ADVANCED AUDIT & ASSURANCE –
Transcript of ADVANCED AUDIT & ASSURANCE –
ADVANCED AUDIT &ASSURANCE –
EXAM SPECIFIC SEMINARSummer 2012
BY: HASNAIN R. BADAMI06 MAY 2012
AGENDA OF TODAYS’ SEMINAR
Introduction Analysis of the past five ICAP papers Broad Key Areas Audit Risk and Business Risk How to deal with ‘Ethics Questions’ How to deal with ‘Reporting Questions’
Use of ‘Open Book’ & Practice Materials Question and Answer Session
Time: 2.0 – 2.5 hours
INTRODUCTION
ANALYSIS OF PAST 5 ATTEMPTS
AUDIT RISK AND BUSINESS RISK
Audit Risk– Definition– How can possibly an audit risk arise?
• Error• Fraud
– Drafting Audit Risk
AUDIT RISK AND BUSINESS RISK
Business Risk– Financial, Operational and Compliance
Risk– Drafting Business Risk
LINKING
BOTH THE
RISKS
ADDRESSING THEAUDIT RISK
AUDIT RISK AND BUSINESS RISK
Five rules for drafting an appropriateaudit procedure– Don’t be vague, use a proper verb!– What exactly you did in the procedure?– Must be addressing the risk!– Prioritize !– Practice !
Launch Internet Explorer Browser.lnk
PRACTICE QUESTION
ETHICS AND QUALITYCONTROL CONSIDERATIONS
HANDLING ETHICS & QC QUESTIONS
Rules to answer ethics questions
Relate the threats to the fundamentalprinciples, where possible Relate to local laws, where possible Justify the threats! Amend and Justify your safeguards Think for other implications in the scenario!
HANDLING ETHICS & QC QUESTIONS
Important areas of Code of Ethics: Independence (Link with ISQC requirements
on ethics) Confidentiality Fee and related matters Professional appointments (Link with ISQC
– client acceptance) Ethical conflicts
HANDLING ETHICS & QC QUESTIONS
Important areas of Quality Control
Client acceptance and continuancerequirements
Engagement performance
PRACTICE QUESTION
DEALING WITHREPORTING QUESTIONS
REPORTING QUESTIONS - Guidelines
State specific non-compliance; Explain the correct treatment as per the criteria; Any other implication? Assess materiality to compare with the PM Effects on the audit report; If immaterial, consider with other misstatements
whether it becomes material or not; If immaterial, it should be noted in schedule of
individually immaterial misstatements ; Report to BL / ML if not in AR.
PRACTICE QUESTION
HOW TO MAKE USE OF‘OPEN BOOK’
OPEN BOOK STRATEGY
Lets consider ISA 550 “Related Parties”– Understand the objectives underlying this ISA.– Only paragraph 8 can be capitalized in case of open book,
which require listing of audit procedures to identifycompleteness of related parties.
– Other requirements require practical application. E.g.paragraph 11 which discusses indications of existences ofpreviously unidentified related parties.
“transactions processed in unusual manner”.– Requirements of IAS 24. Most important is the definition and
disclosures. Link with fraud.– CCG clauses and changes in the review report of CCG.– Relevant sections of Companies Ordinance, 1984 including
section 3, 195 and 208.
PREPARATIONMATERIAL
TECHNICAL RELEASES- REVISED 2012
QUESTIONS?