discusses the residential status and tax liability of individuals and entities in India. It defines the basic conditions to determine if a person is a resident, ordinary resident, or non-resident based on the number of days spent in India. An ordinary resident's total income and tax liability is the highest, including both Indian and foreign income. A non-resident's total income and tax liability is based only on Indian income. The residential status of entities like HUF, companies, firms, and AOP is also determined based on the control and management of their affairs being within or outside of India.
There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares do not have a fixed dividend rate and holders have voting rights. Preference shares have a fixed dividend rate and preferential rights to repayment of capital. There are various kinds of preference shares based on factors like cumulative/non-cumulative dividends and participation in profits. Deferred shares rank below equity and preference shares for dividend payments and repayment of capital.
This document provides information on company auditors, including their appointment, qualifications, rights, duties, and removal. It defines auditing as the systematic examination of a company's books and records to verify financial operations. An auditor must be independent, have integrity, be objective, and have communication skills. Their rights include access to records and attendance of shareholder meetings. Duties include complying with standards, reporting fraud, and signing audit reports. Auditors are typically appointed by directors or shareholders and can be removed before their term with proper notice and representation rights.
A debenture is a type of loan issued by a company to raise funds. There are different types of debentures based on security, redemption period, record keeping, and convertibility. Debentures offer companies a way to raise funds for a specific period without diluting ownership, but carry more risk than shares if the company fails to repay on time. Debenture holders are creditors entitled to interest payments, while shareholders are owners entitled to potential dividend payments from company profits.
Company audits involve examining a company's financial statements to give an expert opinion on whether they fairly represent the company's financial position. The auditor must follow compliance procedures to ensure reliance on internal controls and perform substantive procedures to check financial data in statements. Auditors must also ensure transactions comply with company law. Appointment, removal, and responsibilities of auditors are outlined in the Company Act.
Audit working papers are documents prepared or obtained by auditors that provide evidence of the audit work performed. They include information used to plan and conduct the audit, as well as evidence to support the auditor's opinion. Working papers serve several purposes, such as providing evidence of compliance with auditing standards, supporting the conclusions in the audit report, and allowing for review of the audit work. They must be organized, indexed, and signed or initialed by the preparer and reviewer. Working papers are the property of the auditing firm but may be subpoenaed by a court.
An audit program provides direction for an audit team to properly execute an audit. It contains detailed steps and procedures for the audit team to follow in conducting the audit. The program outlines how to assess the entity's business, allocate work among team members, and estimate timing. It also provides details on evidence, materiality levels, risk tolerance, and measuring evidence sufficiency. The audit program helps ensure important areas are considered, allocates work based on skills, and enhances accountability. However, the program can become rigid and mechanical if it ignores changes or new issues over time.
1. The document discusses auditing procedures for owners' equity accounts, including capital stock, paid-in capital, retained earnings, and dividends.
2. The auditor verifies that owners' equity transactions are properly authorized and accurately recorded in the accounts. For capital stock, this includes confirming share amounts with transfer agents and examining board meeting minutes.
3. The auditor also confirms that retained earnings are properly adjusted for net income/loss and dividends declared, and that presentation and disclosure requirements are met.
This document discusses various types of vouching procedures an auditor should perform when auditing different accounts and transactions. It covers vouching of primary documents and collateral documents, cash sales, rent receivable, dividends received, interest receipts, sale of investments, payments to creditors, capital expenditures, trading transactions like purchases and returns. The auditor needs to check supporting documents, calculations, authorization and proper recording of transactions.
The document summarizes the key provisions around appointment and qualifications of auditors under the Companies Act. It discusses who can be appointed as an auditor, circumstances for disqualification, appointment of first, subsequent and casual vacancy auditors, appointment through special/ordinary resolution, remuneration of auditors, ceiling on number of audits, and provisions for special, cost and branch audits.
The document discusses debentures, which are a type of creditor security issued by companies to borrow funds. Debentures acknowledge a debt and provide the holder with a fixed rate of interest. They are issued for purposes like setting up new projects, expansion, or mergers. There are various types of debentures, including secured/unsecured, redeemable/perpetual, and convertible/non-convertible debentures. Debenture holders are creditors and do not have ownership or voting rights in the company. While debentures provide benefits like a steady return, there are also risks if the company defaults on interest or principal payments.
Presentation on vouching and verification for the benefit of B Com financial Audit students, topics covered are vouching of revenue items , verification and valuation of capital expenditure, receipts and valuation and verification of inventory
Every company has to mandatorily appoint statutory auditors for examining the true and fair view of the financial statements and to express an opinion on such financial statements. Apart from statutory auditors, there are other types of auditors to be appointed for monitoring the statutory compliances, risk / fraud management system, internal control system and for reviewing the overall performance of the management and various functions in an organisation. The webinar covers the aspects of provisions relating to appointment of statutory auditors/ internal auditors, qualification and eligibility criteria for appointment, statutory compliances and judicial precedents.
The document discusses the process of winding up or dissolving a company in India. It can be done either voluntarily through a resolution of shareholders/creditors or compulsory through an order of the court. The liquidator takes control of the company's assets and property to pay off debts and distribute any surplus to shareholders. Various grounds for voluntary and compulsory winding up are provided, along with priority of payments of liabilities and special provisions for different types of companies like government companies and foreign companies.
1. Origin Of Companies Act in India
2. What is a Company?
3. Definition & Characteristics
4. Different Type Of Entities:
a. On Basis Of Liability
b. On Basis Of Registration
5. Small Company
6. Private Company
7. Public Company
8. Unlimited Company
9. Foreign Company
10. Government Company
11. Holding, Subsidiary, Associate Company
12. Investment Companies
13. Promoters
14. Incorporation Of Registration
15. MOA, AOA
16. Tata Sons Vs Cyrus Mistry
17. Vodafone Tax Case
Audit Programme is prepared before the actual auditing procedure starts. it is essential for Auditors. There are numerous things that need to be considered while making an audit programme.
There are several special types of banking customers including minors, married women, drunkards, lunatics, partnership firms, joint accounts, and joint stock companies. Minors require a parent or guardian's assistance to open an account. Lunatics and drunkards may not be able to enter into contracts validly. Illiterate customers require thumbprints and photographs for identification. Married women can open personal accounts. Partnership firm and joint stock company accounts should be opened in the name of the business rather than individuals.
The document discusses techniques for verifying assets and liabilities during an audit. It outlines six key techniques: 1) verifying physical existence, 2) assessing correct valuation, 3) confirming ownership, 4) ensuring proper disclosure, 5) identifying any charges on assets, and 6) checking for proper authorization of transactions. Specific procedures are described for different asset types, including obtaining certificates from management and third parties. The auditor must also consider events after the balance sheet date and obtain a management representation letter.
This document discusses the appointment, remuneration, and qualifications of auditors for companies in India. It outlines that the first auditor of a company is appointed by the Board of Directors or members within 30 days and holds office until the first AGM. Subsequent auditors are appointed at the AGM based on nominations by the Board. Government companies have auditors appointed by the central government. Auditors may be appointed to fill casual vacancies by the Board or at an AGM. Only chartered accountants or firms are qualified to be auditors. Remuneration is determined by the authority that appoints the auditor.
1) The Life Insurance Corporation Act of 1956 nationalized the life insurance business in India and established the Life Insurance Corporation of India (LIC) to take over the business and assets of existing life insurers.
2) The LIC was given powers to carry on life insurance business both in India and abroad, invest funds, borrow money, and enter into arrangements to further its business operations.
3) The act also outlined the process for transferring existing life insurance policies, employees, assets, and documents of private insurers to the LIC.
The document discusses the residential status and tax liability of individuals and entities in India. It defines the basic conditions to determine if a person is a resident, ordinary resident, or non-resident based on the number of days spent in India. An ordinary resident's total income and tax liability is the highest, including both Indian and foreign income. A non-resident's total income and tax liability is based only on Indian income. The residential status of entities like HUF, companies, firms, and AOP is also determined based on the control and management of their affairs being within or outside of India.
There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares do not have a fixed dividend rate and holders have voting rights. Preference shares have a fixed dividend rate and preferential rights to repayment of capital. There are various kinds of preference shares based on factors like cumulative/non-cumulative dividends and participation in profits. Deferred shares rank below equity and preference shares for dividend payments and repayment of capital.
This document provides information on company auditors, including their appointment, qualifications, rights, duties, and removal. It defines auditing as the systematic examination of a company's books and records to verify financial operations. An auditor must be independent, have integrity, be objective, and have communication skills. Their rights include access to records and attendance of shareholder meetings. Duties include complying with standards, reporting fraud, and signing audit reports. Auditors are typically appointed by directors or shareholders and can be removed before their term with proper notice and representation rights.
A debenture is a type of loan issued by a company to raise funds. There are different types of debentures based on security, redemption period, record keeping, and convertibility. Debentures offer companies a way to raise funds for a specific period without diluting ownership, but carry more risk than shares if the company fails to repay on time. Debenture holders are creditors entitled to interest payments, while shareholders are owners entitled to potential dividend payments from company profits.
Company audits involve examining a company's financial statements to give an expert opinion on whether they fairly represent the company's financial position. The auditor must follow compliance procedures to ensure reliance on internal controls and perform substantive procedures to check financial data in statements. Auditors must also ensure transactions comply with company law. Appointment, removal, and responsibilities of auditors are outlined in the Company Act.
Audit working papers are documents prepared or obtained by auditors that provide evidence of the audit work performed. They include information used to plan and conduct the audit, as well as evidence to support the auditor's opinion. Working papers serve several purposes, such as providing evidence of compliance with auditing standards, supporting the conclusions in the audit report, and allowing for review of the audit work. They must be organized, indexed, and signed or initialed by the preparer and reviewer. Working papers are the property of the auditing firm but may be subpoenaed by a court.
An audit program provides direction for an audit team to properly execute an audit. It contains detailed steps and procedures for the audit team to follow in conducting the audit. The program outlines how to assess the entity's business, allocate work among team members, and estimate timing. It also provides details on evidence, materiality levels, risk tolerance, and measuring evidence sufficiency. The audit program helps ensure important areas are considered, allocates work based on skills, and enhances accountability. However, the program can become rigid and mechanical if it ignores changes or new issues over time.
1. The document discusses auditing procedures for owners' equity accounts, including capital stock, paid-in capital, retained earnings, and dividends.
2. The auditor verifies that owners' equity transactions are properly authorized and accurately recorded in the accounts. For capital stock, this includes confirming share amounts with transfer agents and examining board meeting minutes.
3. The auditor also confirms that retained earnings are properly adjusted for net income/loss and dividends declared, and that presentation and disclosure requirements are met.
This document discusses various types of vouching procedures an auditor should perform when auditing different accounts and transactions. It covers vouching of primary documents and collateral documents, cash sales, rent receivable, dividends received, interest receipts, sale of investments, payments to creditors, capital expenditures, trading transactions like purchases and returns. The auditor needs to check supporting documents, calculations, authorization and proper recording of transactions.
The document provides an overview of topics related to auditing various types of financial transactions and documents. It discusses auditing procedures for vouching, payments, receipts, cash transactions, purchases, sales, ledgers, and other areas. Verification steps are outlined to ensure transactions are properly documented and recorded in the accounting books. Internal control systems and documentary evidence are areas of focus for the auditor.
This document provides an overview of auditing, including:
- The objectives and evolution of auditing from detecting errors and frauds to ascertaining if accounts are true and fair.
- Key definitions including that auditing is a systematic and independent examination of data, statements, records, operations and performance for a stated purpose.
- The features and objectives of auditing including verifying financial statements exhibit a true and fair view, and expressing an opinion on the statements.
Verification and valuation of assets and liabilitiessuganyababu14
The document discusses verification and valuation of assets and liabilities. It describes the auditor's role in verifying the existence, ownership, classification, and valuation of assets and liabilities. Key aspects of verification include examining documentary evidence, testing internal controls, and confirming physical existence, ownership, and proper use of assets. Valuation involves determining the exact value of assets based on original cost, depreciation, and factors like useful life. Specific guidance is provided on verifying types of assets like fixed assets, investments, stock, debtors, creditors, and bills payable.
This document discusses the verification of assets and liabilities by an auditor. It begins by defining verification as confirming the truth and accuracy of financial statements according to relevant legislation. The objectives of verification are then outlined, including certifying ownership of assets and detecting any fraud. The document then discusses the verification process for different types of assets, including intangible assets (goodwill, patents, copyrights), fixed assets (land, buildings, plant and machinery), and current/floating assets (cash, bills receivable, debtors). Verification steps involve examining documents, agreements, certificates and conducting counts and confirmations. Valuation methods are also briefly described for each asset type.
This document outlines areas that should be covered in an internal audit of a manufacturing company. It discusses 12 key areas: purchases, sales, creditors, debtors, subcontracting, inventory, export incentives, price escalation, cash management, payroll, labor contractors, and a review of management information systems and internal controls. For each area, it provides 1-3 sentences on audit procedures and checks that should be performed. The conclusion reiterates that this covers many important but not all potential audit areas, and is meant to be a starting point rather than a standardized audit program.
The document discusses various audit procedures related to testing cash, revenue, expenses, investments, financing, and other cycles. It provides examples of substantive tests that can be performed for balances such as plant assets, long-term debt, and cash. It also describes audit evidence that can be used, including cash disbursement journals, bank reconciliations, canceled checks, and confirmations with customers, lenders, and banks. The document is a reference guide for auditors, outlining the types of tests and evidence applicable for different financial statement line items and cycles.
The document discusses the process of vouching in auditing. It defines vouching as the examination of documentary evidence supporting transactions. The objectives of vouching include detecting errors and frauds, verifying the truth and completeness of accounts, and ensuring transactions are authorized. The document outlines the principles, techniques, types of vouchers, and importance of vouching transactions such as cash sales, purchases, rent receivables, and payments to creditors. It also discusses routine checking which regularly monitors accounts to detect errors.
The document discusses auditing procedures for trade receivables and payables. It outlines the objectives of auditing these accounts which include existence, completeness, valuation, and disclosure. It then describes relevant assertions and provides examples of substantive audit tests that can be used, such as direct confirmation of receivable and payable balances, testing sales and purchase transactions, and verifying the aging of receivables. Routine procedures and internal controls for accounts payable are also discussed.
Vouching involves examining documentary evidence to verify transactions recorded in accounting books. It establishes the accuracy and authenticity of entries.
Some key aspects of vouching include checking that vouchers are numbered and cancelled, examining high risk transactions like those with owners, and verifying dates, amounts, and names match the cash book. The auditor must also consider the nature of payments.
Vouching is important as it forms the basis for further audit work and fulfills the purpose of checking entries. It helps ensure transactions are valid, correctly recorded, and supported by evidence. This detects errors and potential fraud.
The document discusses the advantages of auditing. It lists 15 advantages such as errors and frauds being detected early, accounts clerks being more vigilant, audited accounts being accepted by tax authorities, and management being able to get advice from auditors. It also discusses different types of audits based on legislative control, relationship with management, periodicity, coverage, and manner of checking. The last section compares internal auditing with external auditing.
PPT-AUDITING-QUALIFICATION,RIGHTS AND DUTIES.pptxHeldaMaryA
1. An auditor is responsible for examining a company's accounting records and financial statements to ensure they are accurate and in accordance with relevant standards and regulations.
2. Key qualifications for an auditor include being a chartered accountant certified by the Institute of Chartered Accountants of India. Important qualities are sovereignty, honesty, strong communication skills, maintaining confidentiality, and expertise in business and accounting.
3. Primary duties of an auditor are to produce an audit report, make proper disclosures in the report including whether the financial statements accurately represent the company's performance and financial position, and endorse the finalized audit report.
This document outlines areas that should be covered in an internal audit of a manufacturing company. It discusses 12 key areas: purchases, sales, creditors, debtors, subcontracting, inventory, export incentives, price escalation, cash management, payroll, labor contractors, and a review of management information systems and internal controls. The goal is to evaluate financial records, internal processes, and risks to help management ensure efficiency, effectiveness and compliance.
The document discusses auditing investments and cash balances. It covers auditing objectives for investments including occurrence, completeness, accuracy, cutoff, and classification of transactions. It also discusses common investment documents and records, internal controls over investment functions, and substantive audit tests for investments including analytical procedures and tests of transactions. For cash balances, it discusses the relationship to transaction cycles, cash budgeting, and substantive audit tests including cutoff tests, bank reconciliations, and confirmation procedures.
Similar to Introduction to Auditing by Prof. Khwaja Amjad Saeed (20)
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Explore the fascinating world of the Gemini Zodiac Sign. Discover the unique personality traits, key dates, and horoscope insights of Gemini individuals. Learn how their sociable, communicative nature and boundless curiosity make them the dynamic explorers of the zodiac. Dive into the duality of the Gemini sign and understand their intellectual and adventurous spirit.
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Digital Marketing best practices including influencer marketing, content creators, and omnichannel marketing for Sustainable Brands at the Sustainable Cosmetics Summit 2024 in New York
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https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
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[To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
This PowerPoint compilation offers a comprehensive overview of 20 leading innovation management frameworks and methodologies, selected for their broad applicability across various industries and organizational contexts. These frameworks are valuable resources for a wide range of users, including business professionals, educators, and consultants.
Each framework is presented with visually engaging diagrams and templates, ensuring the content is both informative and appealing. While this compilation is thorough, please note that the slides are intended as supplementary resources and may not be sufficient for standalone instructional purposes.
This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
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2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
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12. Design Sprint Framework
13. The Double Diamond
14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
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To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations
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Introduction to Auditing by Prof. Khwaja Amjad Saeed
1. PRESENTATION OF SLIDES
BY: MEHROZE TARIQ #78
BBA (HONS) VII-B
TO: SIR AMIR HUSSAIN
PRINCIPLES OF AUDITING
BY PROF. KHWAJA AMJAD SAEED
Mehroze Tariq
2. CONTENTS:
Chapter #05: Verification- General
Chapter #06: Verification- Liabilities
Chapter #07: Verification- Assets
Chapter #09: Auditor of a Limited Company
All selected from the book:
Principles of Auditing,
by Prof. Khwaja Amjad Saeed
Mehroze Tariq
4. NEED FOR VERIFICATION:
• Verification is the process carried out by the auditor
that would enable him to submit his report addresses
to the shareholders to his entire satisfaction.
• An auditor is required to submit a report to
shareholders mentioning whether the balance sheet is
a true & fair representative of company’s financial
position.
• Verification enables auditor to check possible change
of ownership, decreased asset value or its ceased
existence.
Mehroze Tariq
5. SIX POINT VERIFICATION TECHNIQUE:
1) Satisfaction as to the existence of an asset & liability.
2) Ensuring the correct valuation of assets & liabilities.
3) Verifying the validity of the question of ownership in
respect to asset or liability.
4) Satisfaction as to the disclosure of each asset or liability as
required by the law.
5) Check weather any of the assets is under charge or not,
and a disclosure to that effect.
6) Checking the acquisition and disposal of assets & liabilities
with accordance to proper authorization as laid down in
the memorandum of the company.
Mehroze Tariq
6. 1. Physical Existence:
Checking the physical existence of an item appearing in
balance sheet is carried out by TWO techniques;
#01: A stress on physical verification of items by actual
count, weighing or measurement.
#02: Check documentary evidence and certified inventories
duly signed by an authorized person.
E.g., Physical existence of the cash in hand, cash must be
counted by the auditor as on the date of balance sheet.
• Investments held must be physically examined.
• Certainty to the existence of liability must be made to
relevant documentary evidence.Mehroze Tariq
7. 2. Correct Valuation:
• Fixed Assets: Fixed assets are valued at cost less
depreciation. Their market value is ignored because
market value does not affect their earning power.
• Current Assets: These assets is being valued on the basis
of cost or market price whichever is lower.
• Wasting Assets: The book value of gradually consumed
assets in the process of earning income must be reduced
to the extent of estimated amount by which it has
diminished in value.
Book Value = Cost - Accumulated Depreciation
Mehroze Tariq
8. 3. Ownership:
• Ownership of investments is to be verified by
physically seeing the name of client on share
certificate/ physical examination by the auditor/
seeing a confirmatory certificate directly from the
banker.
• Ownership of bank balance in the name of the
client will be verified by reference to the
confirmation of client’s banker.
• Example: The ownership of motor car is to be
checked with registration book seeing that the
name of the client is stated as the owner.
Mehroze Tariq
9. 4. Correct Disclosure:
The part of the auditor to verify whether
the information which is required by law
has in fact been given in the balance
sheet on which the auditor is submitting
his report.
Mehroze Tariq
10. 5. Assets Under A Charge:
Assets under charge means the assets is being used as
collateral to obtain some liability. Following steps must be
taken to by the auditor to check weather an assets is running
undercharge or not:
1. Certificate from management proving the freedom of
assets from any kind of charge.
2. If any of the loan is being held by the company, auditor
should enquire the nature of charge established.
3. If there is no security found against the loan then further
enquiry is to be made by contacting the financial
institution from which the liability is being obtained.
Mehroze Tariq
11. 6. Proper Authorization:
• Auditor must verify that the document used
to obtained loan is being signed by the
authorized person as mentioned in the
memorandum of association.
• Examination of documentary evidence
which establishes a proper authorization for
complete verification of entries in books.
• The auditor shall require minutes of board
of directors.
Mehroze Tariq
12. VERIFICATION OF ASSETS
NOT IN CLIENT’S POSSESSION:
• Checking the balances in balance sheet in favor of client.
• Bills not yet matured.
• Bills held by bankers for collection.
• Check the documents held by the client’s banker including:
i. Title Deeds
ii. Securities
iii. Investments
iv. Bill of Exchange
• Balance in respect of loans, overdrafts or cash credits.
• These documents can be obtained from 2 sources:
i. From Officials
ii. From Third Party
Mehroze Tariq
13. EVENTS OCCURRING AFTER THE
DATE OF BALANCE SHEET:
• An auditor has to report that the balance sheet is a
true & fair representative of company’s financial
position. This needs assistance from events occurring
after the date of balance sheet.
• Some items appearing in balance sheet are stated
here;
i. Liabilities
ii. Provision of Taxation
iii. Fixed Assets
iv. Debtors
v. Stock in Trade
Mehroze Tariq
14. SUBSEQUENT EVENTS:
• Events occurring between the date of financial
statements and the date of auditor’s report &
facts that become known to the auditor after
the date of auditor’s report.
• They provide evidence of conditions that
existed at/ arose after the date of financial
statements.
Mehroze Tariq
15. ANALYTICAL PROCEDURES:
• Evaluation of financial information through
analysis of plausible relationships among both
financial & non-financial data.
• Performing substantial analytical procedures at
the end of audit assist the auditor to form an
overall conclusion on financial statements.
• These are risk assessment procedures.
• It is used to obtain relevant & reliable audit
evidence.
Mehroze Tariq
16. QUALITY CONTROL FOR AUDIT
OF FINANCIAL STATEMENTS:
• A firm has an obligation to maintain a
system of quality control to provide
with reasonable assurance.
• Engagement teams implement QC
procedures, applicable to audit
engagement.
• They are entitled to rely on firm’s QC
system.
Mehroze Tariq
17. EXTERNAL CONFIRMATION:
• Audit evidence obtained as a direct written
response to the auditor from a third party in paper
form, or by electronic or other medium.
• Depending on the circumstances of the audit, audit
evidence in the form of external confirmations
received directly by the auditor from confirming
parties may be more reliable than evidence
generated internally by the entity.
Mehroze Tariq
19. CAPITAL:
Steps to be taken for verifying share capital of company:
• Check the authorized share capital with the Memorandum
of Association.
• Obtain the list of the share holders, check with the
register of members & verify the control account.
• Verify entries in respect of additions on account of issue
of new shares (calls, fresh issues, rights, bonus)
Mehroze Tariq
20. To check the above point following steps are to be taken:
• To check the amount of shares issued against the
permissions.
• To check the issued capital not exceeds the approved limits.
• Check the applications of shares and their allocation.
• Make voucher of the money received from applicants of
shares and their allotment.
• Make detail verification of the amounts received in respect
to the amount credited to this account,
• Strictly verify the shares issued other then cash or on some
kind of agreement verify those agreements,
• Check the amount of premium amount will be separated
from the share capital.
• Auditor must also verify the amount of discounts given to
the shareholders.
Mehroze Tariq
21. In case of forfeiture of shares auditor must clear himself on the
points:
• To check the forfeiture in accordance with the articles of the
company.
• Check the entries made in the books and their respective
adjustments.
• Check weather those shares were been sold or re-issued,
• If those shares is being utilized auditor must make sure the
respective amount is being added into the company's reserves.
• If the shares of a company is being internationally issued check
the state bank approval.
• Check the amount of redeemable shares of a company and what
conditions are applied to them.
• Examine the shareholders rights in the articles of association.
If the company has reduced the amount of share capital auditor
needs to check the following points:
• Check the amount mentioned in the articles of association,
• Check weather the proper adjustments is being made in the
balance sheet. Mehroze Tariq
22. SHARE TRANSFER AUDIT:
Audit of share transfer is not compulsory although is being done to
avoid any kind of frauds and errors during the process:
• Examine the articles of association.
• Company’s notices to transferees for transfer of funds if liable.
• Proper record of transfer in the books.
• Check the transfer dead and stamp on it.
• Verify signatures of transferer.
• Cancelled certificates should properly examined.
• Examine the director’s minutes approving the transfers.
• Check the total balance transferred with the shareholder account.
• Compare the total issued capital with the balances on
shareholder’s account in the member’s registrar.
Mehroze Tariq
23. RESERVES:
• Obtain a movement schedule of each type of
reserve.
• The opening balance of each reserves should
be checked with audit working papers of
previous year or audited balance sheet.
• See that all reserves required under the tax
laws have been created.
Mehroze Tariq
24. DEFERRED TAXATION:
• Provision of future tax liability which is deferred due to
the accelerated rates of depreciation under the
Income Tax Ordinance and Rules, as compared to low
rate of depreciation charged in accounts.
• The auditor should check the computation.
• Verify the movements during the year.
• The amount is either provided in the accounts or
shown by way of a foot note.
Mehroze Tariq
25. DEBENTURES:
• Examine the amount allowed by the Board of directors to be
borrowed.
• See the actual debenture and examined its terms and
conditions.
• Detail debenture capital audit.
• Redemption of debentures.
• Check the list of registered debenture holders.
• The various type of debentures must be separately mentioned
in the balance sheet.
• The remuneration payable to the trustees.
• Risk premium debentures must be mentioned separately in
balance sheet.
• Debentures issued against the loan as a collateral.
Mehroze Tariq
26. LOANS:
SECURED LOANS
Study the contract for loan
noting the maximum limit
sanctioned, rate of interest, plan
of repayment, installments
payable, the nature & extent of
scrutiny & type of charge
(pledge, hypothecation,
mortgage etc.)
UNSECURED LOANS
Check correct classification.
Ascertain company’s borrowing
powers & that they are not
exceeded. See that interest
accrued & due on unreceived
loans has been accounted for in
books.
Mehroze Tariq
27. UNCLAIMED DIVIDENDS:
• Obtain a schedule giving the movement in
the unclaimed dividend’s account.
• Trace transfer of dividend accounts which
remained unpaid for a longer period to
unclaimed dividends.
• For any remittance of unclaimed dividend to
non-residents, see the approval of State Bank
of Pakistan.
Mehroze Tariq
28. LIABILITIES:
• Obtain liability certificate.
• Enquire against special claims lodged against the
company.
• Examine the files for court cases against the debtors &
establish an opinion about doubtful debts.
• Scrutinize invoices, petty cash vouchers, payment
vouchers & journal vouchers.
• Examine reasons for fluctuations in schedule of liabilities
with previous year.
• Check the provision of leave, retirement & gratuity
benefits to the staff with terms of service.
• Compare statements received from creditors with the
balance shown on the accounts.
Mehroze Tariq
29. UNEXPIRED DISCOUNTS:
• Incase of financial institutions whose
business is to discount bills of
exchange on large scale.
• “Rebate on Bills Discounted” shall
represent discounts received in the
current year but attributable to the
next year.
Mehroze Tariq
30. CONTINGENT LIABILITIES:
A liability which is contingent to the happening or not
happening of an event.
Some types of contingent liabilities to be verified are;
i. Bills Discounted
ii. Uncalled Capital on Investments
iii. Guarantees
iv. Law Suits
v. Arrears of Cumulative Preference Dividends
vi. Labor Disputes
Mehroze Tariq
31. Chapter #07:
Verification- Assets
Summary:
The concept of balance sheet
audit. Verification of all types of
fixed & current assets. Inclusion
of a suggested stock certificate.
Mehroze Tariq
32. BALANCE SHEET AUDIT:
• Verification of existence of assets shown in the balance
sheet.
• Securities in hand of a third party be examined whether
he/she is entitled to get hold of such assets.
• It includes verification of assets like;
Fixed Assets
Preliminary Expenses
Stock
Bill of Exchange
Commission on Shares &
Debentures
Advances
Book Debts
Underwriting Commissions
Stores & Spare Parts
Loose Tools
Investments
Cash & Other Balances
Livestock Contingent Assets
Mehroze Tariq
33. FIXED ASSETS:
Goodwill Freehold Land Leasehold Land Buildings
Capital Work in
Progress
Assets Abroad Railway Sidings
Plant &
Machinery
Furniture &
Fixture
Development
Expenditures
Mines &
Quarries
Patents
Trademarks,
Copyrights &
Designs
Vehicles
Interest Paid out
Capital
Assets Acquired
on Hire-
Purchase System
Mehroze Tariq
34. PRELIMINARY EXPENSES:
Examining the legal
cost of registering the
company.
Stamp duty & fees
paid on authorized
capital.
Cost of preparing &
printing memorandum
& articles of
association.
Cost of preparing all
preliminary
agreements including
stamp duties.
Cost of preparation,
printing & publication
of prospectus.
Accountant’s charges
for certifying profits.
Cost of preparing &
printing share
certificates, letters of
allotment, debentures,
trust deed etc.
Cost of first set of
accounting, statutory
& statistical books &
common seal of the
company.
All legal & professional
charges in promoting
& forming the
company.
Mehroze Tariq
35. COMMISSIONS ON SHARES &
DEBENTURES:
It shall be lawful for a company to pay commissions if;
• The payment of commission is authorized by the
article.
• The commission paid or agreed to paid shall not
exceed the authorized amount.
• The rate of commission shall be disclosed in the
prospectus
Mehroze Tariq
36. STORES & SPARE PARTS:
• Obtain a certified inventory of stores signed by authorized
official & compare with store & spare parts ledger.
• Check the casting, valuation, invoices, receipts & vouchers.
• Ascertain whether any physical count was carried out by the
client.
• A physical test of closing balance be carried out.
• A certificate shall be inquired by a responsible official
indicating the valuation & total amount present in store.
Mehroze Tariq
37. LOOSE-TOOLS:
• Ascertain & certify by Chief Engineer ,
the cost, if the company manufacture its
own tools.
• Obtain a certified closing inventory &
check its valuation.
• The closing balances should be check
with the loose tools register.
Mehroze Tariq
38. LIVESTOCK:
• Obtain a certified inventory of the animals.
• Check it with the livestock register.
• Check annual revaluation.
• Identify if any losses due to sale or death of
animals have been written off.
Mehroze Tariq
39. STOCKS:
Stock of
Goods sent
out on Sale
or Returns
Examination
of Stock-
Taking
procedure
Verification
of Quantities
of Stock
Stock in
Transit
Work in
Process
Stock of
Packages &
Empties
Stock of
Goods sent
on
Consignment
Mehroze Tariq
40. BILLS OF EXCHANGE:
• Obtain a schedule of bills receivable.
• Check casts & compare individual balances with
bill receivable books.
• Count the bills on hand and note over due bills.
• Obtain direct confirmation from parties for large
amounts.
• Obtain direct bank certificates regarding bills in
process of collection.
• Check adequacy of reserves for bills that are
doubtful for recovery. Mehroze Tariq
41. ADVANCES:
• Proper verification of;
• Loans against security of goods
• Loans against insurance policy
• Loans against security of shares
• Loans against security of land & property
• Deposits
• Repayments
• Recoverable Claims
Mehroze Tariq
42. INVESTMENTS:
Obtain a certified schedule of all investments
and verify;
• Face value & ownership
• Book Values
• Market Values
• Receival of interests
• Contingent Liabilities
• Speculative Transactions
• Short term purchases and sales
Mehroze Tariq
43. CASH & OTHER BALANCES:
• All cash on hand shall be brought on one table & physically
counted as on the closing date.
• Last numbers of Receipt Books, Cash Memo Books, Cheque
Payment Vouchers, Cash Payment Vouchers, Cheque book &
Cheque Receipts should be noted.
• Verify;
o Cash in Transit
o National Prize Bonds
o Bank Balances
o Balance with Agents
Mehroze Tariq
44. DEFERRED REVENUE
EXPENDITURE:
These are heavy expenditures made for long term
benefits for the business. It includes the
verification of expenses like;
• Cost of removal of business to a more
convenient place.
• Exceptional repairs of plants, buildings etc.
• Abnormally heavy amount of advertising to
popularize a new product.Mehroze Tariq
45. CONTINGENT ASSETS:
• No requirement to mention as a footnote in balance
sheet.
• Examples of contingent assets are;
o An option to apply for shares in another
company.
o Refund for octroi paid for goods which have
been sent out later.
o Claim for money from a previous endorser of a
bill recoverable which have been discounted but
might be dishonored.
• Disclosure of such assets would assist to exhibit a
true position of the balance sheet
Mehroze Tariq
47. Chapter #09:
Auditor of a Limited
Company
Summary:
The chapter defines various appointment types
of auditors. Remuneration, qualifications &
disqualifications of an auditor, his powers &
duties, lien, status, committee & materiality
concept.
Mehroze Tariq
48. APPOINTMENT OF AUDITORS:
• First Auditors
• Subsequent Appointment
• Casual Vacancies
• No Appointment
Mehroze Tariq
49. First Auditors
>>>
Within 60 days
of company’s
incorporation.
In annual general meeting, if
not done before.
He / She cannot be removed
until his/her tenure is
completed.
Subsequent
Appointment
>>>
A replacement
of retiring
auditor of the
company.
Notice for new appointment
shall be given not less than
14 days before annual
general meeting.
Notice shall be given to
company members, retiring
auditor, one English & ne
Urdu newspaper.
Casual
Vacancies
>>>
To be filled by
directors of the
company.
New appointment shall hold office until the conclusion of
the next annual general meeting.
No
Appointment
>>>
SECP shall take
action in case:
1ST auditor
not appoint-
ted within
120 days of
company’s
incorporation
No
appointments
were made in
annual
general
meeting.
Appointed
persons not
willing to act
as auditors.
If auditors are
removed by
the firm.
Mehroze Tariq
50. REMUNERATION:
Auditor appointed by
Directors or Securities &
Exchange Commission
Directors or Securities &
Exchange Commission
Appointment in all other
cases
The company in general meeting
or in such manner as the general
meeting may determine.
Mehroze Tariq
51. QUALIFICATION OF AN AUDITOR:
• He/ She must be a CA for private limited
companies with paid up capital Rs. 3
million and above (Chartered
Accountant Ordinance, 1961).
• A company with all partners practicing
in Pakistan as CA’s can be appointed as
auditors in the name of their company.
Mehroze Tariq
52. DISQUALIFICATION OF AN
AUDITOR:
The following attributes disqualify a person to act as an
auditor of a firm;
• A person who is, or at any time during the preceding 3
years was a director, partner, other officer or employee of
the company.
• The spouse of a director of a company.
• Debtor to the company (indebted to a sum not exceeding
Rs. 500,000 to credit card issuer or a sum to a utility
company in form of unpaid dues for not more than 90
days)
• A body corporate.
• A person holding shares prior to his appointment as
auditor shall disclose & disinvest within 90 days.
• Disqualified person acting as an auditor shall be fined Rs.
25,000 followed by a new appointment by SECP.
Mehroze Tariq
53. INDEPENDENCE OF AN AUDITOR:
An auditor shall be working independently from the
management of the firm under audit.
CATEGORY OF
INDEPENDENCE
SALIENT FEATURES
i. Programming An auditor shall perform the way he wants to
express his independent opinion. He shall decide
the extent & types of tests of tests required.
ii. Investigative The right to access all books, accounts & vouchers.
iii. Reporting Freedom to express opinion on financial
statements without any pressures imposed upon
him.
Mehroze Tariq
54. POWERS & DUTIES OF
AN AUDITOR:
To access all books, papers, accounts & vouchers
kept anywhere.
To require from the company, directors, other
offices info necessary for the auditor to perform.
To access copies of books of branch offices working
outside Pakistan.
To attend general meeting of the company, to be
heard at, receive all notices, communications which
any member of the company is entitled to receive.
Mehroze Tariq
55. AUDITOR’S REPORT ON
ANNUAL ACCOUNTS:
MAJOR CONSIDERATIONS
i. Information & explanation to be obtained
ii. Books of accounts to be kept as required
under the Ordinance.
iii. Conformity of the financial statements with
law.
iv. Business conducted, investments made &
expenses incurred to be in accordance with
object of the company.
v. Zakat was deducted & deposited in Central
Zakat Fund.
Mehroze Tariq
56. REQUIREMENTS OF AN
AUDITOR’S REPORT:
Reading &
Inspection of the
Report
• The report to be
read before the
company in
annual general
meeting.
• The report shall
be open to
inspection by any
member of the
company.
Signatures on Audit
Report
• By the person
appointed as
auditor of the
company.
• By a partner in
firm practicing in
Pakistan.
Audit of Cost
Accounts
• Cost auditor may
be a Chartered
Accountant or
Cost &
Management
Accountant.
• He shall be vested
with same
powers, duties &
liabilities as any
other auditor.
Mehroze Tariq
57. AUDITOR’S LIEN:
Auditors have no lien on books of accounts
being audited by them.
Only if they have worked on the books in the
capacity of an accountant.
Moreover,
An auditor can retain the books if he got the
books by an authoritative officer and his fee is
not being paid.
Documents retained must belong to the person
liable to pay auditor’s fee.
Mehroze Tariq
58. STATUS OF AUDITOR:
As Agent of the Members:
Auditor appointed by the shareholders of the company shall present
the report to them.
As Officer of the Company:
Auditor is not an officer of the company.
• Only in case of liquidation of firm, past & present auditors are liable
to make good any losses caused due to their negligence.
• An auditor may be punished if a charge of falsification of accounts
is brought against him.
• An auditor may be asked on the matters of amalgamation of
companies or reconstruction of capital of limited company.
Mehroze Tariq
59. AUDIT COMMITTEE:
Consists of non-executive directors.
OBJECTIVE:
to establish an effective link between BOD’s & management team of the
firm.
SCOPE OF WORK:
• Review management letter received from the auditor & make relevant
recommendations.
• Appraising the company’s accounting policies.
• Identifying areas to improve audit efficiency.
• Reviewing internal audit reports of a company.
• Resolving possible conflicts between the directors & the company.
BENEFITS:
• A communication link between the auditor & executive board.
• Facilitation of efficient audit work.
• Insured improvements.
Mehroze Tariq
60. MATERIALITY TO ACCOUNTS
& THE AUDITOR:
• A comparison of the figures in percentage terms be
made with the total of the group items.
• A cut-off percentage is considered to be material if it
is 10 percentage or more of a total amount.
• The amount may be compared with the
corresponding amount of this year.
• The impact in terms of changing to profit figure into a
loss or vice versa be carefully considered.
Mehroze Tariq