The title of my report is "Audit Procedures of Chartered Accountants - A Study on ACNABIN". This report titled “Audit Procedures of a Chartered Accountant Firm – A Study on ACNABIN” is the result of the BBA internship program.
Origin of the Report
As part of my BBA programme, the three month internship program provided me with the opportunity to have a practical knowledge on audit procedure. This study gave me the opportunity to observe and perform real world knowledge about the audit procedure followed by the chartered accountant firm.
OBJECTIVES OF THE STUDY
METHODOLOGY OF COLLECTION OF INFORMATION
I also collected secondary information such as annual audit report, management audit report, accounting system and audit working papers.
LIMITATIONS OF THE STUDY
Firm’s Profile
PROFILE OF THE FIRM
BACKGROUND
Registration of Firm
ASSOCIATIONS
MEMBERSHIP
EXISTING PARTNERS AND THEIR AREA OF SPECIALIZATION
EXTERNAL ACTIVITIES OF THE PARTNERS
Capacity Building of External Auditors for Microfinance Audits, an ICPAU workshop held in Kampala, Uganda under the sponsorship of CGAP. Bangladesh Bank, the central bank of the government of Bangladesh, has ranked ACNABIN second among the 82 registered companies.
HUMAN RESOURCES
LOGISTIC SUPPORT
As one of the top four firms in Bangladesh, ACNABIN has audit clients of all types, e.g.
SERVICES OFFERED COVER THE FOLLOWING AREAS
ANALYSIS OF TOTAL PRACTICE TURNOVER
DEFINITION OF AUDITING
Whenever an audit is performed, the scope of the auditor's responsibility should be made clear. The final stage in the audit process is the audit report – communicating the findings to users.
DISTINCTION BETWEEN AUDITING AND ACCOUNTING
To provide adequate information, accountants must thoroughly understand the principles and rules that provide the basis for the preparation of accounting information. In contrast, auditing uses the theory of evidence – in much the same way as the legal profession – to test the overall reasonableness (fairness) of the financial statements presented.
TYPES OF AUDIT
However, public sector financial audits also determine whether the financial statements are presented in accordance with applicable laws and regulations. An audit of financial statements is performed to determine whether the general financial statements—the measurable information being verified—are reported in accordance with specific criteria.
AICPA GENERALLY ACCEPTED AUDITING STANDARDS
The work must be adequately planned and any assistants must be properly supervised. Sufficient understanding of the internal control structure must be obtained to plan the audit and determine the nature, timing and extent of testing to be performed. Sufficient competent evidence must be obtained through inspection, observations, investigations and confirmations to provide a reasonable basis for an opinion on the financial statements being audited.
The report states whether the financial statements are presented in accordance with generally accepted accounting principles (GAAP). The report identifies circumstances where such principles have not been consistently adhered to in the current period compared to the previous period. Informative disclosures in the annual accounts should be considered reasonably adequate, unless otherwise stated in the report.
The report must contain either an expression of opinion on the financial statements, taken as a whole, or a statement that an opinion cannot be expressed.
PROFESSIONAL CONDUCT
- AICPA Principles of Professional Conduct
In all cases where an auditor's name is associated with financial statements, the report should include a clear indication of the nature of the auditor's work, if any, and the degree of responsibility assumed by the auditor. The principles provide the ethical concepts on which the rules of conduct are based, as well as the standards for meeting public trust. The principles provide the broadest framework for professional behavior and should be the highest guideline for professional conduct.
Published clarifications and answers to questions about the Code of Conduct submitted to the AICPA by practitioners and others interested in ethical requirements. A member in public practice must be factually and ostensibly independent in the performance of audit and other attestation services. A member must observe the technical and ethical standards of the profession, constantly strive to improve competence and quality of service, and perform professional responsibility to the best of his or her ability.
A member in public practice should adhere to the principles of the Code of Professional Conduct in determining the scope and nature of the services to be provided.
AUDIT RISKS
To maintain and broaden public trust, members must perform all professional responsibilities with the highest sense of integrity. Control risk" is the risk that a misstatement that may occur in an account balance or class of transactions and that may be individually material or when aggregated with misstatements in other balances or classes, will not occur or be detected and corrected in a timely manner by the accounting and internal control systems. Detection risk" is the risk that an auditor's attestation procedures will not detect a misstatement that exists in an account balance or class of transactions that may be material, individually or when aggregated with misstatements in other balances or classes.
Audit Evidence
In the case of a direct offer, they ask the audit firm to submit a quote for the cost of performing the client's audit. The client firm mentions here the main audit areas in the attachment form. PHASE – 2: Technical and financial proposal is sent to the client by ACNABIN After reviewing the client's letter or letter circular, the audit firm drafts a proposal letter for the client.
STAGE – 3: Acceptance by the client on the basis of proposals from ACNABIN – A contract letter. From the technical and financial proposal of ACNABIN, the client company understands the nature of the audit (such as independent, external) to assess the organization's internal control system in the administration of the audited relationship. STEP – 4: A letter is sent by ACNABIN to the client confirming to work with the client – Confirmation Letter.
After receiving the acceptance letter from the client, ACNABIN provides confirmation letter describing the firm's willingness to work with the client.
AUDIT PROCEDURES FOLLOWED BY ACNABIN
- GATHER & EVALUATE INITIAL INFORMATION
- ASSESS GENERAL RISKS
- ACCOUNT-SPECIFIC RISK ANALYSIS
- Audit Risks
- Consideration of Fraud and Error
- Inquiries of Management
- Assessment of Inherent Risk and Control Risk
- Assessment of Detection Risk
- Documentation
- Management Representations
- Communication
- DEVELOPMENT OF EFFECTIVE AND EFFICIENT AUDIT PLAN/ WORK PROGRAM
- CONDUCT AUDIT TESTING
- Substantive Tests
- EVALUATE AND COMMUNICATE AUDIT RESULTS
- External Report/ Auditor’s report
- Internal Report/ Management letter
Presentation and disclosure The separate components of the financial statements are properly classified, described and disclosed. Appendix-1 contains a form that ACNABIN used to assess the client's internal control structure. The specific risk analysis (SRA) is based on the information obtained during the General Risk Assessment (GRA) and is completed after reviewing the assessment of the internal control system.
In planning the audit, the person responsible for an audit team discusses with other members of the audit team the company's susceptibility to material misstatement in the financial statements due to fraud or error. The management's assessment of the risk that the annual accounts may contain material misinformation as a result of fraud; and. The auditor has disclosed the results of his assessment of the risk that the annual accounts may contain material misinformation as a result of fraud.
The auditor should apply analytical procedures in the planning and overall review phases of the audit. We generally perform analytical procedures at or near the end of the audit when we form an overall conclusion about whether the financial statements as a whole are consistent with the auditor's knowledge of the business. In the last stage of the audit, the audit team communicates the audit result to the company's management and stakeholders.
COMPARISON BETWEEN BAKER TILLY INTERNATIONAL AUDIT PROCEDURE (THAT IS FOLLOWED BY ACNABIN) AND CHRONOLOGICAL
However, at the time of designing the nature, timing and extent of the material tests, all these factors must be considered by the auditor. Both audit procedures emphasize the external auditor's correct understanding and evaluation of the internal control system. To record an overview of the customer's accounting procedures and the audit actions to be performed. iii.
In Baker Tilly International's audit procedure, the auditor not only provides audit report to the interested parties but also management letter to the management of the organization. In most cases, when the company gets a new client, the partner/partners choose one of the managers as the supervisor of the audit team. Then the supervisor selects some of the students as members of the audit team for such audit task and the top student is chosen as the team leader.
Only the manager is informed about the customer and the manager also does not discuss the details of the customer's business and its nature before going to the customer.
Recommendations
CONCLUSION
- Segregation of duties: The custodian function, recording
- Physical: Safeguard of assets with a policy, procedure
- Authorization and approval: Transaction
- Arithmetical and accounting: Whether the
- Personnel: Qualification, training, skill & competency of
- Supervision: Day to day supervision, review, approval
- Management: Budgetary control and internal audit were
Segregation of duties: The custodian function, registering custodian function, recording function and authorization function are fulfilled by three different persons. Physical: Protection of assets with policy, procedure, assets with policy, procedure and its practice is ensured. Arithmetic and accounting: Whether it concerns accounting: Whether the control of arithmetic accuracy, reconciliation, correct registration is assured.
Personnel: Qualification, training, skill and competence of education, skill and competence of personnel are sufficient. Supervision: Daily supervision, review, approval supervision, review, approval of records, reconciliation, transactions by responsible officials. Management: Budget control and internal audit were controls and internal audit was properly implemented and practiced.
Appendix–1
In connection with the audit of our financial statements, please confirm directly to our auditors ACNABIN & Co., Chartered Accountants, BDBL Bhaban (13th Floor), 12, Kawran Bazar Commercial Area, Dhaka-1215, Bangladesh the amount you owe us which according to our records on (date) amounted to Tk. After checking the appropriate answer, please sign and date your answer and mail it directly to our auditors in the enclosed envelope. In connection with the audit of our financial statements, please confirm directly to our auditors ACNABIN & Co., Chartered Accountants, BDBLBhaban (13th Floor), 12, Kawran Bazar Commercial Area, Dhaka-1215, Bangladesh the amount of our liability to you as of (date).
If, while completing this confirmation, additional information comes to your attention regarding other deposit and loan accounts we may have with you, please include that information below. At the end of the business day on the date stated above, our records indicated the following deposit(s). We were directly liable to the financial institution for loans as follows at the end of the business day on the date stated above:
No other deposit or loan accounts have come to our attention except as noted below.
BIBLIOGRAPHY
