Auditing AssignmentAuditing Assignment Submitted To:Prof. Gurleen

Kaur(School of

management,IMS Unison

University)

Submitted By: Shweta Rawat

(13BCH035)Komal Bhatt

(13BCH002)Rashi Patel

(13BCH009)Nitant

Rastogi(13BCH052)

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Auditing Auditing is a process of objectively gathering,

evaluating, and documenting the evidence needed to provide assurance on the financial statements.

The audit programs detail the auditor's plan to gather, evaluate, and document evidence.

Auditors generally conduct audits following these general steps:

1. planning2. gathering evidence3. evaluating evidence4. Field work5. issuing a report6. Audit follow up

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1. PlanningIn planning an audit, three questions need to be

answered: What audit procedures should be performed? How much evidence is needed? When should the audit procedures be

performed?Planning includes:

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Announcement Letter: The client is informed of the audit through an announcement or engagement letter from the auditor.

Initial Meeting: the client describes the unit or system to be reviewed, the organization, available resources (personnel, facilities, equipment, funds), and other relevant information.

Preliminary Survey: In this phase the auditor gathers relevant information about the unit in order to obtain a general overview of operations.

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Internal Control Review: The auditor will review the unit's internal control structure, a process which is usually time-consuming.

Audit program: Preparation of the audit program concludes the preliminary review phase. This program outlines the fieldwork necessary to achieve the audit objectives.

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2. Gathering evidence

Because each audit is unique, there is no set amount or type of evidence that must be gathered.

Sufficient and Competent Evidence: There are two dimensions to audit evidence: sufficient (quantity) and competent (quality/reliability).The relationship between these dimensions is inverse; if evidence is of lesser quality, greater amounts must be collected (and vice versa).

When gathering evidence, auditors consider which procedures provide the most reliable evidence in the most efficient manner.

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3. Evidence evaluation An audit trail is a chronological record of

economic events or transactions that have been experienced by an organization.

The audit trail enables an auditor to evaluate the strengths and weaknesses of internal controls, system designs, and company policies and procedures.

The auditor must evaluate the initial hypothesis based on the evidence and accept or reject the hypothesis as a result. 

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4. Field work Fieldwork typically consists of talking with

staff, reviewing procedure manuals, learning about your business processes, testing for compliance with applicable university policies and procedures and laws and regulations, and assessing the adequacy of internal controls.

Staff is made aware that the auditor will be scheduling meetings with them.

During this phase, the audit team will physically be on site at the audit client’s location performing the audit.

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5. Audit report

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Discussion draft: At the conclusion of fieldwork, the auditor drafts the report. Audit's goal is to complete the audit and issue a draft audit report within 30 days after the completion of fieldwork. 

Exit conference: Auditor meets with the unit's management team to discuss the findings, recommendations, and text of the discussion draft. At this meeting, the client comments on the draft and the group works to reach an agreement on the audit findings.

Formal draft: The auditor then prepares a formal draft, taking into account any revisions resulting from the exit conference and other discussions.

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Final report: After auditing, management has been given an opportunity to respond to the Preliminary Draft, the Final Draft Report is presented to the Accountability Oversight Committee for approval.   Upon approval of the Final Report is issued.

Client response: The client has the opportunity to respond to the audit findings prior to issuance of the final report which can be included or attached to the final report.

Client comments: Finally, as part of Audit's program, clients are asked to comment on Audit's performance.

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6. Audit follow-up Depending on the nature of the audit or the audit

findings, the Follow-Up procedure may be formal or informal.

Approximately one year of the final report, Auditor will perform a follow-up review to verify the resolution of the report findings.

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Follow-up review: The actions taken to resolve the audit report findings may be tested to ensure that the desired results were achieved.

Follow-up report: To resolve the original report findings. Unresolved findings will include a brief description of the finding, the original audit recommendation, the client response, the current condition, and the continued exposure to the board of company.

Audit annual report: Memorandum to the senior manager that notifies them that audit activities are underway and describes the follow-up process. 

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