Audit Manual For CMA Firms

TABLE OF CONTENTS
Chapter 1
PRE ENGANEMENT....................................................................................................... 1
1.
Pre Engagement Activities........................................................................................................... 1
1.1 Acceptance of New Client............................................................................................................ 1
1.2 Continuance of Existing Client........................................................................................................ 1
2.
Engagement Terms...................................................................................................................... 2
3.
Changes in Terms of Audit Engagement......................................................................................3
Chapter 2
PLANNING...................................................................................................................... 4
1.
Introduction.................................................................................................................................. 4
2.
Risk Statement............................................................................................................................ 5
3.
Information about Client............................................................................................................... 6
4.
Meetings...................................................................................................................................... 6
5.
Business Control Environment..................................................................................................... 6
6.
Computer Information Systems................................................................................................... 7
7.
Financial / Management Reporting Environment.........................................................................7
7.1 Issues relating to Financial / Management Reporting.......................................................................7
8.
Critical Audit Area........................................................................................................................ 7
9.
Expert Opinion............................................................................................................................. 8
10. Control Overview......................................................................................................................... 8
10.1 Control Environment...................................................................................................................... 8
10.2 Control Activities............................................................................................................................ 8
10.3 Control Risk.................................................................................................................................. 8
10.4 Internal Control.............................................................................................................................. 8
10.5 Risk Assessment in Small Entity..................................................................................................... 9
10.6 Significant Risks............................................................................................................................ 9
11. Control Activities of Audit............................................................................................................. 9
11.1 Physical Control............................................................................................................................ 9
12. Audit Materiality........................................................................................................................... 9
13. Assessment of Fraud Risk......................................................................................................... 10
13.1 Responsibilities of the Auditors for Fraud Risk...............................................................................10
14. Computer Information System Check List..................................................................................11
15. Analytical Procedure for Risk Assessment.................................................................................12
16. Evaluation of Internal Audit Functions........................................................................................ 12
17. Conducting Audit of Group of Companies..................................................................................13
18. Points Brought Forward from Previous Years............................................................................13
19. Staff Planning and Time Allocation............................................................................................13
Chapter 3
EXECUTION................................................................................................................. 14
1.
Introduction................................................................................................................................ 14
2.
Selection of items for testing...................................................................................................... 14
3.
Audit Sampling........................................................................................................................... 15
4.
Sampling Risk............................................................................................................................ 15
4.1 Affecting Audit Effectiveness...................................................................................................... 15
4.2 Affecting Efficiency of Audit........................................................................................................ 15
5.
Non-Sampling Risk.................................................................................................................... 16
6.
Sampling Approaches................................................................................................................ 16
7.
Planning the Sample Selection.................................................................................................. 16
8.
Sample Selection and Testing.................................................................................................... 18
9.
Evaluating Results of Audit Sampling........................................................................................19
10. Sample Audit Programs............................................................................................................. 20
11. Going Concern........................................................................................................................... 21
12. Compliance of Regulatory Framework.......................................................................................21
13. Physical Counting of Inventory.................................................................................................. 21
14. Confirmation and Inquiries......................................................................................................... 22
15.
16.
17.
Related Party Transactions........................................................................................................ 22

Compliance of Labour Laws...................................................................................................... 23
Taxation..................................................................................................................................... 23
Chapter 4
REPORTING.................................................................................................................. 24
1.
Objective of the Audit................................................................................................................. 24
2.
Auditors Report......................................................................................................................... 24
3.
Audit Opinion............................................................................................................................. 24
4.
Draft Audit Report...................................................................................................................... 26
5.
Audit Completion Checklist........................................................................................................ 26
6.
Subsequent Events.................................................................................................................... 26
7.
Letter to Board of Director.......................................................................................................... 28
APPENDICES........................................................................................................................................ 29
Chapter 1
AUDIT PRACTICE MANUAL
PRE ENGANEMENT
1. Pre Engagement Activities

The most important and crucial phase for practicing Cost and Management
Accountants ( CMA Firms / Auditors) is to decide whether to accept a new
client or to reject, on the basis of the information available about the client at
that time. Similarly, the decision, whether to continue relations with the
existing clients or to terminate the engagements, is also very critical. The
decision of client acceptance or continuance, as the case may be, is dependent
on the client evaluation, background checks and related ethical considerations.
The CMA Firms need to ensure periodical reviews of their existing clients at
least at after every 2-3 Years. Further, the practicing CMAs are also required to
ensure that audit engagements are conducted by adhering to the rules
prescribed in Code of Ethics issued by ICMA Pakistan and the ethical
requirement set out in Paragraph 26 of International Standard on Quality Control
1(ISQC-1) and International Standard on Auditing (ISA) 220 issued by IFAC.
1.1
Acceptance of New Client

1.1.1 Similar to other engagements, an auditor needs to be careful about
new clients, because of lack of previous experience with management
and governing boards, knowledge of business, transactions and the
associated risk affecting the financial statements and cost statements /
records. The risk associated w i t h t h e new clients is more vulnerable
than existing clients for the reasons stated above.
1.1.2 Though certain assignments, procedures for new and existing clients
are common but additional information about the new client is of high
significance. Accordingly, while accepting a new client, the auditor must
ensure communication with the predecessor auditors, if any.
1.1.3 The auditors shall complete the Form 001 as specified in Appendix
A before the engagement has been signed with the new client.
1.2
Continuance of Existing Client
Institute of Cost and Management Accountants of Pakistan
1.2.1 Retaining the existing clients is important for every business. In order to
decide whether to continue or not with the existing client, t h e r e i s
needed a sensible deliberation and evaluation of significant matters that
have arisen during the current or previous engagements, and their
implications for continuing the relationship.
1.2.2 The periodical review shall be made, not exceeding three years,
depending upon the relationship with c l i e n t or lesser when significant
information is available. C M F F i r m s s h a l l complete the Form 002
a s spe ci fi e d i n Appendix B, before the continuous engagement has
been signed.
2. Engagement Terms
2.1
Once an auditor has decided to accept a new or existing clients request to

conduct the audit, it is necessary to unfold the terms of the audit engagement
either through an audit engagement letter or through formal contract. The
CMA Firms / Auditors shall formulate the terms in accordance with the ISA 210 on
Agreeing the Terms of Audit Engagements.
2.2 While formulating the terms of engagement, the CMA Firms / Auditors shall:
2.2.1 Ensure the compliance with the following minimum requirements:a.
b.
c.
d.
e.
Objectives and scope of audit.

Responsibilities of the auditor.
Responsibilities of management.
Identification of applicable financial / cost reporting framework
Reference to expected form and contents of reports to be issued
2.2.2 Obtain management

responsibilities:
acknowledgement
for
its
understanding
of
a. For reparation of financial / cost statements in accordance with applicable

framework.
b. For internal controls necessary to enable the preparation of financial / cost
statements
2.2.3 Ensure that management acknowledges providing the auditors with the
access to all the relevant information necessary for the preparation of
statements and conduct of audit including any additional information which
auditors deems necessary from the management.
2.3 When auditor considers that management has imposed any limitations on
scope of auditors work related to audit engagement, and that the auditor believes
that such restriction will lead to disclaiming an opinion on the financial / cost
statement, the auditor shall not accept such limited engagement, except if
required by law or regulations.
2.4 For
recurring audits, the auditor shall evaluate the client whether

circumstances stipulate for revision of terms of audit engagements or only
presents terms need to be communicated.
3. Changes in Terms of Audit Engagement

3.1 When it is considered appropriate to change the terms of the audit
engagement, irrespective by the auditor or on the request of the clients
management, the auditor shall critically evaluate the changes and to
accept or reject the changes is a matter of professional judgment. It
should be done with full justifications and shall be brought in writing.
3.2 The auditor may agree to the changes where change is required due to change
in circumstances that effects the entitys requirements for an audit or due
to a misunderstanding concerning the nature of service originally
requested.
3.3
The change in terms of an audit engagement would not be justified if it

relates to information, which is incorrect, incomplete or unsatisfactory.
3.4 If the auditor rejects a change of terms of the audit engagement and the
management does not continue with the original audit engagement, the
auditor should:
a. Withdraw from audit engagement where possible under applicable laws;
and
b. Determine whether there is any obligation to report the circumstances to

stakeholders, such as regulators or executive management.
c.
d.
Chapter 2
PLANNING
e.
1.
Introduction
f.
1.1 Planning is essential for the successful execution and completion of a u d i t
engagement a s it enables the auditor to properly organize and manage the
audit engagements in an effective and efficient manner, assists in selection of
team members with appropriate levels of capabilities and competence, and
enables the complete and efficient delivery of professional responsibilities.
g.
1.2 The purpose of the planning is to ensure and document:
a. The auditors understanding of the entitys business and its industry and
environment, its accounting policies and practices, and its financial
performance
b. assessment of risks of material misstatement relevant to the audit, including
error and fraud risks
c. audit strategy in response to these risks, and
d. the planned audit approach for significant accounts and disclosures
h.
1.3 Audit planning includes identifying the audit risks while obtaining the
information about business, assessing a s s o c i a t e d risk and mitigating
the identified risk by designing the adequate audit procedures and their
application to obtain reasonable assurance to minimize the audit risk to an
acceptable level.
i.
1.4 Planning also covers consideration of materiality and application of substantive
analytical procedures.
j.
1.5
Planning continues throughout the audit engagement.
k.
1.6
It is mandatory that hierarchy of the engagement team with appropriate level of
competences and key management person, point of contact is defined before
commencement of the audit.
l.
1.7 Planning consists of developing an overall audit strategy and audit plan required
for the preparation of detailed audit program.
m.
p.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
1.8
n.
Overall Audit Strategy
o.
Formulation of overall audit strategy shall consist of:q.
Kick off meeting with the client management
Define and agree the scope of engagement
Ascertain reporting objectives
Decide the timing of audit activities.
r.
Assess nature and timing of the communication required with management and
those charged with governance
Selecting engagement team, team meetings and other communications among
team members
Apply risk assessment procedures.
Use knowledge acquired from preliminary assessment
Decision on involvement of specialists and other external experts
Significant other matters
s.
t.
Overall Audit Plan
u.
In order to understand the entity and its environment, it is important to identify and
assess risk of material misstatement, due to fraud and error. Audit risk is the risk of
failure to detect material misstatement in the financial / cost statements. The
auditor must ensure to identify and assess the risk of material misstatement in
accordance with ISA-315.
v.
2.
Risk Statement
w.
x.
The auditor shall perform the following procedures for the risk assessment
and shall also document the results of the procedures performed in order to arrive at
the conclusion of risk assessment:y.
2.1 Inquiries from those charged with governance and management, internal audit
personnel, employees responsible for initiating, processing or recording
complex transactions, in house legal counsel etc. about the entitys business
and its environment including the internal control.
z.
2.2
Analytical procedures to identify the aspects of the entity of which auditor
is unaware and the existence of unusual events or transactions. The results of
analytical procedures shall be critically evaluated.
aa.
2.3
Intelligent observations of the entitys environment.

ab.
2.4
Inspection of the entitys documents and related management

obtain in-depth information about the clients environment.
reports to
ac.
2.5
The information obtained from prior period audits. This provides the auditor
with the basis for analyzing the corrections made during the current period,
significant changes in entitys operations affecting financial / cost statements.
ad.
2.6
The engagement partner shall discuss the material misstatement in

financial / cost statements with other engagement team members. The
engagement partner shall determine which matters are required to be
communicated to engagement team members not involved in the decision.
ae.
2.7
Business risk results from significant condition or circumstances, which could

adversely affect the entitys ability to achieve its targets. Auditor shall use
SWOT (Strength, Weaknesses, Opportunity and Threats) analysis and PEST
(Political, Economic, Social and Technological) analysis.
The auditor shall record the processes stated at para 2.7 on Form 003
(Specimen placed at Appendix C at the end of this manual). This form may
be modified by the auditor to suit his requirements.
2.8
af.
3.
ah.
Information about Client
ag.
3.1
Detailed information about clients business and its activities is very
important for the audit of the entity. The following information shall be gathered
before the commencement of the audit:ai.
a.
The nature of clients business and history
b.
Products and services.
c.
Clients profile.
Key customers
Key Suppliers
Employees
Investments
Financing
Related parties
Litigations and claims
aj.
d.
Corporate structure and conduct of operations.
e.
f.
g.
Objectives of the clients business.

Entitys industry environment
Legal and regulatory environment
ak.
4.
Meetings
al.
am. The meetings with the management and those charged with
governance are important for resolving audit queries, making decisions or
deliberating on the difference of opinion between auditor and the management.
It is mandatory that agenda of every meeting is prepared and agreed upon in
writing. The meetings shall be conducted by the appropriate member of the
engagement team depending upon the nature of queries / agenda item. The
detailed minutes of the meeting must be prepared and documented.
an.
5.
Business Control Environment
ao.
ap.
To understand the business control environments of the client, the
following shall be analyzed and recorded:aq.
a. Legal and operating structure.
b. Culture of the clients entity.
c. Ethics adapted by the clients entity.
d. Corporate governance environment.
e. Remuneration of the Management.
f. Personal profile of the management.
ar.
6.
Computer Information Systems
as.
at.
The majority of the business entities are using the Computer Information
Systems (CIS) or ERP systems for recording their financial / cost and other
records. The dependence of the entity on CIS varies from one to other due to size
and operating culture of the entities. . Auditor shall obtain an understanding about:
level of dependence on CIS by the client,
au.
C IS p e r so n a l structure and skills,
Security and access controls,
Backups and recovery procedures,
Reliability of the CIS and data integrity,
Data processing and reporting control
7.
7.1
Financial / Management Reporting Environment
av.
aw. The financial and management reporting environment of an entity is critical
and plays important role in information flow and decision making. Auditor shall
obtain understanding of the applicable financial reporting framework, approved
management reporting guidelines, selection and application of accounting
policies, critical accounting policies for financial and management reporting,
impact of accounting policies upon specific aspects of the financial / cost
statements and reconciliations of cost / management reports with financial
statements.
ax.
ay.
Issues relating to Financial / Management Reporting
az.
ba.
While analyzing the issues relating to reporting, the auditor shall consider
the following factors for identification of reporting issues to be addressed:bb.
a. Clients accounting procedures and policies
b. New accounting pronouncements
c. Going concern
d. Legal and regulatory changes
e.
Analysis of financial / cost statements prepared by
management and their results
bc.
8.
Critical Audit Area
bd.
be.
Critical audit areas are those areas of the audit, where judgment process
and significant estimations are required. The judgment and resulting impact of
the judgment on the financial / cost statements relating to audit shall be
documented. Critical audit areas, where judgment is made, shall be documented
on Form 004 as specified in Appendix D.
bf.
bg.
9.
Expert Opinion
bh.
bi.
During audit engagement, circumstances may arise necessitating for
getting the opinion of the expert or from other parties. When the opinion of an
expert or other parties is obtained, the detailed rationale about why it is
considered significant to engage the expert or other parties and their potential
effect on financial statements, must be recorded.
bj.
10.
10.1
10.2
10.3
10.4
Control Overview
bk.
bl.
The auditor shall obtain an understanding of the environment and
activities being undertaken by an entity. Control overview consists of the
following:bm.
Control Environment
bn.
bo.
It is the component of the internal controls. It includes governance,
attitudes and awareness of management and those charged with governance
and its importance.
bp.
Control Activities
bq.
br.
These are the policies and procedures, that being component of internal
controls ensures implementation of managements directives.
bs.
Control Risk
bt.
bu.
This is the risk that a misstatement that could occur in an assertion about a
class of transactions, account balance or disclosure, which could be material
either individually or when aggregated among other misstatements, will not be
prevented, detected or corrected, on a timely basis by the entitys internal control
system.
bv.
bw. The auditor shall obtain an understanding of the risk assessment
procedures carried out by the management and shall evaluate the results
thereof. The auditor shall also evaluate that process undertaken by the entity is
appropriate or not.
bx.
Internal Control
by.
bz.
It is the process designed, implemented and maintained by management to
provide reasonable assurance about the achievement of entitys objectives with
regard to reliability of financial and management reporting, effectiveness and
efficiency of operations, and compliance with applicable legal provisions. The
auditor shall study and document the internal controls of the entity on Form 005
as specified in Appendix E.
ca.
cb.
10.5
10.6
Risk Assessment in Small Entity

cc.
cd.
Generally the small entities identify risks through direct personal
involvement rather than established risk assessment processes. The auditor
shall assess the risk, irrespective whether verbal or established.
ce.
Significant Risks
cf.
cg.
Auditor shall pay special attention to the significant risks including:
ch.
Risk of Fraud
Risk related to recent developments in economic, accounting and other areas
Risk from related parties transactions
Risk from uncertainty in measurement and estimates
Risk from unusual and complex transactions

ci.
11.
11.1
Control Activities of Audit
cj.
ck.
Understanding the control activities relating to audit are of prime
importance for the auditor. He shall obtain details of control activities in order to
access the risks related to material misstatement due to fraud and error and shall
design the audit procedures directed to respond to the assessed audit risk. The
auditor shall evaluate how entitys management responds to the risks arising from
information technology.
cl.
cm.
Physical Control
cn.
co.
Physical Control activities refer to physical security of the assets and their
safeguarding. Physical verification of the assets and inventories at specified
period and surprise checks are the examples of physical controls.
cp.
12.
Audit Materiality
cq.
cr.
When establishing the overall audit strategy, the auditor shall determine
materiality as a whole. Any information that influences the decision of user of
financial statement is termed as material. To assess, whether information is
material or not, is a matter of the professional judgment of the auditor. The
decision of the auditor regarding materiality is based on both quantitative and
a.
b.
c.
d.
e.
qualitative aspects. The auditor shall calculate materiality using quantitative

approach. Following are the few examples of the audit materiality:cs.
Financial Statements level Materiality
Accounts Balances Materiality
Transaction level Materiality
Performance Materiality
Computing Materiality (Single Rule Approach or Average Method)
ct.
cu.
The auditor shall seek guidance from ISA 320 Materiality in Planning and
Performing an Audit, in determination of materiality.
cv.
13.
13.1
Assessment of Fraud Risk
cw.
cx.
Misstatement of financial / cost statements can also ascend from fraud or
error. Fraud is an act of intentions by one or more individuals, who are trusted
with governance, employer or even third party, which involves the use of
deception to obtain illegal advantages. Error is always unintentional. The
auditor, while planning the audit, must be careful and alert to the possibility of
fraud. The risk of error shall be assessed by using appropriate quantitative and
qualitative techniques. The auditor shall adhere to ISA-240 assessment of fraud
risk, as detailed in following paragraphs.
cy.
Responsibilities of the Auditors for Fraud Risk
cz.
da.
13.1.1
The auditors responsibilities relating to fraud in auditing
of Financial Statements are described in ISA-240. ISA-240
supplements as to how ISA-315 and ISA-330, are applied for risks of
material misstatement, due to fraud.
db.
dc.
13.1.2
The auditor is responsible for forming an opinion of
professional skepticism during the entire process of auditing irrespective
of the experience. The auditor must ensure the followings:dd.
a.
Identify and assess the risks of material misstatement in the financial /
cost statement due to fraud.
b.
Obtain appropriate audit evidences for assessed risks of material
misstatement due fraud.
c.
Respond to fraud or suspected fraud, as appropriate.
de.
df.
dg.
dh.
di.
dj.
dk.
dl.
dm.
dn.
do.
dp.
dq.
dr.
ds.
dt.
du.
dv.
dw.
dx.
a.
13.1.3
Identification and assessment of risks of material misstatement
due to fraud in accordance with ISA-315.
Discussion among Engagement Partners

13.1.4
The auditor shall discuss the susceptibility of the financial
statements to material statement due to fraud with engagement partner
and among other team members. During discussion the particular
emphasis shall be placed on how and where the entitys financial / cost
statements may be susceptible to material misstatement, due to fraud,
including how fraud might occur. The engagement partner shall
determine that which matters are to be communicated to those team
members not involved in the discussion. Based on discussion the auditor
shall design the additional audit procedures to address the identified
fraud risk.
Discussion with Management

13.1.5
During the planning phase of an audit, the auditor shall
make enquiries from management to address the risk of management
override of controls that may lead to or enable fraudulent financial
reporting or misappropriation of assets. Whether to perform such
procedures should be considered apart from any conclusions regarding
the existence of more specifically identifiable risks.
13.1.6
The auditor shall document the findings from the procedures
performed related to the fraud and error on Form 006, as specified in
Appendix F.
Written Representation
13.1.7
The
auditor
shall
obtain
the
following
written
representation from the management about risk of fraud and error:Acknowledgement of their responsibility for the design, implementation
and maintenance of internal control to prevent and detect fraud.
dy.
b.
c.
d.
Disclosure to the auditor of the results of its assessment of the risk that the
financial statements may be materially misstated, as a result of fraud.
dz.
Disclosure to the auditor about their knowledge of fraud or suspected
fraud affecting the entity involving management employees, who have
significant roles in internal control.
ea.
Disclosure to the auditor about its knowledge of any allegations of fraud, or
suspected fraud, affecting the entitys financial statements communicated
by employees, former employees, regulators and others.
eb.
ec.
14.
Computer Information System Check List
ed.
ee.
Computer Information System (CIS) check list shall be considered
during planning phase of the audit for the evaluation of general level controls.
The auditor shall use the sample provided in Form 007, specified in Appendix
G t o this manual. This check list may be modified according to the degree of IT
environment operating in the entity. The auditor shall inquire about the answers to
the questions management or other responsible person(s) of the entity in writing
and shall also perform other audit procedures, where appropriate, to obtain
required evidence.
ef.
eg.
15.
Analytical Procedure for Risk Assessment
eh.
15.1 For assessing the risk, analytical procedure may identify the aspects, which
were not apparent in normal audit procedures and which help the auditor in
determining that there could risks of material misstatement due to fraud.
Analytical procedures to be performed may include both financial and nonfinancial information.
ei.
ej.
15.2 Analytical procedures may help to identify that the unusual transactions,
events, amounts, ratios or trends that might have implications on audit.
ek.
15.3 Auditor shall obtain evidence that the financial information from appropriate
source. Auditor shall identify the source from where data has been obtained
for analytical procedures and shall evaluate the underlying data gathering
process. The reliability of the data can be assessed by comparing the financial
information with ledgers and budgeted amounts.
el.
em.
15.4 While planning the detailed audit procedures, the auditor shall perform
analytical procedures prescribed in Form 008, a specimen of which is
placed in Appendix H to the manual. The suggested procedures are not
exhaustive and the auditor may include additional evaluation, as deem,
appropriate in the given circumstances.
en.
16.
Evaluation of Internal Audit Functions
eo.
16.1 Internal audit function provides information to the management about
a d h e r e n c e o f the policies and procedures defined by those
charged with governance. The degree of auditors reliance on the data of
the entity depends on the effective functioning of the internal audit. The
effectiveness of the internal auditor shall be determined in accordance with
ISA-315 and the results of the evaluation shall be documented in Form 009,
as referred in Appendix I to the manual.
ep.
16.2 The external auditor can use the work of internal auditor to modify the nature,
timing and extent of audit procedures, to be performed, depending upon the
internal audit functions organizational status and that the relevant policies and
procedures adequately support the objectivity of internal auditor, the level of
competency of internal audit function, and whether the internal audit function
applies a systematic and disciplined approach. .. However, the extent of
internal audit effectiveness and use of internal audit work by external auditor
does not relieve the external auditor from his responsibility. External
auditor is solely responsible for expression of audit opinion. The external
auditor shall consider the work of internal auditor in accordance, with ISA-610.
eq.
16.3 The Auditor shall use the below approach for evaluation of the internal audit
function:er.
a. Obtain understanding of the activities of internal audit function
b. Determination of the extent to which the work of internal auditor is to be
relied upon
c. Evaluation and testing the work of internal auditor
es.
17.
Conducting Audit of Group of Companies
et.
17.1 Audit of Group of Companies needs to be conducted in-accordance with
relevant local laws and ISAs. The auditor may have to rely on the work of
other auditor(s). The auditor shall document the details of co-auditors and
their components. Before commencement of the audit of a group, auditor
shall obtain the following:eu.
a.
Understanding of the Group, its business and products and
services.
b.
Understand the component auditors.
c.
Communication of Group instructions to component auditors.
ev.
17.2 Auditor shall record the information obtained for group audit as per Form
010 specified in Appendix J to the Manual.
ew.
18.
Points Brought Forward from Previous Years
ex.
ey.
During conduct of audit for any period, certain points require some
action(s) to be completed in subsequent year(s). Auditor shall ensure to make the
list of all those points, which are required to be brought forward from the previous
years audit work. The auditor shall ensure that all the points on which action is
required in current year are carefully brought forward and shall document the
points in Form 011, provided in Appendix K to the manual.
ez.
19.
Staff Planning and Time Allocation
fa.
19.1 Auditor shall make planning for deployment of staff for carrying out the audit.
This is an important activity of the planning phase. Time budgeting provides
the auditor to ensure availability of the staff so that audit work is not hampered
because of lack of the required human resources. It also enables the auditor
to evaluate the efficiency of his staff and future planning for charging of
audit fee. While deploying the human resource for an audit assignment, the
factors such as qualification, experience and previous performance of the
team members and audit in charge are important to consider.
fb.
19.2 The auditor shall prepare the time budget for the audit as suggested on
Form 012 specimen of which is placed at Appendix L to this manual.
fc.
fd.
Chapter 3
EXECUTION
fe.
1. Introduction
ff.
fg.
Designing and performing audit procedures is the responsibility of the
auditor. Auditor shall obtain sufficient appropriate audit evidence to provide
reasonable assurance for the purposes of expressing his opinion on the financial
statements. The auditor shall ensure compliance of audit procedures outlined in
ISA-500 Audit Evidence.
fh.
2. Selection of items for testing

fj.
fs.
fi.
2.1
Besides the consideration that the audit evidence is sufficient, in selecting
an item to test, the auditor shall determine the relevance and reliability of
information to be used as audit evidence. The available methods for selecting
an item for testing are:
fk.
a.
Selecting all items (100% examination)
b.
Selection of specific items
c.
Audit sampling
fl.
fm.
The application of any one or combination of these methods may be
appropriate depending upon the particular circumstances and the practicality and
efficiency of different methods.
fn.
fo.
In making decision to select items for testing, the relevant factors include,
auditors understanding of the entity, assessed risk of material misstatement, and
the population characteristics.
fp.
fq.
Selecting All Items
fr.
2.2
If the auditor concludes that specific audit areas are required to be fully
examined in order to express his opinion on the financial statements, he will
evaluate the 100% population that make up of class of transaction or account
balance. 100% is unlikely in case of test of controls and more common for test of
details.
ft.
fu.
Selection of Specific Items
fv.
fw.
2.4
2.5
2.3
The auditor may decide to select specific items from a population. Specific
items may include:
fx.
a.
High value or key items
b.
Items above certain amount threshold
c.
Items needed for further information
fy.
The judgmental selection of specific items is subject to non-sampling risk. The
results of the audit procedures applied to selected items cannot be projected to
entire population; accordingly, selective examination of specific items does not
provide audit evidence concerning the remainder of the population.
fz.
Audit sampling is applied to enable conclusions to be drawn about the entire
population on the basis of testing a sample drawn from it in accordance with ISA530 Audit Sampling.
ga.
gb.
3. Audit Sampling
gc.
gd.
Audit sampling is the application of audit procedures to conduct the audit of
less than 100% items. Sampling approach is applied on entire population by
ensuring that all units have a chance of selection in order to provide the auditor
with a reasonable basis to substantiate the conclusion and to form the audit
opinion. Auditor shall ensure that tests and procedures are applied to the items
selected through audit sampling,
ge.
4. Sampling Risk
gf.
gg.
Sampling risk is the risk that the auditors conclusion, in case the entire
population is subject to same audit procedures as are selected samples, could be
different from the conclusion drawn from audit procedures performed to selected
samples. Sampling risk can lead to two types of erroneous conclusions as detailed
below:
gh.
gi.
gj.
4.1
Affecting Audit Effectiveness
gk.
gl.
The following are the elements that impact audit
effectiveness:gm.
gn.
4.1.1
Test of Control - Risk of Over Reliance
go. This is the incorrect conclusion that assessed levels of control risk
based on samples supports preliminary assessment of control risk.
gp.
gq.
gr.
4.1.2
Substantive Test of Details - Risk of Incorrect
Acceptance
gs.
gt. This is the incorrect conclusion that sample estimates of accounts
balances or misstatements in accounts balances supports conclusion
that the recorded balances are not materially misstated.
gu.
gv.
gw. 4.2
Affecting Efficiency of Audit
gx.
gy.
Following elements affect the work of an auditor and prompt auditor to
do additional work:gz.
ha.
4.2.1
Test of Control - Risk of Under
Reliance
hb.
hc. This is the incorrect conclusion that assessed levels of control risk
based on samples do not supports preliminary assessment of control
risk.
hd.
he.
4.2.2
Rejection
hf.
Substantive Test of Details - Risk of Incorrect
hg.
hh.
hj.
This is the incorrect conclusion that sample estimates of accounts

balances or misstatements in accounts balances do not supports
conclusion that the recorded balances are not materially misstated.
hi.
Sampling risk is frequently expressed as a percentage (%). Risk can also
be expressed in terms of confidence levels and reliability factors. A confidence
level is the degree of assurance that the material error does not exist and it is
opposite of risk.
hk.
5. Non-Sampling Risk
hl.
hm. Component of detection risk, which is not due to examining any portion of
the data is called, non-sampling risk. Non-sampling risk is due to
inappropriate audit procedures, misinterpretation of audit evidence and failure to

recognize the misstatements. Following are the few sources of non-sampling
risk:hn.
a.
Non investigation
of significant
fluctuation in analytical procedures.
b.
Reliance on management representations as
alternative source for audit evidence.
ho.
6. Sampling Approaches
hp.
6.1
There are several methods for audit sampling. Audit sampling can be done
through statistical or non-statistical sampling approach.
hq.
6.2
6.3
hr.
Statistical Sampling Approach
Statistical sampling approach means determining the items to be selected
through available statistics. Random selection of items and use of probability
theory to evaluate sample results are the examples of statistical sampling
approach.
hs.
ht.
Non Statistical Sampling Approach
The selection of items, which is not based on statistics, is called non statistical
sampling approach.
hu.
7. Planning the Sample Selection

7.1
7.2
hv.
Following shall be considered for planning the sample account balances and
transactions.
hw.
a. Materiality and the number of items in population
b. Inherent Risk
c. Cost and time required
d. Relevance and reliability of evidence
hx.
hy.
Steps for Planning the Sample
hz.
Following Steps shall be considered for planning the sample audit:ia.
a.
Determine the objective of the test.
b.
Define errors and deviations being sought.
c.
Decide the size of the sample.
d.
Identify the population and sampling units.
ib.
ic.
Steps for planning are explained in detail below:
id.
Objectives of the Test
ie.
7.2.1 It is the responsibility of the auditor to consider the specific objectives to be
achieved and the combination of audit procedures that is likely to best
achieve the specified objectives. Both tests of control and substantive
procedures can be performed to the items of population selected through
audit sampling techniques.
if.
ig. Test of Control
ih.
7.2.2 Sampling is applicable in testing the operation of controls, when there is a
trail of documentary or electronic evidence of the performance of
control procedures.
ii.
ij.
ik. Substantive Tests
il.
7.2.3 Substantive test for sampling plans may form one of two procedures. The
first approach is to obtain evidence that an account balance is not
materially misstated. The second approach is to make independent
estimates of some amount.
im.
7.2.4 Substantive test for sampling plans may form one of two procedures. The
first approach is to obtain evidence that an account balance is not
materially misstated. The second approach is to make independent
in.
io.
Definition of Error and Deviation
ip.
7.2.5 The auditor shall consider what constitutes an error by referring to the
objectives of the test. The objective of test of control is to identify the
deviations from the prescribed control procedures. The objective of test of
details or substantive testing is the identification of errors or misstatements in
recorded transactions or balances.
iq.
ir.
is.
Identification of population and sample units
it.
7.2.6 Auditor shall identify the population and the sampling unit strictly in
accordance with the objectives of the audit test. While selecting the samples,
auditor shall ensure that population is appropriate and complete. For test of
controls, the population must have the same control characteristics.
iu.
Stratification
iv.
7.2.7 Stratification is one of several method of sample selection. Stratification is
dividing population in creating relatively homogeneous group. This method is
widely used for substantive testing.
iw.
ix.
Size of the Sample

iy.
7.2.8 The auditor shall determine sample size to reduce the sample risk at an
acceptable low level. The auditor shall determine the sample size either
through use of statistical formula or the exercise of professional judgment.
iz.
8. Sample Selection and Testing

ja.
8.1
While selecting the items for audit sampling, the auditor shall ensure that
there is every possibility for each sampling unit in the population to be
selected. Following are commonly used methods for obtaining representative
samples for audit sampling (for details, ISA 530 be referred):jb.
8.1.1 Statistical
a.
b.
c.
jc.
Random selection
Systematic selection
Monitory unit sampling
jd.
8.1.2 Non-Statistical
jg.
8.2
je.
a.
Haphazard Selection
b.
Block Selection
jf.
Projection of Error to Population
jh.
If errors or deviations appear to be consistent with those which were anticipated
during the procedures planning the same can then be projected to consider the
effect on the population .
ji.
jj.
If errors or deviations appear to be consistent with those which were
anticipated during the procedures planning the same can then be projected to
consider the effect on the population.
jk.
jl.
jm.
Both statistical and non-statistical sampling requires sample results to
be projected on the population.
jn.
jo.
Test
of
Controls
jp.
8.2.1 The rate of errors or deviations in the sample may be taken to be the rate of
deviation or error in the population.
jq.
jr.
Test of Control
js.
8.2.2 There are two quantitative methods of error projections for substantive
tests. The use of these methods depends on whether or not the error relates
closely to the size of the item.
jt.
ju.
(a) Routine Methods
jv.
jw.
This method is used, if errors relates closely to the size of
the items. As the monetary value of the items increases, the
monetary value of error increase.
jx.
jy.
(b) Difference Method
jz.
ka.
The difference method is used, where error does not have
direct relationship to the monetary value of the items. These errors
will increase in proportion to the number of items in the population.
kb.
9. Evaluating Results of Audit Sampling

9.1
9.2
kc.
The auditor shall evaluate the results of sample and that the use of audit sampling
has provided a reasonable basis for conclusion about the population that has
been tested. The auditor while evaluating misstatements should not include,
anomalous error(s) from projected misstatement, however, such errors may be
considered while evaluation of misstatement within the sample. Auditor shall
obtain sufficient appropriate audit evidence to validate the fact that error or
deviation is anomalous.
kd.
Every error or deviation discovered during audit need to be evaluated for its
implementations. Auditor shall consider the following:
ke.
a.
Error or deviation has an effect on the whole population.
b.
Error or deviation has local occurrence.
c.
kg.
Error or deviation has isolated effect.
kf.
9.3
While analyzing the errors or deviations, their nature, cause and possible
impact on the financial statement as whole should be considered. In case errors
or deviation have common and potentially significant features, a sub-population
of items of that feature may be identified for further testing.
kh.
10.
Sample Audit Programs
ki.
kj.
10.1
The main objective of the audit process is to conduct the audit and for
that the importance of preparation of steps o f audit cannot be over
emphasized. The purpose of audit program is to document the procedures planned
and to be performed in respect of the class of transactions and account balances.
Auditor shall ensure that the audit programs are prepared for key areas of the
financial statements in order to determine the planned audit approach for various
audit objectives.
kk.
10.2 Following are the main areas to be focused by the auditor and list of sample
audit programs of key activities are provided below along with detailed model
audit program specified in Appendix M to AK to the manual. The sample
audit program may be modified as per requirement of the entity and applicable
laws:kl.
10.2.1 Balance Sheet: Assets
km.
a. ko. Cash and Bank
kp.
F kq. Appendi
b. ks. Investment in Properties
kt.
F ku. Appendi
orm 014 F ky.
x NAppendi
c. kw. Investment in
kx.
Subsidiaries
orm 015 F lc.
x OAppendi
d. la.
Deposits and Advances
lb.
orm
016
x P Appendi
e. le. Loan and Allowances
lf.
Form
lg.
017
x QAppendi
f. li.
Inventories
lj.
Form
lk.
018
x RAppendi
g. lm. Trade Debts
ln.
F lo.
orm
019
x S Appendi
h. lq. Fixes Assets
lr.
Form
ls.
020
x T
lt.
10.2.2 Balance Sheet: Liabilities
lu.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
b.
Accrued Expenses
f.
Deferred Liabilities
j.
Taxation
n.
Contingencies and
Commitments
r.
Payables
v.
Short term borrowing
z.
Finance lease Liabilities
ad. Long Term Liabilities
ah. Dividend Payable
al. Equity
lv.
lw.
10.2.3 Profit & loss Accounts
lx.
a. Sales
b. Cost of Sales
c. Admin Expenses
d. Financial Charges
e. Other income
ly.
lz.
10.2.4 Others
ma.
a. WWF
b. Law & Regulations
mb.
mc.
11.
c. Form
g. Form
022 Form
k.
023
o. Form
024
s. Form
025 Form
w.
026 Form
aa.
027 Form
ae.
028 Form
ai.
029
am. Form
030
d.
h.
V
l.
W
p.
X
Appendix
Appendix
Appendix
Appendix
t.
Ap
x.
Ap
ab. Appendix
AA Appendix
af.
AB Appendix
aj.
AC an.
Ap
Form 031
Form 032
Form 033
Form 034
Form 035
Form 036
Form 037
Appendix AE
Appendix AF
Appendix AG
Appendix AH
Appendix AI
Appendix AJ
Appendix AK
Going Concern
md.
11.1 Continuation of an entity as a going concern is of prime importance. Ordinarily,
information that significantly contradicts the going concern assumption relates to
the entitys inability to meet its obligations as they become due without substantial
disposition of assets outside the ordinary course of business.
me.
mf.
11.2 As per Para 12 of ISA 570, an auditor is required to obtain and evaluate the
management assessment of the entitys ability to continue as a going concern.
mg.
mh.
11.3
The process for assessment for going concern shall be at least twelve
months and the period used for assessment shall also be the same as that of
management assessment.
mi.
mj.
11.4 Auditor shall perform the procedures to make assessment as suggested in
Form 038 referred in Appendix, AL to the manual.
mk.
12.
Compliance of Regulatory Framework
ml.
mm. Auditor shall ensure that client has complied with requirements of
applicable legal and regulatory framework e.g. Companies Ordinance, 1984,
Income Tax Ordinance, SECP Regulations. The auditor shall obtain a general
understanding of how the client is complying with the applicable legal and
regulatory framework by inquiring of management. To ensure that regulatory
requirements are complied with, the auditor shall perform the procedures detailed in
Form 039 referred in Appendix, AM to the manual.
mn.
mo.
13.
Physical Counting of Inventory
mp.
13.1 ISA 501 describes that if inventory is material to the financial statements, the
auditor shall obtain sufficient appropriate evidence for physical existence of
the inventory, unless it is impracticable.
mq.
13.2 Physical verification of the inventory in the presence of the auditor
provides assurance that procedures applied for physical count by the client
are accurate.
mr.
ms.
13.3 The auditor shall also carry out the test counts on the cutoff date and
timing. The inventory count normally covers three stages i.e., before, during
and after physical inventory counting. The auditor shall use both bottom-up
and top-down approach for selecting samples for inventory counting.
mt.
mu.
13.4 If the client has efficient inventory counting system, the physical inventory may
be carried on continues basis instead of counting all items at year end.
mv.
mw.
13.5
13.6
During physical counting, the auditor shall ensure that employees of the entity
carry out instructions properly.
mx.
my.
Discrepancies observed during the counting shall be documented and notified to
management for taking correcting measures.
mz.
na.
14.
Confirmation and Inquiries
nb.
14.1 Significant transactions in an entity relates to third party. The balances shown
and transactions recorded in the books of accounts relating to other parties
can only be authenticated by the concern party. For ensuring that the
balances are correct, these be got confirmed from related parties.
Confirmation and inquiry is defined by ISA as, "Audit evidence obtained as a
direct written response to the auditor from the responding party, in paper form,
or by electronic or other medium. While using external confirmation
procedure as audit evidence, the auditor shall maintain control over
confirmation requests.
nc.
nd.
14.2 The auditor shall ensure that information from third party is received
directly from concerned party.
ne.
14.3 Confirmation received directly from third party in paper form is most
authenticated than the evidence received through facsimile or electronic mail.
The response recorded electronically involves risks as to reliability because
the originator cannot be authenticated. If the auditor feels that response
through electronic mean is not authentic, he may ask for authentication
through paper. If the response from third party is received through client,
auditor may request confirming party to respond directly with auditor, in
writing. The letters to be sent to third parties for confirmation of the
information are stated below and these sample letters be modified as per
the requirements of the auditor or client:nf.
(a)
Letter to Bank
Form 040,
Appendix AN
ng.
(b)
Letter to Debtors/ Creditors
Form 041, Appendix AO
nh.
ni.
15.
Related Party Transactions
nj.
15.1 A business deal or arrangement between two parties, who are joined by a
special relationship prior to the deal is called related party transaction. For
example, a business transaction between a major shareholder and the
corporation, such as a contract for the shareholders company to perform
renovations to the corporations offices, would be deemed as related-party
transaction.
nk.
nl.
15.2 As per IAS 24, entity is to ensure that financial statement contain the
disclosure, necessary to draw attention to the possibility that its financial
position and profit or loss may have been affected by the existence of
related parties transactions and outstanding balances with such parties.
nm.
nn.
15.3 Auditor shall ensure to identify the related party transactions and obtain
sufficient appropriate audit evidence by performing the procedures
described in, Form 043, as specified in Appendix AQ to the manual.
no.
np.
16.
Compliance of Labour Laws
nq.
16.1 Auditor shall ensure that entity under audit, falls under the definition of
commercial or industrial establishment, as defined in, West Pakistan
Industrial and Commercial Employment/ (Standing Orders) Ordinance,
1968. If the entity falls under the category of commercial or industrial
establishment, auditor shall perform the procedures as per Form 044,
specified in Appendix AR to the manual.
nr.
17.
Taxation
ns.
nt.
Auditor shall ensure that provision for income and deferred taxes are
made in accordance with the Income Tax Ordinance, 2001 and recorded as per
Form 045, specified in Appendix AS to the manual.
nu.
nv.
nw. Chapter 4
REPORTING
nx.
ny.
1. Objective of the Audit

nz.
1.1
The objective of the auditor in conducting the audit of financial / cost

statements are:oa.
1.1.1 To obtain reasonable assurance that financial / cost statements are free
from misstatement, whether due to fraud or error, which enables auditor to
express an audit opinion.
ob.
1.1.2 To provide report on the financial statement and communicate as per the
requirements of ISAs.
oc.
od.
2. Auditors Report
oe.
2.1
Auditors report is the final segment of the auditors assignment. In fact,

auditors report is the crux of the findings and recommendations of the
auditor, therefore, auditor must ensure that auditors report is free of errors,
spelling mistakes and omissions.
of.
2.2
Auditor shall be well aware of its reporting responsibilities under the IAS to
report on financial statements prepared in accordance with the applicable
reporting frameworks. . Below is the list of applicable laws for preparation of
financial statement in Pakistan:-
og.
a.
b.
c.
oh.
Companies Ordinance, 1984

The Banking Companies Ordinance, 1962 (for banking companies)
Insurance Act, 1938 (for insurance companies)
3. Audit Opinion
oi.
3.1
The purpose of the audit is to enhance the degree of reliance of intended

users of the financial statements. Auditor is required to give its opinion
whether the financial statement, in all material respects, give a true and fair
view, in accordance with applicable financial reporting framework. The
audit opinion could be
oj.
a.
b.
c.
d.
ok.
ol.
om.
a.
b.
c.
3.2
3.3
3.4
3.5
pd.
Clean or Unqualified
Clean or Unqualified but with an emphasis
Qualified due to disagreement.
Disclaimer or Adverse.
The following ISAs shall be applied in forming an audit opinion.

ISA 700 Forming an Opinion and Reporting on Financial Statements
ISA 705 Modifications in the Opinion in the Independent Auditors Report
ISA 706 - Emphasis of Matter Paragraphs and Other Matter Paragraphs in
the Independent Auditors Report
on.
Clean or Unqualified
oo.
op.
When the auditor has obtained reasonable assurance the financial
statements present, in all material respects, a true and fair view, the opinion is
called clean or unqualified.
oq.
or.
Clean or Unqualified but with an emphasis
os.
ot.
When auditor considers it necessary to draws users attention to the matter
prescribed or disclosed in the financial statement, which is fundamental to
users understanding, shall include an emphasis of matter paragraph in the
auditors report
ou.
Qualified Report
ov.
ow. The auditor shall express a qualified opinion in one of the following form:ox.
oy.
3.4.1When sufficient appropriate audit evidence concludes that
misstatement is indirectly or in the aggregate, are material, but not
persuasive, to the financial statements.
oz.
pa.
3.4.2 When the auditor is unable to obtain the sufficient appropriate
audit evidence, but concludes that the possible effect on the financial
statements of undetected misstatement, if any could be material but not
persuasive.
pb.
pc.
Scope Limitation
3.6
pe.
This situation arises, when the auditor is unable to obtain sufficient
appropriate audit evidence to give an unqualified opinion due to limitation of
scope of audit. Following shall be considered in case of inability to obtain sufficient
appropriate audit evidence.
pf.
3.5.1 If the auditor become aware that management has imposed a
limitation on his scope, that he considers likely to results his
qualified opinion or disclaimer of opinion, the auditor shall request
management to remove the limitation.
pg.
3.5.2 If the management refuses to remove the limitation, the auditor shall
communicate the matter to those charged with Governance.
ph.
pi.
pj.
Disclaimer of opinion
pk.
3.5.3 Where the auditor is unable to obtain sufficient appropriate audit
evidence to provide basis for his audit opinion and he concludes that
due to such limitation of scope, the possible effects on the
financial statements of the probable misstatements, if any, could be
material and pervasive , the auditor shall amend the description of the
auditors responsibility paragraph in the auditors report and the
description of the scope of the audit to state only the following:
pl.
pm.
Our responsibility is to express an opinion on the financial
statements based on conducting the audit in accordance with
International Standards on Auditing. Because of the matter(s) described
in the Basis for Disclaimer of Opinion paragraph, however, we were
not able to obtain sufficient appropriate audit evidence to provide a basis
for an audit opinion.
pn.
po.
Adverse Opinion
pp.
pq.
An adverse opinion shall be expressed when the effect of a
disagreement is so material and pervasive to the financial statements that the
auditor considers that a qualified opinion would be inadequate to disclose the
misleading or incomplete nature of the financial statements.
pr.
4. Draft Audit Report

ps.
pt.
Before issuing the final audit report, auditor shall share the draft audit
report along with financial statements and letter to the Board of Directors of the
entity with the management and those charged with governance for their review
and comments, if any. Auditor shall ensure to perform the steps outlines in
Form 46, specified in Appendix AT to the manual.
pu.
5. Audit Completion Checklist

pv.
pw. Auditor shall prepare the audit completion checklist as suggested in Form
47, specified in Appendix AU.
px.
py.
The audit completion checklist is to ensure that documentation has been
done adhering to International Standards on Auditing and requirements of
applicable laws and regulations. This check list requires review and sign by the
partner.
pz.
6. Subsequent Events
qa.
6.1
There is a possibility that Auditor becomes aware of certain facts a n d

c i r c u m s t a n c e s after issuance of the auditors report which may
necessitate to amend the auditors report. Following are the subsequent
events which may arise after issuance of audit report:qb.
6.2
Events identified after the date of the auditors report but before the
financial statement are issued:-
qc.
6.2.1 When auditor becomes aware of the facts leading to amendment of the
auditors report after the date of report but before issue of financial
statements, the audit shall discuss the matter with the management
and with those charged with corporate governance.
qd.
6.2.2 If management agrees to amend the financial statement, than auditor
shall carry out the audit procedures to obtain sufficient appropriate
audit evidence that the all events occurring after the date of report that
required adjustments, r disclosure in the financial statements, have
been identified.
qe.
6.2.3 In case management does not agree to amend the financial
statements, in the events where auditor believes that the adjustment or
disclosure in the financial statements is required, the auditor shall
amended, it report, provided auditor has not issued the final report and
in case audit report has been issued, inform those, charged with
governance that not to issue the financial statement and auditors
report to third parties without necessary amendments. If the
management has issued the financial statement without considering
the request of auditor, then the auditor shall take appropriate actions to
prevent reliance on the auditors report.
qf.
qg.
Events identified after the issuance of financial statements:qh.
6.3.1 When auditor becomes aware of the facts and events that require
adjustment or disclosure in the financial statements, after the issuance of
financial statement, he shall discuss the matter with the management and
those charged with governance.
qi.
qj.
6.3.2 If management considers to revise the financial statement audit shall
carry out appropriate audit procedures to obtained sufficient
appropriate evidence that facts and events necessitating disclosure or
adjustments have been identified, and shall review the steps taken by
the management and issue new auditors report on the revised
financial statement.
qk.
ql.
6.3.3 If management declines to revise the financial statement and does not
take steps to inform the recipient of the financial statement regarding
the situation and the impacts of subsequent events, the auditor shall
inform those charge with governance. If no action is taken by those
charged with governance, the auditor shall take appropriate action to
prevent reliance on the auditors report.
6.3
qm.
6.4
Auditor shall review the audit procedures to be performed for subsequent events
which require adjustments or disclosures in the financial statements. The auditor
shall take into consideration the auditors risk assessment in determining the nature
and extent of such audit procedures. However, it is not expected that, the auditor
shall perform additional audit procedures on the matters on which audit
procedures have been applied previously and the conclusions were
satisfactory. Auditor shall document the subsequent events and audit procedures
performed in Form 48, as specified in Appendix AV to the manual.
qn.
7. Letter to Board of Director
qo.
qp.
The auditor shall submit the auditors report to Board of Directors or
those charged with governance. Along with the auditors report, the auditor shall
provide a letter containing details about the auditors responsibility, management
responsibility and significant matters for specific attention of the board for their review and
consideration as well as a management letter pointing out the control deficiencies, not
materially affecting financial statements, and the auditors recommendation on the same.
qq.
qr.
A sample of letter has been provided in Form 49, referred in Appendix
AW to the manual.

qs.
qt.
qu.
qv.
qw.
qx.
qy.
qz.
ra.
rb.
rc.
rd.
re.
rf.
rg.
rh.
ri.
rj.
rk.
rl.
rm.
rn.
ro.
rp.
rq.
rr.
rs.
rt.
ru.
rv.
APPENDICES
rw.
rx.
ry.
rz.
sa.
sb.
sc.
sd.

35

se.
sf.
sg.
sh.
si.
sj.
sk.
sl.
sm.
sn.
so.
sp.
sq.
sr.
st.
ss.
Appendix A
su.
Form 001
sv.
sw.
sx.
sy.
sz.
ta.
tb.
tc.
td.
te.
tg.
th.
ti.
NEW CLIENT AUDIT ENGAGEMENT FORM
Name of CMA Firm / Auditor

Particulars of the client
M/ S----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reference No.
Prepared By
tf.
Date
Approved By
1. Status of the Client (Company, Firm, DFI, etc.):-
tj.
36

tk.
--------------------------------------------
tl.
2. Auditors previous experience with the client:a) -------------------------------------------b) --------------------------------------------
tm.
3. How the client is referred:-
tn.
to.
--------------------------------------------
tp.
4. Risk associated with the client:a) ------------------------------------------b) -------------------------------------------
tq.
5. Information Known about the client:a) -----------------------------------------b) ------------------------------------------
tr.
6. Fact surfaces through inquires with third party:a) ----------------------------------------b) -----------------------------------------
ts.
7. Any condition for audit:a) -----------------------------------------b) ------------------------------------------
tt.
tu.
8. Limitation of scope likely to result in disclaimer of opinion and need to accept
limitation, if any:a) -------------------------------------------b) --------------------------------------------
tv.
9. Will the auditor be independent or have some restriction(s):a) -------------------------------------------b) --------------------------------------------
tw.
10. Are there any conflicts of interest:a) -------------------------------------------b) --------------------------------------------
tx.
11. Details of estimated fees etc.:a) -------------------------------------------b) --------------------------------------------
ty.
12. List down the factors that could impair the firms independence for this audit
engagement:a) -------------------------------------------b) --------------------------------------------
tz.
37

13. List down other factors considered important:a) -------------------------------------------b) --------------------------------------------
ua.
14. Conclusion on the basis of the information gathered above:a) -------------------------------------------b) --------------------------------------------
ub.
uc.
We conclude that M/s __________________________be accepted/ not to be

accepted for audit engagement.
ud.
15. Following are the reasons for not accepting the client for audit engagement.
a) ------------------------------------------b) --------------------------------------------
ue.
uf.
ug.
uh.
Date
Engagement
Date
Senior Partner
Partner
ui.
uj.
uk.
ul.

38

um.
Appendix B
F
orm 002
un.
uo.
up.
uq.
ur.
us.
ut.
uu.
uv.
uw.
ux.
EXISTING CLIENTS AUDIT ENGAGEMENT FORM

Particulars of the Client
M/ S----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
uy.
Reference No.
va.
Prepared By
vb.
Approved By
vc.
uz.
Date
1. State last years significant experience with the client:a) ----------------------------------------b) -----------------------------------------
vd.
2. Significant changes in clients business:a) ----------------------------------------b) -----------------------------------------
ve.
3. Any new legal, regulatory or professional requirements that requires changes in
planning or performance:a) ----------------------------------------b) -----------------------------------------
vf.
4. Significant changes in the clients management:a) -----------------------------------------b) -----------------------------------------
vg.
5. State the degree of independence experienced during audit engagement:a) -----------------------------------------b) -----------------------------------------
vh.
6. Requirement of experts in exertion of audit engagement:a) ----------------------------------------b) -----------------------------------------
vi.
vj.
7. Proposed services to the client in addition to audit engagements:a) ----------------------------------------Institute of Cost and Management Accountants of Pakistan
39

b) -----------------------------------------
vk.
8. Conclusion on the basis of the above information:vl.
It is concluded that we should/ should not continue the audit engagement with
this client due to:a) ---------------------------------------b) ----------------------------------------
vm.
vn.
vo.
vp.
vq.
vr.
vs.
vt.
Date
Partner
Engagement
Date
Senior Partner
vu.

40

vv.
Appendix C
vw.
Form 003
vx.
vy.
vz.
wa.
wb.
wc.
wd.
we.
wf.
wg.
PLANING AN AUDIT

M/ S-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
wh. Reference No.

wj.
Prepared By
wk.
Approved By
wl.
wi.
Date
1. Define scope:(a) -------------------------------------(b) --------------------------------------
wm.
2. Purpose of the audit:(a) -------------------------------------(b) --------------------------------------
wn.
3. Schedule of the audit:(a) -------------------------------------(b) --------------------------------------
wo.
4. Value and timing of the communication:(a) -------------------------------------(b) --------------------------------------
wp.
5. Engagement terms:(a) -------------------------------(b) --------------------------------
wq.
6. Management Personal:(a) -------------------------------(b) --------------------------------
wr.
7. Allocation of work:(a) -------------------------------(b) --------------------------------
ws.
8. Result of inquiries:Institute of Cost and Management Accountants of Pakistan
41

(a) -------------------------------(b) --------------------------------
wt.
wu.
9. Results of analytical procedures:(a) -------------------------------(b) --------------------------------
wv.
10. Observations and inspection:(a) -------------------------------(b) --------------------------------
ww.
11. Information gathered in previous periods for reliance to current period:(a) -------------------------------(b) --------------------------------
wx.
12. SWOT analysis:a) Strength
(i)
------------------------(ii)
------------------------(iii)
-------------------------
wy.
b) Weaknesses
(i)
------------------------(ii)
------------------------(iii)
-------------------------
wz.
c) Opportunities
(i)
------------------------(ii)
------------------------(iii)
------------------------d) Threats
(i)
------------------------(ii)
------------------------(iii)
-------------------------
xa.
13. PEST analysis:a) Political
(i)
------------------------(ii)
------------------------(iii)
-------------------------
xb.
b) Economic
(i)
------------------------(ii)
------------------------(iii)
-------------------------
xc.
c) Social
(i)
------------------------Institute of Cost and Management Accountants of Pakistan
42

(ii)
(iii)
-------------------------------------------------
xd.
d) Technological
(i)
------------------------(ii)
------------------------(iii)
-------------------------
xe.
14. Conclusion
(a) -------------------------------(b) --------------------------------
xf.
xg.
xh.
xi.
xj.
xk.
xl.
xm.
Date
Partner
Engagement
Date
Senior Partner
xn.

43

xo.
Appendix D
xp.
Form 004
xq.
xr.
Critical Audit Areas/ Significant Financial Statement

Components
xs.
xt.
xu.
xv.
xw.
xx.
xy.
xz.

M/S-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ya.
Reference No.
yc.
Prepared By
yd.
Approved By
ye.
yf.
yb.
yh.
Managem
ent
Response
Date
yi.
yg.
Critical Audit Areas/

Objectives
yj.
Significant estimate
made
New borrowings with
extra-ordinary terms
and conditions
Acquisition of a
significant asset
yk.
yl.
yn.
yo.
yq.
yr.
ys.
Discontinuation of
major supplier
yt.
yu.
yv.
Discontinuation of a
major customer
yw.
yx.
ym.
yp.
Proposed
Audit
Approach
yy.
yz.
za.
zb.
zc.
zd.
ze.
zf.
zg.
zh.
Date
Partner
Engagement
Date
Senior Partner
44

zi.

45

zj.
Appendix E
zk.
Form 005
CONTROL OVERVIEW & RISK ASSESSMENT FORM
zl.
zm.
zn.
zo.
zp.
zq.
zr.
zs.
zt.
Name of Practicing Cost and Management Accountants/ Firm

M/S----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
zu.
Reference No.
zw.
Prepared By
zx.
Approved By
zy.
zv.
Date
1. Control Environment:(a) Communication, Integrity and Ethics:(i)

------------------------------------(ii)
------------------------------------(iii)
-------------------------------------
zz.
(b) Governance:(i)
-------------------------------------(ii)
-------------------------------------(iii)
--------------------------------------
aaa.
(c) Managements Operations:(i)
------------------------------------(ii)
------------------------------------(iii)
-------------------------------------
aab.
(d) Competence:(i)
------------------------------------(ii)
------------------------------------(iii)
-------------------------------------
aac.
(e) Organization Structure:(i)
------------------------------------(ii)
------------------------------------(iii)
-------------------------------------
aad.
(f) Human Resource:(i)
-----------------------------------(ii)
-----------------------------------(iii)
------------------------------------
aae.
46

aaf.
(g) Authority and Responsibilities:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aag.
2. Risk Assessment:(a) Business Risk
(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aah.
(b) Signification of risk:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aai.
(c) How to address risk:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aaj.
(d) Significant Risk:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aak.
(e) Information System:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aal.
(f) Communication:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aam.
(g) Financial Reporting:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aan.
3. Control Activities of Audit:(a) Risk Relating to Information Technology:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aao.
(b) Smaller Entities (Special):Institute of Cost and Management Accountants of Pakistan
47

(i)
(ii)
(iii)
-------------------------------------------------------------------------------------------------------------------------
aap.
(c) Physical Controls:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aaq.
(d) Segregation of Duties:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aar.
(e) Design and Documentation of Controls:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aas.
(f) Others:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
aat.
aau. Summary of Internal Controls Checklist
aav.
aaw. Description
aay. Are entity risk assessment processes
aba.
satisfactory?
If risk assessment process is not satisfactory,
give reasons
abb.
abd.
Is control environment satisfactory?

If Control environment is not satisfactory, give
details
abe.
abg.
Are control activities e satisfactory?

If Control activities are not satisfactory, give
details
abh.
abj.
Is monitoring of control satisfactory?

If monitoring of control is not satisfactory, state
the reasons.
aax. Answers
aaz. Yes/ No
(a)
(b)
abc. Yes/ No
(a)
(b)
abf. Yes/ No
(a)
(b)
abi. Yes/ No
(a)
(b)
abk.
48

abl.
abm.
abn. Date
Engagement
Partner
abo.
abp.
abq.
abr.
Date
Senior Partner
abs.
abt.
abu.
abv.
Appendix F
abw. Form 006

abx.
aby.
ASSESSMENT OF MISSTATEMENT OF FINANCIAL STATEMENTS DUE

TO FRAUD
abz.
aca.
acb.
acc.
acd.
ace.
acf.

M/S----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
acg. Reference No.

aci. Prepared By
acj. Approved By
ack.
ach.
Date
1. Discussion among the engagement team:(a) --------------------------------------------(b) --------------------------------------------(c) ---------------------------------------------
acl.
2. Discussion with Management:(a) Preliminary discussions:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(b) Result of inquiries:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(c) Management fraud risk assessment:(i)
----------------------------------------(ii)
----------------------------------------Institute of Cost and Management Accountants of Pakistan
49

(iii)
-----------------------------------------
(d) Over sight of Management:(i)

----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(e) Accounting environment and internal control system:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(f) Internal audit function:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(g) Risk of fraud and errors:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------3. Discussion with those charged for Governance:(a) --------------------------------------------(b) --------------------------------------------(c) --------------------------------------------4. Fraud risk factors:(a) Financial reporting fraud:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(b) Misappropriation of asset:(i)
----------------------------------------(ii)
----------------------------------------(iii)
----------------------------------------(c) Document relating to fraud and risk factors:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
acm.
(d) Other considerations:(i)
----------------------------------------(ii)
----------------------------------------(iii)
-----------------------------------------
acn.
(e) Audit procedures:(i)
----------------------------------------Institute of Cost and Management Accountants of Pakistan
50

(ii)
(iii)
---------------------------------------------------------------------------------
aco.
acp.
acq. Date
Engagement
Partner
acr.
acs.
act.
acu.
Date
Senior Partner
acv.
acw.
acx.
acy.
acz.
ada.
adb.
adc. Appendix G
add. Form 007
ade.
adf.
GENERAL PURPOSE CHECKLIST FOR COMPUTER INFORMATION

SYSTEMS
adg.
adh.
adi.
adj.
adk.
adl.
adm.
adn.
ado.
adq.
adr.
Reference No.
Prepared By

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
adp.
Date
Approved By
ads.
adt.
adu.
adv.
Description
adw.
adx.
ady.
adz.
Entitys Policies
aeb.
IT functions are controlled as per IT

policies?
Has entity documented plan for the
Brief
of
Findin
gs
aea.
a
aee.
aef.
aec.
aed.
aeg.
aeh.

51

b
aei.
aej.
aek.
ael.
aeo.
aep.
Does internal audit department

review the IT controls?
Does a formal IT security function
exist in the entity?
Is the structure of the entity
conducive to control structure?
Segregation of duties
aeu.
aev.
aey.
aez.
afc.
afd.
afi.
afj.
afm.
afn.
afq.
afr.
aft.
Do proper organizational controls

exist?
Are proper segregation of duties
within the IT department appropriate
according to structure of the
organization?
Are the responsibilities of IT
department properly defined?
Logical Access Controls
afv.
Is sensitive data defined?
afw.
afx.
afz.
Are appropriate security measure

taken for sensitive data?
Does proper control exist for
securing passwords?
Is there proper segregation and
authorization for proper use IDs for
administrative use?
aga.
agb.
age.
agf.
agi.
agj.
agp.
agq.
agt.
agu.
agx.
agy.
aem.
aen.
aeq.
future?
Is there any Committee which
controls the IT policy?
Do formal comprehensive IT policies
and procedures exist?
Role of Internal Audit
aer.
aes.
aet.
aew.
aex.
afa.
afb.
afe.
aff.
afg.
afh.
afk.
afl.
afo.
afp.
afs.
4
afu.
a
afy.
b
agc.
agd.
agg.
agh.
agk.
agl.
agm. Physical Access Controls
5
agn.
ago.
agr.
ags.
agv.
agw.
Are adequate physical security

measures taken to avoid theft of
computer equipment and data?
Is firewall installed, if using INTRA
net?
Are backup copies of data file and

52

c
agz.
aha.
ahd.
ahe.
ahh.
ahi.
programs made regularly?

Are backup copies kept at secure
and remote place?
What is the procedure for disaster
recovery?
Over all conclusion
ahb.
ahc.
ahf.
ahg.
ahj.
ahk.
ahl.
(a)
.
(b)
.
(c)
.
ahm.
ahn.
aho.
ahp.
ahq.
ahr.
ahs.
aht.
ahu. Date
Engagement Partner
ahv.
ahw.
ahx.
ahy. Date
Senior
Partner

53

ahz.
aib.
Appendix H
aia. Form 008
ANALYTICAL PROCEDURES FOR RISK ASSESSMENT
aic.
aid.
aie.
aif.
aig.
aih.
aii.
aij.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
aik. Reference No.

aim. Prepared By
ain. Approved By
aio.
aip. Ratio Analysis
aiq.
S
air.
ail.
Descriptio
n
ais.
Date
ait. aiu. aiv.aiw.

Formula
1. Performance Analysis
aix.
aiy.
aje.
ajf.
ajl.
ajm.
ajt.
ajx.
ajs.
d
akw.
Local sales
akb.
aki.
akp.
i)
ii)
iii)
Export
ala.
aly.
Installed
Capacity
Utilized
Capacity
Production
in Units
Gross
Sales
ale.
all.
als.
alz.
aju.
ajy.
akc.
akj.
akq.
akx.
alb.
Local
Gross
Sales
Gross
Total
Sales
aiz.
--
aja. ajb. ajc.ajd.
ajg.
--
ajh. aji. ajj. ajk.
ajn.
--
ajo. ajp. ajq.ajr.
ajv.
X100
akd. ake. akf.akg.

akk. akl. akm.akn.
akr. aks. akt.aku.
Gross
Exports
Gross
Total
Sales
aky.
X100
i)
alf.
alg. alh. ali. alj.
ii)
alm.
aln. alo. alp.alq.
iii)
alt.
alu. alv. alw.alx.
Gross profit
ama. G
amb. X100
54

to Net
Sales
r
o
s
s
p
r
o
f
i
t
N
e
t
S
a
l
e
s
amd.
amk.
amr.
i)
ii)
iii)
ame.
aml.
ams.
amf.amg.amh.ami.
amm.amn.amo.amp.
amt.amu.amv.amw.
amx.

55

amz. Direct Raw
amy.
and.
ank.
anr.
any.
anx.
g
aow.
h
aoc.
aoj.
aoq.
aox.
apa.
aph.
apo.
apv.
apu.
apz.
aqg.
aqn.
aqu.
aqt.
aqx.
are.
arl.
ars.
arr.
k
asp.
arv.
asc.
asj.
asq.
Material
consumptio
n cost to
goods
manufactur
ed cost
i)
ii)
iii)
Direct
labour cost
to goods
manufactur
ing cost
i)
ii)
iii)
Conversion
cost per
unit
i)
ii)
iii)
Average
conversion
cost per
unit
ana.
i)
ii)
iii)
Overhead
cost per
unit of
production
i)
ii)
iii)
Packing
material
cost per
unit
i)
ii)
iii)
Selling
aqa.
aqh.
aqo.
aqv.
Direct raw
material cost
Manufacturing
cost
anb.
ane.
anl.
ans.
anz.
aod.
aok.
aor.
aoy.
anf. ang. anh. ani.

anm.ann. ano. anp.
ant. anu. anv. anw.
Direct
labor cost
Manufact
uring cost
aoa.
Direct raw material cost + Direct labour cost
conversion
cost
No of units
produced
arw.
asd.
ask.
asr.
X100
aoe. aof. aog. aoh.

aol. aom.aon. aoo.
aos. aot. aou. aov.
apb.
api.
app.
apw. Total
aqy.
arf.
arm.
art.
X100
apc. apd. ape. apf.

apj. apk. apl. apm.
apq. apr. aps. apt.
apx.
X100
aqb. aqc. aqd. aqe.

aqi. aqj. aqk. aql.
aqp. aqq. aqr. aqs.
Overhead cost
No of unit produced
aqz. ara. arb. arc.

arg. arh. ari. arj.
arn. aro. arp. arq.
Units of packing material
No of units produced
arx. ary. arz. asa.

ase. asf. asg. ash.
asl. asm.asn. aso.
Selling expense

56
atn.
ast.
ata.
ath.
ato.
atv.
atu.
n
avt.
aty.
aub.
aui.
aup.
auw.
auz.
avg.
avn.
avu.
expenses
per unit
i)
ii)
iii)
Financial
charges
Average
selling
price per
unit
Local
i)
ii)
iii)
Exports
i)
ii)
iii)
No of
Finished
Goods
No of units sold
asu.
atb.
ati.
atp.
atw.
auc.
auj.
auq.
aux.
aud. aue. auf. aug.

auk. aul. aum. aun.
aur. aus. aut. auu.
Exports sales
No of export units sold
avb. avc. avd.

avi. avj. avk.
avp. avq. avr.
avw.avx. avy.
awe. Total cost of goods
production
awn.
awo. Net profit(loss)/unit sold
asy.
atf.
atm.
att.
Local sales
No of local units sold
ava.
avh.
avo.
avv.
awa.
awb. Finished Goods Produced
awc.
awd.
Cost of
p
asv. asw.asx.
atc. atd. ate.
atj. atk. atl.
atq. atr. ats.
manufactured
No of units produced
awp.
ave.
avl.
avs.
avz.
awf. awh.awj. awl.

awg. awi.awk. awm.
awq. awr.aws. awt.
awu.
awv.
Local
aww. Local net profit

No of local units sold
awx.
axe.
axl.
awy.
axf.
axm.
axs.
axt.
axv.
ayc.
ayj.
ayq.
axw.
ayd.
ayk.
ayr.
azb.
azc.
awz.
axg.
axn.
i)
ii)
iii)
Export
axu.
axa. axb.axc. axd.

axh. axi.axj. axk.
axo. axp.axq. axr.
Export net profit
No of export unit sold
axx.
aye.
ayl.
i)
ii)
iii)
Net profit
(loss) per unit
sold
Net profit
axy. axz.aya. ayb.

ayf. ayg.ayh. ayi.
aym.ayn.ayo. ayp.
ays.
Total sales
No of units sold
ayt. ayv.ayx. ayz.

ayu. ayw.ayy. aza.
azd.
Net profit (loss) x100
aze.
azj. azk.

57

s
(loss) % of sales
Sales
azf.
2. Profitability Ratios
azl.
azm. Return of
assets (ROA)
azt. Return of
Capital
Employed
(ROCE)
baa. Operating
Expense Ratio
bah. Administrative
Expense Ratio
bao. Selling
Expense Ratio
bav. Financial
Expense Ratio
bbc. Price Earnings
Ratio
azs.
b
azz.
c
bag.
d
ban.
e
bau.
f
bbb.
g
bbj.
bbk.
Earning Yield
bbr.
Earnings Per
Share (EPS)
azn.
azu.
bab.
bai.
bap.
baw.
bbd.
bbe.
bbl.
bbq.
bbs.
Net profit after tax

Average total assets
Net profit after tax
Total capital employed
azo. azp.azq. azr.
Operating expense
Net sales
Administrative Expense
Net Sales
Selling Expense
Net Sales
Financial Expenses
Net Sales
Market Price of Per
Share
Earnings Per Share
Earnings Per Share
Market Value Per Share
Net Profit Available to
Equity Holders
Number of Ordinary
Shares Outstanding
bac. bad.bae. baf.
azv. azw.azx. azy.
baj. bak.bal. bam.

baq. bar.bas. bat.
bax. bay.baz. bba.
bbf. bbg.bbh. bbi.
bbm.bbn.bbo. bbp.
bbt. bbu.bbv. bbw.
bbx.
bby. Reasons for significant fluctuation in the result of analytical procedures:(a)
(b)
(c)
(d)
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
bbz.
bca.
Activity Ratios
bcb.
bcc.
Inventory Turnover
bce. i. Raw Material

bcd.
Turnover
bcl.
ii. Work in
process
turnover
bcs.
iii.
Finished
goods
bck.
bcr.
bcf.
Cost of raw material used

Average raw material
inventory
bcm. Cost of good
manufactured
Average work in process
inventory
bct. Cost of goods sold
average finished goods
inventory
bcg. bch.bci. bcj.

bcn. bco.bcp. bcq.
bcu. bcv.bcw. bcx.

58

bcy.
bcz.
bdf.
bdg.
bdn.
bdo.
bdu.
bdv.
beb.
bec.
bei.
bej.
inventory
Debtor
turnover
bda.
bdb. bdc.bdd. bde.
Credit Sales
Debtor
Average
debtor
collection
period
Asset
turnover
bdh.
Current
assets
turnover
Fixed
assets
turnover
Working
capital
turnover
bdw. Cost of goods sold
bdj. bdk.bdl. bdm.
Debt
bdi.
bdp.
Cost of goods sold

Average total assets
X365
bdq. bdr.bds. bdt.

bdx. bdy.bdz. bea.
Average current assets
bed.
Cost of goods sold

average fixed assets
bee. bef.beg. beh.
bek.
Cost of goods sold

Net working capital
bel. bem.ben. beo.
bep.
beq. Overall review of Financial Performance of the entity:(a)
(b)
(c)
(d)
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ber.
bes.
bet.
Date
Engagement Partner
beu.
bev.
bew.
bex. Date
Senior
Partner

59

bey.
Appendix I
bez. Form 009
bfa.
bfb.
EVALUATION OF INTERNAL AUDITOR WORK
bfc.
bfd.
bfe.
bff.
bfg.
bfh.
bfi.
bfj.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
bfk. Reference No.

bfm. Prepared By
bfn. Approved By
bfo.
bfl.
Date
bfp.
Audi
tor evaluating the work of internal auditor shall ensure the following:bfq.
bfr. Description
S
bft.
bfu.
bfw.
bfx.
bfz.
bga.
Is the work of internal auditor performed by the persons who

have adequate professional training?
Is the work of assistants of internal auditor properly planned,
executed and documented?
Unusual matters pointed out by the internal auditor and remedial
actions taken by the management.
bgc.
1. Auditor shall test the work of internal auditor in the following manner:(a) Evaluate the internal audit function in performing audit procedures.
(b) Performing different audit procedures.
(c) Examine the working papers of the internal auditor.
bgd.
2. Results of the evaluation and testing the internal auditor are
(a) ---------------------------------------(b) ---------------------------------------(c) ----------------------------------------
bge.
3. Summary of the evaluation of the internal auditor work and its reliance.
(i) ---------------------------------------(ii) ---------------------------------------(iii) ----------------------------------------
bgf.
bgg.
bgh.
bgi.
Date
Engagement Partner
Date
Senior Partner
60
bfs.
A
bfv.
bfy.
bgb.

bgj.
Appendix J
bgk. Form 010
bgl.
bgm. GROUP AUDIT
bgn.
bgo.
bgp.
bgq.
bgr.
bgs.
bgt.
bgu.
bgv.
bgx.
bgy.
bgz.
bhb.
Reference No.
Prepared By
Description
Group Structure.
bha. Answers
(a) ..
(b) ..
bhc.
Significant component for the group

audit.
Financial reporting framework.
Group consists of:-
(a) ..
(b) ..
bhd.
bhe.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Approved By
bhh.
Significance of the components

including materiality to financial
statements of the group
bhi.
Results of quality reviews:-
bhj.
(a) Internal
bhk.
(b) External
bhl.
Remedial actions taken by the

management on quality reviews.
Written confirmation of compliance
with ethical requirements.
What is previous experience with
respect to Group audit?
bhn.
bhp.
bhq.
bhs.
bgw. Date
Timetable for completion of audit.

Applicable financial reporting
framework and auditing standards
(a)
(b)
(c)
(a)
(b)
(c)
..
..
..
..
..
..
(a)
(b)
(c)
(a)
(b)
(c)
..
..
..
..
..
..
bhm.
bho.
(a) ..
(b) ..
(c) ..
bhr.
bht.

61

bhu.
bhv.
Date
Partner
bhw.
bhx.
bhy. Date
Engagement
Senior Partner

62

bhz.
Appendix K
bia. Form 011
bib.
bic.
POINTS BROUGHT FORWARD FROM PRIOR PERIODS AUDITS
bid.
bie.
bif.
big.
bih.
bii.
bij.
bik.
bil.
bin.
bio.
Reference No.
Prepared By
bip.
biq.
bir.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
bim.
Date
bit.
Action
Requir
ed
Approved By
bis.
Description of Issue
biv.
biu.
biw.
bix.
biy.
bja.
bjb.
bjc.
bje.
bjf.
bjg.
bji.
bjj.
bjk.
bjm.
bjn.
bjo.
bjq.
bjr.
bjs.
bju.
bjv.
bjw.
Action
Taken
biz.
0
bjd.
0
bjh.
0
bjl.
0
bjp.
0
bjt.
0
bjx.
bjy.
bjz.
bka.
63

bkb.
bkc.
bkd.
Date
Partner
bke.
bkf.
bkg.
Date
Engagement
Senior Partner
bkh.
bki.
bkj.
bkk.
bkl.
bkm.
bkn.

64

bko.
Appendix L
bkp. Form 012
bkq.
bkr.
STAFF PLANING FOR AUDIT WORK
bks.
bkt.
bku.
bkv.
bkw.
bkx.
bky.
bkz.
blb.
blc.
bld.
Name CMA Firm / Auditor

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
bla.
Reference No.
Prepared By
Approved By
blh.
ble.
Description
Planning
Testing of Control
blx. Manufacturing Cost
bmd.
Direct Material Cost
bmj. Direct Labour Cost
bmp.
Purchases
bmv. Admin Expenses
bnb. Selling Expenses & Other items
bnh. Profit & Loss Account
bnn. Test of Journal Entries
bnt. Cash in Hand/ Bank
bnz. Stock and Work in Process
bof. Physical Stocks Taking
bol. Debtors
bor. Creditors
box. Other Areas
bpd. Substantive Audit Procedures
S
u
p
e
r
V
i
s
o
r
blf.
HOURS
bli.
S
blj.
e
n
i
o
r
J
u
ni
or
blm.
bln.
blo.
blp.
blr.
bls.
blt.
blu.
blv.
bly.
bme.
bmk.
bmq.
bmw.
bnc.
bni.
bno.
bnu.
boa.
bog.
bom.
bos.
boy.
blz.
bmf.
bml.
bmr.
bmx.
bnd.
bnj.
bnp.
bnv.
bob.
boh.
bon.
bot.
boz.
bma.
bmg.
bmm.
bms.
bmy.
bne.
bnk.
bnq.
bnw.
boc.
boi.
boo.
bou.
bpa.
bmb.
bmh.
bmn.
bmt.
bmz.
bnf.
bnl.
bnr.
bnx.
bod.
boj.
bop.
bov.
bpb.
bmc.
bmi.
bmo.
bmu.
bna.
bng.
bnm.
bns.
bny.
boe.
bok.
boq.
bow.
bpc.
bll.
blq.
blw.
Date

65

bpe. Shareholders Equity/ Dividend
bpk. Liabilities
bpq. Creditors
bpw. Investments
bqc. Stock (all types)
bqi. Overhead Expenses
bqo. Trade Debtors
bqu. Advances
bra. Sales and Other Income
brg. Selling Expenses
brm. Admin Expenses
brs.
brt.
bru. Date
bpf.
bpl.
bpr.
bpx.
bqd.
bqj.
bqp.
bqv.
brb.
brh.
brn.
bpg.
bpm.
bps.
bpy.
bqe.
bqk.
bqq.
bqw.
brc.
bri.
bro.
bph.
bpn.
bpt.
bpz.
bqf.
bql.
bqr.
bqx.
brd.
brj.
brp.
bpi.
bpo.
bpu.
bqa.
bqg.
bqm.
bqs.
bqy.
bre.
brk.
brq.
bpj.
bpp.
bpv.
bqb.
bqh.
bqn.
bqt.
bqz.
brf.
brl.
brr.
Engagement
Partner
brv.
brw.
Date
Senior Partner
brx.
bry.
Appendix M
brz. Form 013
bsa.
bsb. AUDIT PROGRAM: CASH AND BANK BALANCES
bsc.
bsd. Name of CMA Firm / Auditor
bse.
bsf. Particulars of the client
bsg. M/s-------------------------------------------------------bsh. -------------------------------------------------------------bsi. -------------------------------------------------------------bsj.
bsk.
bsl.
bsm.
bsn.
bso.
bsp.
bsq.
bsr.
Reference No.
Prepared By
Approved By
Client
Period
Prepared by
Lead Schedule
Description
bss.
bsu.
Dated-------------
bst.
Am
oun
t
(Rs.
)
bsv.
Cash at Main Office
66

bsw. Petty cash
bsx.
(a) .
(b) .
(c) .
bsy. Total cash
bta. Cash at Bank
btc. Current Accounts
bte. Savings Accounts
btg. Deposit Accounts
bti.
Total cash at Bank
btk. Total cash and bank balances
bsz.
btb.
btd.
btf.
bth.
btj.
btl.
btm.
btn. Audit Objectives
bto.
btp. Description
btq.
btr.
bts.
Records of cash in hand and bank balances are

complete and accurate.
btt.
btv.
Balance shown in books of accounts, physically

exist.
btw.
bty.
Titles of the bank balances are same as of the

client.
btz.
bub.
Balance of cash in hand and bank presented and

disclosed in accordance with the requirements of
IFRS and the Companies Ordinance, 1984
buc.
btu.
0
btx.
0
bua.
0
Re
mar
ks
bud.
bue.
buf. Audit Procedures
bug.
buh. Description
bui.
buj.
bul.
0
buo.
0
bur.
Test of controls
bum. Check sample of selected transactions covering the
whole period that all preventive controls are
exercised.
bup. Check sample transactions that detective controls
have been properly exercised.
bus.
buu.
0
buv.
Check that, in case of detection of fraud or error

proper steps have been taken to avoid recurrence
of the fraud and error.
Check that proper bank reconciliation statements
are prepared and approved.
Don
e by
buk.
bun.
buq.
but.
buw.

67

bux.
buy.
Check that duties are properly segregated among

custodian of cash, accounting personal and
approving authority.
Check that payment vouchers are prepared and
approved properly by designated personal.
buz.
Document the conclusion after performing tests of

controls.
bvf.
Obtain list of authorized signatories for bank and

check that the same have been consistently applied
for all designated transactions.
Analytical Procedures
bvl. Check logical commercial reasons for opening of
new bank accounts and closing of the bank
accounts during the period under audit.
bvo. Compare the balances of current year with previous
year and note significant variation
bvi.
bva.
bvb.
bvd.
bve.
bvg.
0
bvj.
bvk.
0
bvn.
0
bvh.
bvq. Test of Details

bvr.
bvs. Physical counting of cash and verification of
0
bvc.
bvm.
bvp.
bvt.
deposits.
bvu.
bvv.
Get confirmation of bank balance from all banks.
bvw.
bvy.
Examine the bank reconciliation statement for the

following:bvx.
(a) Long outstanding cheques are properly followed.
0
(b) Deposits are cleared within two working days.
(c) Cheques of significant amount are prescribed and there is
no cheque of significant amount lying un-presented.
bwa.
bwb. Check that opening balances of the ledgers conform
0
with the working paper file of the previous period,
bwd.
bwe.
bwf.
bwg.
bwh. Date
bvz.
bwc.
Engagement
Partner
bwi.
bwj.
bwk. Date
Senior Partner

68

bwl.
Appendix N
bwm. Form 014
bwn.
bwo. INVESTMENT IN PROPERTIES
bwp.
bwq. Name of CMA Firm / Auditor
bwr.
bws. Particulars of the client
bwt. M/s-------------------------------------------------------bwu. -------------------------------------------------------------bwv. -------------------------------------------------------------bww.
bwx.
bwy.
bwz.
bxa.
bxb.
bxc.
Reference No.
Prepared By
Approved By
Client
Period
Prepared by
Dated-------------
bxd.
bxe.
Lead Schedule
bxf.
bxg. Description
bxh. A
bxi.
m
o
u
n
t
i
n
R
s
.
bxj.
bxk.
bxm.
bxn.
bxp.
bxq.
bxs.
bxt.
bxv.
bxw.
bxl.
0
bxo.
0
bxr.
0
bxu.
To

69

bxx.
bxy. Audit Objectives
bxz.
bya.
Description
byb. R
e
m
a
r
k
s
byc.
byd.
Check that investment in properties are properly and

accurately recorded and physically held.
bye.
byg.
Transactions relating to properties completely recorded

and appropriately disclosed in accordance IFRS and
the Companies Ordinance, 1984.
byh.
byf.
0
byi.
byj.
Tests of Control
byl. Description
bym. D
o
n
e
b
y
byk.
N
byn.
byo.
byq.
byr.
byt.
0
byu.
Assess the reasonableness of designed system of

internal control through inquiry from the client personal
and walk through test.
Check selected transactions to ensure that preventive
controls are exercised by the clients management.
byp.
Check maintenance of subsidiary records and reconcile

with general ledger.
byv.
bys.
byw.

70

byx. Analytical Procedures
byy.
byz. Access
depreciation/
bza.
bzc.
Check logical commercial reasons for major additions,

deletion and disposals during the audit period.
bzd.
bzf.
Reconcile the balances.
bzg.
the
appropriateness
amortization methods.
bzb.
0
bze.
of
bzh.
bzi.
bzk.
Test of Details
bzj. Check schedule of investment in properties both for
Cost and Accumulated depreciation.
bzl.
bzm. Reconcile the balances with subsidiaries account
bzn.
ledgers and working papers of previous period.
bzo.
bzp.
Ensure that properties are owned and held by the

client.
bzq.
bzs.
For partially owned property, check ownership and

check compliance in accordance with IAS 16 and IAS
40.
Check approval and documentation of property
disposed during the period of audit.
bzt.
bzy.
Determine the reasonableness of accounting policies

and depreciation method and their consistency.
bzz.
cab.
Ensure that disclosure have been made in accordance

IFRS and the Companies Ordinance, 1984.
cac.
bzr.
0
bzu.
bzv.
bzx.
0
caa.
0
bzw.
cad.
cae.
caf.
cag.
cah.
cai.
Date
Partner
Engagement
caj.
cak.
cal.
Date
Senior Partner
cam.

71

can.
Appendix O
cao. Form 015
cap.
caq.
INVESTMENT IN SUBSIDIARIES AND OTHERS
car.
cas.
cat.
cau.
cav.
caw.
cax.
cay.
Name of CMA Firm / Auditors
caz.
cbb.
cbc.
Reference No.
Prepared By

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
cba.
Date
Approved By
cbd.
cbe.
Lead Schedule
cbf. Description
cbh. Investments
cbi. Subsidiaries
cbk.
Held to maturity
cbm.
Available for sale
cbo. Classes of Transaction
cbp.
Dividend
cbr.
Interest
cbt.
Gain/ (loss) on Revaluation
cbv.
Gain/ (loss) on Disposal
cbx.
Impairment loss
cbz.
ccb.
ccd.
cce. Audit Objectives
ccf.
ccg. Description
cbg. Amount
cbj.
cbl.
cbn.
cbq.
cbs.
cbu.
cbw.
cby.
cca.
ccc.
cch.
Remarks
cci.
01
ccl.
02
cco.
03
ccr.
04
ccj.
Complete and accurate record of investments is

physically available.
ccm. Investments are owned by the entity in their
own title.
ccp. Income on account of interest and dividend has
been accurately calculated, recorded and
appropriately disclosed.
ccs. Disclosures have been made in accordance
Companies Ordinance 1984 and related IASs.
cck.
ccn.
ccq.
cct.

72

ccu.

73

ccv. Audit Procedures
ccw.
ccx. Description
ccy.
Done by
ccz.
cda.
Test of controls
Check selected transactions covering the whole
01
period that all preventive controls are exercised.
cde. Assess the reasonableness of design of system
cdd.
of internal control by enquiring from relevant
02
client personnel and document the same.
cdg.
cdh. Check
subsidiary
records
for
proper
03
maintenance.
cdj.
cdk. Check sample transaction to ensure exercise of
04
detective controls.
cdm.
cdn. Check that investments are made after specific
05
approval
cdp. Analytical Procedures
cdq.
cdr. Check logical commercial reasons for major
01
additions and disposal during the audit period.
cdt. Test Of Details
cdu.
cdv. Check movement schedule of investment and
01
record.
cdx.
cdy. Compare the records of current with previous
02
year investments.
cea.
ceb. Check if any investment is under lien and
03
proper disclosure accorded.
ced.
cee. Check that brokerage expenses are recorded
04
properly.
ceg.
ceh. Check selected shares disposal during the
05
period for supporting documents.
cej.
cek. Test the costing and cross costing of the
06
general ledger.
cen. Check opening and closing balances with
cem.
general ledger and working papers of previous
07
audit period.
cep. Investment Income
cer. Obtain a Schedule for opening and closing
ceq.
balances of income earned and revenue during
01
the period.
ceu. Check that proper accounting treatment of
cet.
bonus share received and right shares
02
subscribed.
cdb.
cdc.
cdf.
cdi.
cdl.
cdo.
cds.
cdw.
cdz.
cec.
cef.
cei.
cel.
ceo.
ces.
cev.
cew.
cex.
cey.
Date
Partner
Engagement
cez.
74

cfa.
cfb.
Date
Senior Partner
cfc.

75

cfd.
Appendix P
cfe. Form 016
cff.
cfg.
DEPOSITS AND ADVANCES
cfh.
cfi.
cfj.
cfk.
cfl.
cfm.
cfn.
cfo.
cfp.
cfr.
cfs.
Reference No.
Prepared By

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
cfq.
Date
Approved By
cft.
cfu.
Lead Schedule
cfv. Description
cfw.
cfx.
cfz.
cgb.
cgd.
cgf.
(a)
(b)
(c)
(d)
Advances
Deposits
Prepayments
Other________
Previous adjustments
Advances
Deposits
Prepayments
Misc.
cgi.
cgj. Audit Objectives
cgk.
cgl. Description
cfy.
cga.
cgc.
cge.
cgg.
cgh.
cgm. Re
cgn.
ma
rks
cgo.
Check that advances, deposits and other recoverable

are properly recorded and actually exists.
cgp.
cgr.
Advances, deposits and other recoverable are

recorded at appropriate value and are owned by the
company.
Advances are in accordance with legal provisions.
cgs.
cgq.
0
cgt.
Am
ou
nt
in
Rs.
cgu.
cgv.
0
76

cgw.
cgx.
Proper disclosure is given for advance deposits and

other recoverable in accordance with IASs and the
Companies Ordinance, 1984.
Test Of Controls
chb. Description
cgy.
che.
Access the reasonableness of design of system for

internal control.
chf.
chh.
Check sample of selected transaction of the audit

period for ensuring that all preventive controls are
exercised.
Reconcile subsidiary records with general ledger and
working papers of previous period.
chi.
chp.
Document the conclusion after performing test of

controls and required level of assurance from
substantive procedures.
chs. Compare current year balances and expenses with
last year balances and ensure that any significant
variation is properly and logically reasoned.
Test of Details
chw. Obtain party wise movement schedule of advances/
deposits and other recoverable.
chy.
chz.
Reconcile the balances with ledger and working

papers of previous audit period.
cia.
cic.
Check costing and cross casting of the schedule.
cid.
cif.
Check register and bank statements to verify the

disbursements.
cig.
cii.
Obtain age-analysis of advances and other

recoverable to verify classification current maturates
etc.
Check that all loans and advances to associates are
granted after due diligence with compliance of legal
requirements.
Check that none of the advances and other
recoverable are impaired or the recoverable amount
is not less than its carrying amount.
cij.
cgz.
cha.
chc.
chd.
0
chg.
0
chj.
chk.
chm.
chn.
cho.
0
chq.
chr.
0
chu.
chv.
cib.
Do
ne
by
chl.
cht.
chx.
cie.
0
cih.
0
cik.
cil.
cin.
0
cio.
cim.
cip.
ciq.
cir.
77

cis.
cit.
ciu.
civ.
ciw.
cix.
ciy.
Date
Partner
Engagement
Date
Senior Partner

78

ciz.
Appendix Q
cja. Form 017
cjb.
cjc.
LOANS AND ADVANCES
cjd.
cje.
cjf.
cjg.
cjh.
cji.
cjj.
cjk.
cjl.
cjn.
cjo.
Reference No.
Prepared By

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
cjm.
Date
Approved By
cjp.
cjq.
cjr.
Lead Schedule
cjs. Description
cjt.
cju.
cjv.
Amou
nt in
Rs.
Long term
cjw.
Loan
cjx.
cjz.
Provision against loan
cka.
ckc.
Advances
ckd.
ckf.
Provision against advances
ckg.
ckj.
Loan
ckk.
ckm.
Advances
ckn.
cjy.
0
ckb.
0
cke.
0
ckh.
cki.
Short term
ckl.
0
cko.
ckp.
Audit Objectives
ckq.
ckr. Description
S
79

cks.
ckt.
Check that loans, advances and prepayments are recorded accurately

and completely.
ckv.
Verify that loans, advances and prepayments physically exist.
ckx.
Ensure that loans, advances and prepayments are recorded at

appropriate value.
ckz.
Verify that loans, advances and prepayments fulfill the legal requirement
and disclosure is given in accordance with Companies Ordinance, 1984
and relevant IASs.
cku.
0
ckw.
0
cky.
0
cla.
clb.
clc.
Test of Controls
cld. Description
clf.
Do
clg.
Assess the reasonableness of design of system of

internal control through inquiry from the employees of the
client.
Check sample of selected transactions covering the whole
period.
clh.
clm.
Verify that subsidiary records are properly maintained.
cln.
clp.
Reconcile the balances with ledger, subsidiary ledger and

working papers of the previous audit period.
clq.
cls.
Verify that loans, advances and prepayments are

regulated after due diligence and proper approval.
clt.
clv.
Document the results after performing tests of controls.
clw.
cli.
clj.
cll.
cle.
clk.
clo.
0
clr.
0
clu.
0
clx.
cly.
0
clz.
Compare current year balances and expense with last
year balances and expenses. Evaluate the significant
variations.
cmb.
cmc. Test of Details
cmd.
cme. Obtain employee-wise movement schedule of loans,
0
cmg.
cma.
cmf.
advances and verify details with ledgers, bank statements

and other documents.
cmh. Get confirmation from certain (selective) relative parties.
cmi.
cmk. Analyze the advances and rationale for approvals.
cml.
cmj.

80

0
cmm.
cmn. Check that loans and advances are granted after proper
cmo.
approvals.
cmp.
cmq. Verify that disclosure is made in accordance with
cmr.
Companies Ordinance, 1984 and the applicable IASs.
cms.
cmt.
cmu.
cmv.
cmw.
cmx.
cmy.
cmz.
cna.
cnb. Date
Engagement
Partner
cnc.
cnd.
cne.
cnf.
Date
Senior Partner

81

cng.
Appendix R
cnh. Form 018
cni.
cnj.
INVENTORIES
cnk.
cnl.
cnm.
cnn.
cno.
cnp.
cnq.
cnr.
Name of CMA Firm / Auditors

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
cns. Reference No.

cnu. Prepared By
cnv. Approved By
cnw.
cnx.
cnt.
Date
Lead Schedule
cnz. Description
coa.
coc.
Stores
cod.
cof.
Spares
cog.
coi.
Supplies
coj.
col.
Stationary
com.
coo.
Raw material
cop.
cor.
Work in Process
cos.
cou.
Finished Goods
cov.
82
cny.
S
cob.
0
coe.
0
coh.
0
cok.
0
con.
0
coq.
0
cot.
A
m
o
u
n
t
i
n
R
s.

0
cow.
cox. Audit Objectives
coy.
coz. Check inventories are recorded completely and
0
cpb.
cpc.
Check that inventories are physically exist and

owned by the client.
cpd.
cpf.
Verify that disclosure have been given in accordance

with the Companies Ordinance, 1984 and Relevant
IASs.
cpg.
cpe.
0
cph.
cpi.
cpa.
accurately.
Test of Controls
cpk. Description
cpl.
cpj.
S
cpm.
cpn.

internal control by inquiring from client personal.
cpo.
cpq.
Verify that selected transactions of the period under

that all preventive controls are exercised.
cpr.
cpt.
Reconcile the balances with ledger, balance sheet

and working papers of the previous period.
cpu.
cpw. Ensure that entries are recorded consistently and
cpx.
cpp.
0
cps.
0
cpv.
0
cpy.
properly.
cpz.
cqb.
0
cqe.
cqf.
0
cqi.
0
cql.
0
cqc.
Ensure that management does not override the

designed controls through enquiring from Clints
staff.
Document the conclusion after performing test of
control.
cqg. Assess the appropriateness of purchases and
consumptions method and rate, in view of the flow of
economic benefits.
cqj. Ensure that purchases are made economically and
consumptions are logical.
cqm. Reconcile the balances with ledger, balance sheet
cqa.
cqd.
cqh.
cqk.
cqn.
and working papers of the last audit periods.

83
D
o
n
e
b
y

cqo. Test of Details
cqp.
cqq. Verify that periodical physical counting of the
0
cqr.
inventories is done by the client.
cqs.
cqt.
Check the inventories on sample basis to ensure

reliability.
cqu.
cqw. Get independent confirmation for the items owned by
cqx.
cqv.
0
the client but physically not held.
cqy.
cqz.
Check selected transactions for purchases, returns

and sales.
cra.
crc.
Check that basis of valuation of inventory (FIFO or

Average) is appropriate and consistently followed.
crd.
crf.
Verify cost of closing stock with Net Reliable Value

(NRV) by comparing raw material with last invoice
from supplier.
Get aging of inventories and computer provisions of
obsolete, damage etc.
crg.
crl.
Verify that spares of the machines are held for which

machines are still in use.
crm.
cro.
Determine that disclosures are given as per the

requirements of the Companies Ordinance, 1984
and applicable IASs.
crp.
crb.
0
cre.
0
crh.
cri.
crk.
0
crn.
0
crq.
crr.
crs.
crt.
cru.
crv.
crw.
crx.
cry.
crj.
Date
Partner
Engagement
Date
Senior Partner

84

crz.
Appendix S
csa. Form 019
csb.
csc.
TRADE DEBTORS
csd.
cse.
csf.
csg.
csh.
csi.
csj.
csk.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
csl.
Reference No.
csn. Prepared By
cso. Approved By
csp.
csq.
csm. Date
Lead Schedule
csr. Description
css.
A
m
o
u
n
t
i
n
R
s
.
cst.
csv.
csx.
Trade Debtors
Provision for doubtful debt
Others
csu.
csw.
csy.
csz.
cta.
ctb.
Audit Objectives
cte.
ctc.
S
ctd.
Description
ctf.
ctg.
Check that trade debts are recorded completely and

accurately.
cth.

85
R
e
m
a
r
k
s

cti.
ctj.
Verify that trade debts are owned by the client and

valued correctly.
ctk.
ctm.
Trade debts are presentation and disclosure has been

given in accordance with the the Companies Ordnance,
1984 and related IASs.
ctn.
ctl.
0
cto.
ctp.
Audit Procedures
cts.
ctq.
S
ctr.
Description
D
o
n
e
b
y
ctt.
ctu.
0
ctx.
Test of Controls
ctv. Assess the reasonableness of design of internal control
system through inquiries from clients staff.
cty.
cua.
cub.
cud.
cue.
cug.
cuh.
cuj.
cuk.
Check that selected transactions of the period under

audit to ensure that preventive controls are exercised by
the management.
Verify the party wise sub ledgers for proper maintenance
and also ensure that transactions are recorded properly
and consistently.
Verify the balances from ledger, subsidiary accounts,
balance sheets and working papers of the last audit
period.
Ensure that management does not override the
designed controls through inquiries, from the clients
staff.
Document the conclusion after performing the audit.
ctw.
ctz.
cuc.
cuf.
cui.
cul.
cum.
cun. Analytical Procedures
cup.
cuq. Access the appropriateness of discount and credit policy
0
cus.
cuo.
cur.
keeping in view flow of economic benefits.
cut.
Check reasonableness of impairment expenses.
cuu.
cuw. Document logical reason for major addition or deletion.
cux.
cuz.
cva.
cuv.
0
cuy.
Make comparison with current year expenses with last

86

0
year expenses and analyse significant changes.
cvb.
cvc.
cve.
0
cvh.
cvd.
Test of Details
cvf. Obtain party wise schedule and verify the balances from
ledger, subsidiary ledgers and working papers of last
audit period.
cvi.
Check the clearance of debtors.
cvg.
cvj.
cvk.
cvl.
Analyze the aging of debtors.
cvm.
cvo.
Calculate provisions of doubtful debts based on age

analysis.
cvp.
cvr.
Get third party verification from the concern parties and

evaluate the results.
cvs.
cvu.
Check that no undue favour to the aging debtors is

accorded.
cvv.
cvx.
Verify approvals for write-off of the debtors.
cvy.
cvn.
0
cvq.
0
cvt.
0
cvw.
0
cvz.
cwa. Verify that disclosure is given in accordance with the
cwb.
Companies Ordinance, 1984 and applicable IASs.
cwc.
cwd.
cwe.
cwf. Date
Engagement Partner
cwg.
cwh.
cwi. Date
cwj.
cwk.
cwl.
Senior Partner

87

cwm.
Appendix T
cwn. Form 020
cwo.
cwp. FIXED ASSESTS
cwq.
cwr.
cws.
cwt.
cwu.
cwv.
cww.
cwx.
cwy.
cxa.
cxb.
Reference No.
Prepared By
cxc.
cxd.
cxe.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
cwz.
Date
Approved By
Lead Schedule
Description
cxf.
A
m
o
u
n
t
i
n
R
s
.
cxg. Machinery
cxi.
Jigs and fixture
cxk. Building
cxm. Furniture
cxo. Building
cxq. Land
cxs. Other
cxu.
cxw.
cxx.
cxy.
cxz.
Audit Objectives
Description
cxh.
cxj.
cxl.
cxn.
cxp.
cxr.
cxt.
cxv.
cya.

88
R
e
m
a
r

k
s
cyb.
cyc.
Check that fixed assets are completely recorded.
cyd.
cyf.
Verify that fixed assets physically exist and owned by

the client.
cyg.
cyi.
Access that fixed assets are recorded at appropriate

value.
cyj.
cyl.
Check that depreciation, amortization or impairment

expenses are calculated correctly and disclosures are
given as per existing law.
cym.
cye.
0
cyh.
0
cyk.
0
cyn.
cyo.
Test of Controls
cyq. Description
cyr.
cyp.
S
D
o
n
e
b
y
cys.
cyt.

internal control through inquiries from clients staff.
cyu.
cyw.
Check sample of selected transaction to verify that

preventive controls are exercised on all transactions.
cyx.
cyz.
Check that Fixed Assets Register is maintained and

entries are recorded properly and consistently.
cza.
czc.
Check sample transactions that detective controls are

exercised by the management and appropriate action
taken in case of detection of error/ fraud.
czd.
czf.
Verify that management does not override the

designated controls.
czg.
cyv.
0
cyy.
0
czb.
0
cze.
0
czh.
czi.
czk.
0
czn.
0
czq.
czj.
czl.
Assess the appropriateness of depreciation/
amortization method with regards to flow of economic
benefits and useful life of the assets.
czo. Document logical commercial reason(s) for major
addition or disposal of the fixed assets.
czr.
Make analysis for expenses of current period with
czm.
czp.
czs.

89

0
previous period.
czt.
czu.
czw.
0
czz.
0
dac.
0
daf. 0
-
dai.
czv.
Test of Details
czx. Get Schedule of fixed assets including capital work-inprocess and check costing and cross costing of the
schedule.
daa. Reconcile balances of fixed assets register, general
ledger, subsidiary ledger and working papers of last
years audit.
dad. Check that fixed assets are procured after proper
approval from the management.
dag.
czy.
dab.
dae.
Check the following:Capital expenditure does not contain any portion of revenue
expenditure.
Proper invoices of the vendors.
Revenue of clients capitalization policy.
daj. Examine documents authorizing disposal.
dah.
dam. Reconcile depreciation expense and verify the
dan.
dak.
dal.
0
dao.
dap.
dar.
das.
reasonableness of the accounting policy regarding

depreciation.
Check certain fixed assets transfer contractor
certificates for completion etc.
daq.
Reconcile the balances with fixed assets register, ledger,

subsidiary ledger and working papers of audit of
previous periods.
dau.
dav.
daw.
dax.
day. Date
dat.
Engagement
Partner
daz.
dba.
dbb.
dbc.
Date
Senior Partner

90

dbd. Appendix U
dbe.
Form 021
dbf.
ACCRUED EXPENSES
dbg.
dbh. Name of CMA Firm / Auditor
dbi.
dbj. Particulars of the client
dbk. -------------------------------------------------------------dbl. -------------------------------------------------------------dbm. -------------------------------------------------------------dbn.
dbo. Reference No.
dbq. Prepared By
dbr. Approved By
dbs.
dbt.
dbp.
Date
Lead Schedule
dbu. Description
dbv. A
m
o
u
n
t
i
n
R
s
.
dbw. Accrued Expenses

dby.
dca.
dcb.
dcc.
dbx.
dbz.
Audit Objectives
dcd. Description
dce.
dcg.
To ensure that accrued expenses are valid claims of

suppliers for the store or services received.
dch.
dcj.
To ensure that goods or services received by the

entity are accounted properly.
dck.
dcm. To ensure that liabilities are presented, classified
dcn.
dcf.
0
dci.
0
dcl.

91
R
e
m
a
r
k
s

and disclosed in the financial statements in
accordance with Companies Ordinance, 1984 and
applicable IASs.
dco.
dcp. Test of Controls
dcq.
dcr. Description
dcs.
dct.
dcu.
Verify that purchase orders are approved by

appropriate authority and are serially numbered.
dcv.
dcx.
Goods received are recorded in appropriate register

after receipt of approved Goods Received Note
(GRN).
Check invoice of the suppliers for accuracy.
dcy.
Ensure that independent person compares the

purchase orders, goods received notes and
suppliers invoice, for consistency.
Verify credit notes for correctness.
dde.
dcw.
0
dcz.
dda.
ddb.
ddc.
ddd.
ddf.
ddg.
ddh.
ddi.
ddj.
ddk.
0
ddl. Analyze the accrued expenses and compare with
prior periods for unusual items.
ddn. Test of details

ddo.
ddp. Get reasons for significant changes in the accrued
0
ddm.
ddq.
expenses, in any.
ddr.
dds.
Evaluate the policy for recording accrued expenses

and give comments.
ddt.
ddv.
Reconcile the balance of accrued expenses liabilities

with ledger, subsidiary ledgers and working papers
of the previous period.
Check the selected accruals for correctness.
ddw.
Get independent confirmation of the outstanding

balances from the related parties.
dec.
ddu.
0
ddx.
ddy.
ddz.
dea.
0
deb.
ded.
92
D
o
n
e
b
y

dee.
def.
deg.
deh.
Date
Engagement
Partner
dei.
dej.
dek.
del.
dem.
den. Date
deo.
dep.
Senior Partner

93

deq.
Appendix V
der.
Form 022
des.
det.
deu.
dev.
dew.
dex.
dey.
dez.
dfa.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
dfb. Reference No.

dfd. Prepared By
dfe. Approved By
dff.
dfg.
dfh.
DEFFERED LIABILITIES
dfc.
Date
Lead Schedule
Account Balance
dfj.
dfl.
dfn.
dfp.
dfq.
dfi.
A
m
o
u
n
t
i
n
R
s
.
dfk.
dfm.
dfo.
Audit Objectives
dfs.
Description
dft.
dfv.
All deferred liabilities on the balance sheet,

represent amounts owned by the entity to tax
authorities, employer or other parties.
The deferred liabilities represent obligations of the
entity and are owned by the entity.
dfw.
dfr.
S
dfu.
0
dfx.
0
dfy.
dfz.

94
R
e
m
a
r
k
s

dga.
dgb.
dgd.
dge.
Deferred liabilities have accrued at the balance

sheet date and are recorded accurately and
completely.
Deferred liabilities have been classified and
disclosure is accorded in accordance with
Companies Ordinance 1984, and IRFS.
dgc.
dgf.
dgg.
dgh.
dgj.
Audit Procedure
Description
dgk. D
o
n
e
B
y
dgi.
S
dgl.
dgm. Compare the balances of current period with prior
dgn.
periods and observe any significant change.
dgo.
dgp.
Analyse the unusual changes & obtain explanation

from the concern staff of the client.
dgq.
dgs.
Reconcile the balances of current audit period with

ledgers, subsidiary ledger and working papers of
last audit period.
dgt.
dgr.
0
dgu.
dgv.
dgw. Test of Details
dgy. Description
dgz.
dgx.
S
dha.
dhb.
dhd.
0
-
Obtain Schedule of deferred liabilities and reconcile

the balances. with ledgers, financial statements,
and working papers of the last audit period.
dhe. Check deferred liabilities against taxation, as
follows:Reconcile the balances with ledgers and working papers of
the previous audit period.
dhc.
dhj.
dhf.
-
Obtain schedule of tax base of each component of balance

sheet along with workings.
dhg.
-
Review cumulative temporary differences as of the

balances sheet date.
dhh.
-
Review reversal of cumulative temporary differences and

obtain managements representations regarding scheduled
95
D
o
n
e
B
y

reversal.
dhi.
-
Review the tax-planning strategy of the client and ensure

that all valid strategies that could materially affect deferred
taxes, have been identified and accounted for.
dhl. Deferred Assets regarding taxation:-
dhp.
dhm.
dhk.
Deferred tax asset should not be accounted for, unless it

can be ensured with reasonable surety that future tax
profits will be available for realization of such assets.
dhn.
dho.
-
dhq.
0
Calculate taxable and deductible timing difference as per

IAS 12.
dhr. Check deferred liabilities regarding pension, as
under:Obtain copy of the pension policy of the company.
dhu.
dhs.
-
Check payment of contribution of client towards fund as per

policy.
dht.
-
Check that requirements of IAS-19 are complied with.

dhw. Check deferred liabilities regarding gratuity:Obtain copy of gratuity policy of the company.
dia.
dhx.
dhv.
0
Verify that contributions are verified with last salary.
dhy.
-
Verify date of appointment and reconcile the date relating

to gratuity.
dhz.
-
dib.
0
die.
dif.
dig.
Ensure compliance of IAS-19 for deferred liabilities relating

to gratuity.
dic. Ensure that disclosures are in accordance with
Companies Ordinance, 1984 and relevant
accounting pronouncements.
did.
Date
Engagement
Date
Senior Partner
Partner
dih.
dii.
dij.
dik.
dil.
dim.
din.
dio.

96

dip.
diq.
dir.
dis.
dit.
diu.
Appendix W
div.
Form 023
diw.
dix.
diy.
diz.
dja.
djb.
djc.
djd.
dje.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
djf.
Reference No.
djh. Prepared By
dji.
Approved By
djj.
djk.
djl.
DIRECT TAXATION
Lead Schedule
Account Balance
djg.
Date
djm. A
m
o
u
n
t
i
n
R
s
.
djn.
djp.
djr.
djt.
dju.
djo.
djq.
djs.
Audit Objectives
djw. Description
djx.
djv.
S

97
R
e
m
a
r
k
s

djy.
djz.
dkb.
dkc.
dke.
dkf.
All liabilities for income taxes on the balance sheet

date, represent amount owed to Income Tax
authorities by the Client.
Income taxes payable are included in the balance
sheet at appropriate amount.
dka.
Ensure that liabilities for taxation have been

presented, classified and disclosure is given in
accordance with Companies Ordinance 1984, and
Applicable IFRS.
dkg.
dkd.
dkh.
dki.
Audit Procedures:dkk. Description
dkl.
dkj.
S
dkm. Analytical Procedures

dkn.
dko. Reconcile the current year balances with prior year
0
dkq.
dkp.
balances.
dkr.
dkt.
dku.
Ensure reasonableness of changes during the year

and inquire about any unusual change during the audit
period.
dks.
Test of Details
dkw. Description
dkx.
dkz.
Obtain movement schedule of taxation liabilities

showing opening/ ending balances and reconcile with
ledger and working papers of the previous audit
period.
Check the status of last years returns.
dla.
dlg.
dli.
Check list of assessments pending finalization and

verify the correspondence from tax authorities for
indication that the actual liabilities may differ
significantly for the figures provided.
Consult tax department for complex tax matters.
dll.
Reconcile the tax payments with the advance tax.
dlm.
dkv.
S
dky.
0
dlb.
dlc.
dld.
dle.
dlf.
dlh.
dlj.
dlk.
D
o
n
e
B
y

98
D
o
n
e
B
y

0
Verify for tax payments with tax challans.
dln.
dlo.
dlp.
dlq.
Date
Engagement
Date
Senior Partner
Partner
dlr.
dls.
dlt.
dlu.
dlv.

99

dlw.
Appendix X
dlx.
Form 024
dly.
CONTENGENCIES & COMMENTMENTS
dlz.
dma. Name of CMA Firm / Auditor
dmb. Particulars of the client
dmc. -------------------------------------------------------------dmd. -------------------------------------------------------------dme. -------------------------------------------------------------dmf. Reference No.
dmg. Date
dmh. Prepared By
dmi. Approved By
dmj.
dmk.
dml.
Lead Schedule
Description
dmm. A
m
o
u
n
t
i
n
R
s
.
dmn.
dmp.
dmr.
dms. Audit Objectives
dmu. Description
dmo.
dmq.
dmv. R
e
m
a
r
k
s
dmt.
S
dmw.
dmx. The contingent liabilities include all contingencies
dmz.
0
dna.
where-in, it is not yet confirmed whether the entity has

a present obligation that cannot be measured till its
occurrence.
All the future commitments represents out flow of
economic benefits against committed transactions
have been identified, classified and disclosed in the
Financial Statements as per the requirements of
Companies Ordinance, 1984 and applicable IFRS.
dmy.
dnb.
dnc.
100

dnd. Audit Procedures
dnf. Description
dng. D
o
n
e
b
y
dne.
S
dnh.
dni.
0
dnl.
dnm.
0
dnp.
Analytical Procedure
dnj. Review the contingencies and commandments
appearing in the accounts of previous audit period and
check status of current period and reconcile.
Test of Details
dnn. Obtain clients policy for contingency and commitments
for identifying, evaluation and accounting.
dnq.
dns.
dnt.
dnv.
dnw. Review bank confirmation for contingent liabilities,
dny.
dnz.
dob.
doc.
doe.
dof.
doh.
doi.
Obtain confirmation from legal advisor of the company

regarding litigation and claims that are disclosed in the
financial statements.
Verify the documents concerning litigation, claims and
un asserted claims.
letters of credit and compensating balance
arrangements.
For tax contingencies, get professional opinion of the
tax consultant of client to ensure the degree and
extent of exposure.
Review the bank guarantee letter agreement and
prepare summary as per confirmations received from
the banks.
Obtain the clients representation for contingencies
and commitments as part of the financial statement
representations letter.
dnk.
dno.
dnr.
dnu.
dnx.
doa.
dod.
dog.
Date
Engagement Partner
doj.
dok.
dol.
Date
Senior Partner

101

dom.
Appendix Y
don.
Form 025
doo. PAYABLES
dop.
doq. Name of CMAFirm / Auditor
dor.
dos. Particulars of the client
dot. -------------------------------------------------------------dou. -------------------------------------------------------------dov. -------------------------------------------------------------dow.
dox. Reference No.
doz. Prepared By
dpa. Approved By
dpb.
dpc.
doy.
Date
Lead Schedule
dpd. Description
dpe. A
m
o
u
n
t
i
n
R
s
.
dpf.
Accounts Payables
dph.
dpj.
dpk. Audit Objectives
dpm. Description
dpg.
dpi.
dpn. R
e
m
a
r
k
s
dpl.
S
dpo.
dpp.
dpr.
0
dps.
To ensure that payables are valid claims of the

vendors, for which goods/ services have been
received by the client and are properly accounted for.
To ensure that liability is shown in financial statement
at correct balances.
dpq.
dpt.

102

dpu.
dpv.
To ensure that payables are presented, classified and

disclosed as per Companies Ordinance, 1984 and
applicable IFRs.
dpx.
dpy. Audit Procedures
dqa. Description
dpw.
dqb. D
o
n
e
b
y
dpz.
S
dqc. Test of Controls

dqd.
dqe. Ensure that purchase orders are approved by the
0
dqg.
authorized persons and are serially numbered.
dqh.
Ensure that purchases are recorded as per approved

Goods Received Note (GRN).
dqi.
dqk.
Ensure that activities of approving the price list/

quotations, issuing purchase orders, receiving the
goods and issuance of GRN and processing the
invoice are dealt by independent persons.
Entries to account payable are approved at an
applicable level.
dql.
Verify the credit note for correctness and are entered

in the period related to the purchase.
dqr.
dqj.
0
dqm.
dqn.
dqp.
dqq.
dqs. Analytical Procedures

dqt.
dqu. Reconcile balances of trade creditors, purchases,
0
dqw.
dqx.
dqz.
dra.
drc.
drd.
0
drg.
payments, with ledger etc. and get explanation for

unusual items.
Calculate trade creditors turnover and compare with
previous periods.
Critically check the payments at the close of the fiscal
year.
Test of Details
dre. Reconcile the balances with ledger, subsidiary ledger
and working papers of the previous period.
dqo.
dqv.
dqy.
drb.
drf.
drh.
Analyze the trade creditors ratio and compare with

last audit period and evaluate any significant variation.
drk.
Check that if there are any significant purchases, at

drl.
the close of fiscal Year. Investigate for any abnormality.
103
drj.
dqf.
dri.

drm.
drn.
Check the invoices, for recording at appropriate timing.
dro.
drq.
Trace selected disbursements, from receiving

documents, purchase invoices and other
supplementary documents.
Ensure that liabilities are owed by the company and
disclosure is given in the Financial Statements in
relevant IFRSs.
Trace few invoices (selected) for checking complete
process.
drr.
Consider requesting positive confirmation of material

balances with related parties.
dsa.
drp.
0
drs.
drt.
drv.
drw.
dry.
drz.
dsb.
dsc.
dsd.
dse.
dsf.
dsg.
Date
Partner
dsh.
dsi.
dsj.
dsk.
dsl. Date
dsm.
dru.
drx.
Engagement
Senior Partner

104

dsn. Appendix Z
dso.
Form 026
dsp. SHORT TERM BORROWING

dsq.
dsr. Name of CMAFirm / Auditor
dss. Particulars of the client
dst. -------------------------------------------------------------dsu. -------------------------------------------------------------dsv. -------------------------------------------------------------dsw.
dsx. Reference No.
dsy.
dsz. Prepared By
dta. Approved By
dtb.
dtc.
Date
dtd.
Lead Schedule
Description
dte.
dtf.
Short Term Borrowing
dtg.
dth.
dtj.
dtk.
A
m
o
u
n
t
i
n
R
s
.
dti.
Audit Objectives
dtl.
dtm. Description
dtn.
dtp.
Check that short term borrowing represent true and

fair value of valid claims of banks and other parties.
dtq.
dts.
To ensure that short term borrowing are accounted

for in the books of the company and liabilities are
recorded correctly.
To ensure that proper disclosure is given for short
term borrowing in the Financial Statements in
dtt.
dto.
0
dtr.
0
dtu.
0
dtv.
dtw.

105
R
e
m
a
r
k
s

related IFRS.
dtx.
dty.
dtz.
dua. Description
S
duc.
Compare current year balance with prior year and

ensure reasonableness of changes during the year.
due.
dug.
Evaluate the unusual changes and obtain

explanations regarding unusual changes.
duh.
dui.
duj.
0
dum.
Test of Details
duk. Obtain complete schedule of short term borrowing,
opening balance, transitions and closing balance.
Reconcile the balances with ledgers, financial
statements and working papers of previous period.
duo.
duq.
Get confirmation from the lenders for the specific

amounts.
dur.
dut.
Ensure that interest is calculated according to

approved terms and condition and are recorded
timely and accurately.
duu.
dus.
dul.
dun.
dup.
o
n
e
b
y
dud.
duf.
dub. D
duv.
duw. Date
Engagement
Partner
dux.
duy.
duz.
dva.
Date
Senior Partner

106

dvb. Appendix AA
dvc.
Form 027
dvd. LIABILITIES AGAINST FINANCE LEASE

dve.
dvf. Name of CMA Firm / Auditor
dvg. Particulars of the client
dvh. -------------------------------------------------------------dvi. -------------------------------------------------------------dvj. -------------------------------------------------------------dvk.
dvl. Reference No.
dvn. Prepared By
dvo. Approved By
dvp.
dvq.
dvr.
dvm. Date
Lead Schedule
Description
dvs.
dvt.
dvu.
dvv.
dvx.
dvw.
dvy.
dvz.
Audit Objectives
dwa. Description
Am
ou
nt
in
Ru
pee
s
dwb. R
e
m
a
r
k
s
dwc.
01
dwf.
02
dwi.
03
dwd. To ensure that liabilities represent true claims of

lesser against assets leased to the entity under
financial lease.
dwg. To ensure that liabilities against financial lease
are accurately recorded in the books on timely
basis.
dwj. To ensure that liabilities are disclosed in the
financial statement as per the requirements of
Companies Ordinance, 1984 and relevant IFRS.
dwe.
dwh.
dwk.
dwl.
dwm.
Audit Procedures
107

dwn.
dwo. Description
dwp. D
o
n
e
b
y
dwq. Analytical Procedures

dws. Reconcile the balances of prior period and obtain
dwr.
01
dwt.
dwu.
dww. Test of Details

dwy. Obtain schedule showing complete details of
dwx.
01
dxa.
dxb.
02
dxd.
dxe.
03
dxg.
dxh.
04
dxj.
dxk.
05
dxm.
dwv.
explanation for any unusual items and significant

variation.
dxn.
dwz.
finance and operating leases of current and prior

years for evaluation.
Ensure that schedule is complete through
inquiries from management.
Reconcile the balance and transactions relating
to leases.
Get the confirmation to ascertain the correctness
of the data. Confirmation shall be done by the
auditor itself.
Review new lease agreements for approval and
ensure that principal portion has been recorded
as liability, against assets.
Review the security of documents
dxc.
dxf.
dxi.
dxl.
dxo.
06
dxp.
dxq.
07
dxs.
dxt.
08
dxv.
dxw.
09
dxy.
dxz.
10
dyb.
dyc.
dyd.
dye.
Date
Partner
Check that rental of the lease is paid according

to amortization schedule.
Ensure that payments are made through banking
channel.
Ensure that lease liabilities are properly
bifurcated into current and non-current.
Ensure that proper disclosure is given in the
Financial Statements in accordance with
Company Ordinance, 1984 and related IFRS/
IAS.
dxr.
dxu.
dxx.
dya.
Engagement
dyf.
dyg.
dyh.
dyi.
108

dyj.
dyk.
dyl.
Date
Senior Partner

109

dym. Appendix AB
dyn.
Form 028
dyo. LONG TERM DEBTS

dyp.
dyq. Name of CMA Firm / Auditor
dyr.
dys. Particulars of the client
dyt. -------------------------------------------------------------dyu. -------------------------------------------------------------dyv. -------------------------------------------------------------dyw. Reference No.
dyx.
dyy. Prepared By
dyz. Approved By
dza.
dzb.
Date
dzc.
Lead Schedule
Description
dzd.
dze.
Account Payables
dzf.
dzg.
dzi.
dzj.
A
m
o
u
n
t
i
n
R
s
.
dzh.
Audit Objectives
dzl.
Description
dzm. R
e
m
a
r
k
s
dzk.
S
dzn.
dzo.
To ensure that liabilities are recorded at current

amount and are valid claims of the other parties.
dzp.
dzr.
To ensure that long term debts have been recorded,

classified and disclosed in the financial statement
according to the requirement laid down in Companies
Ordinance, 1984 and relevant IAS.
dzs.
dzq.
0
dzt.
110

dzu.
dzv.
Audit Procedures
dzw. Description
dzx.
dzy.
dzz.
Analytical Procedure
eaa. Reconcile the balances of current audit period with
prior periods.
eac.
eab.
ead.
Enquire for any substantial or unusual change and

get management explanation for reason of such
change.
Test of Details
eai. Obtain schedule of long term debts showing balance
and transactions accrued during the audit period.
eaf.
eah.
0
eak.
Make sure that schedule is complete, information be

obtained through inquiries from management.
eam.
eao.
Check few selected transactions for ascertaining the

correctness of the schedule.
eap.
ear.
Get independent confirmation from the parties for the

balances shown in the books of accounts.
eas.
eau.
Ensure that interest is calculated strictly according to

the terms and conditions, approved by the
management.
Ensure that disclosure is given in Financial
Statements as for the requirements of Companies
Ordinance, 1984 and relevant IAS.
eav.
eaq.
0
eat.
0
eaw.
eax.
eaz.
eba.
ebb.
ebc.
ebd.
eag.
eaj.
eal.
ean.
eae.
Date
Partner
eay.
Engagement
Date
Senior Partner
ebe.
Appendix AC
ebf.
Form 029
ebg. DIVIDEND PAYABLES

ebh.
ebi. Name of CMA Firm / Auditor
ebj.
111
D
o
n
e
b
y

ebk.
ebl.
ebm.
ebn.
ebo.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ebp.
ebr.
ebs.
Reference No.
Prepared By
ebt.
ebu.
ebv.
ebq.
Date
Approved By
Lead Schedule
Description
ebw. A
m
o
u
n
t
i
n
R
s
.
ebx.
Dividend Payables
ebz.
ecb.
eby.
eca.
ecc.
ece.
Audit Objectives
Description
ecf.
ecd.
S
ecg.
ech.
To ensure that amount of dividend payables,

represent the liability of the Company.
eci.
eck.
To ensure that liability is accurately and completely

recorded in the books of account.
ecl.
ecn.
To ensure that balances of dividend payable is

disclosed in the Financial Statements as per the
requirements, laid down in Companies Ordinance,
1984 and applicable IAS.
eco.
ecj.
0
ecm.
0
R
e
m
a
r
k
s
ecp.
ecq.
Audit Procedures
ecr.
ecs. Description
ect.

112

o
n
e
b
y
ecu.
ecv.
0
ecy.
ecw. Reconcile percentage of dividend declared for current
audit period with previous audit period.
ecz.
Ensure that declaration of divided is consistent with

the profits of the organization.
edb. Test of Details

edc.
edd. Obtain list of members of the company, as of the book
0
closure date and copy of board resolution, to verify

the rate of dividend declared.
edg. Check the movement of the dividend payable, during
the audit period and ensure that unpaid dividends are
accounted properly.
edj. Ensure that Zakat has been deducted and deposited
with Central Zakat Fund in accordance with Zakat and
Usher Ordinance, 1980.
edm. Ensure that Income Tax is deducted in accordance
with Income Tax Ordinance, 2001.
edo.
edp.
edf.
0
edi.
0
edl.
edn.
edw.
edy.
For remittance of dividend to foreigners ensure the

compliance of Foreign Exchange Act, 1947.
edz.
eeb.
Ensure that disclosure is given in the Financial

Statements as per Companies Ordinance, 1984 and
relevant Accounting pronouncements.
eec.
eed.
eee.
eef.
edk.
Check that dividend is not paid out of sale proceeds

and paid out of profit.
eea.
edh.
edv.
eds.
edx.
ede.
edq.
edu.
eda.
Ensure that dividend warrants are issued to entitled

persons and payment is made within period, specified
by Companies Ordinance, 1984.
Check that unpaid/ unclaimed dividend amount is
properly disclosed.
edr.
ecx.
Date
Partner
edt.
Engagement
eeg.
eeh.
eei.
eej.
113

eek.
eel. Date
eem.
Senior Partner

114

een.
Appendix AD
eeo.
Form 030
eep.
EQUITY
eeq.
eer. Name of CMA Firm / Auditor
ees. Particulars of the client
eet. -------------------------------------------------------------eeu. -------------------------------------------------------------eev. -------------------------------------------------------------eew.
eex.
eez.
efa.
efb.
efc.
efd.
Reference No.
Prepared By
eey.
Date
Approved By
Lead Schedule
Description
efe.
eff.
efg.
efh.
efj.
efk.
efi.
Audit Objectives
efn.
efl.
S
efm. Description
efo.
efp.
efr.
efs.
eft.
A
m
o
u
n
t
i
n
R
s
.
To ensure that equity accounts are properly authorized

and issued and changes in equity accounts have been
accounted for in the books of accounts.
Audit Procedures
efu. Description
R
e
m
a
r
k
s
efq.
efv.

115

e
m
a
r
k
s
efw.
efx.
0
ega.
0
egd.
efy. Reconcile the balances of equity of current audit
period, with prior period and ensure reasonableness
regarding changes during the audit period.
egb. Analyze the unusual changes and get management
explanation to clarify the state.
egc.
ege.
Obtain a schedule of equity stating number of shares

authorized, issued and outstanding.
egf.
egh.
Ensure that number of shares and amount of issued,

authorized and paid, are strictly according to
memorandum of association and Form A.
egi.
egg.
efz.
egj.

116

egk.
egl.
Check board resolution for issuing bonus shares.
egm.
ego.
Ensure that all the transactions are through

banking channel.
Ensure compliance of Capital of Company (issue
of Capital) Rules, 1996.
Statements in accordance with Companies
Ordinance, 1984 and IAS.
egp.
05
egn.
06
egq.
egr.
07
egu.
egt.
08
egw.
egx.
egy.
egz. Date
egs.
egv.
Engagement
Partner
eha.
ehb.
ehc.
ehd.
ehe.
ehf.
ehg.
ehh.
Date
Senior Partner

117

ehi.
Appendix AE
ehj.
Form 031
ehk.
ehl.
ehm.
ehn.
eho.
ehp.
ehq.
ehr.
ehs.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
eht. Reference No.

ehv. Prepared By
ehw. Approved By
ehx.
ehy.
ehz.
SALES
ehu.
Date
Lead Schedule
Description
eia.
eib.
eic.
eid.
eif.
eig.
eie.
Audit Objectives
eij.
eih.
S
eik.
0
A
m
o
u
n
t
i
n
R
s
.
eii.
Description
eil.
To ensure that the revenue is completely and

accurately recorded in the books of accounts of the
company. Also that the sales recorded are existing for
the current accounting period only
eim.
ein.
eio.
118
R
e
m
a
r
k
s

eip.
Audit Procedures
eis.
eiq.
S
eit.
eiu.
0
eix.
0
eja.
eir.
Test of Controls
eiv. Select sales transactions including sales return from
the independent records (Shipping, Delivery and
Purchase Orders) for verification.
eiy. Ensure completeness of the records by numerical
sequence.
eiz.
Ensure price on the sales invoices agrees with price

agreements.
ejc.
eje.
Trace the sales invoices with sales journal general

ledger.
ejf.
ejh.
Check credit notes for sale items.
eji.
ejk.
Check that prices charged are in accordance with

approved price list, by the management.
ejl.
ejn.
Ensure that only authorized persons have access to

sales system.
ejo.
ejq.
Ensure that discounts are given as per approved list.
ejr.
eju. Get comparative monthly analysis of sales from the
client.
ejv.
ejg.
eiw.
ejb.
ejd.
Procedure
ejj.
0
ejm.
0
ejp.
0
ejs.
ejt.
0
ejw.
0
ejz.
eka.
0
ekd.
0
ejx.
Analytical procedures be performed on sales, based

on sales by developing an expected amount of sales
based on previous years figures or current period
economic conditions, significant difference be
evaluated.
Test of Details
ekb. Reconcile the balance of sales/ sales returns with
ledgers and working papers of the last audit report.
eke.
Check complete process of few selected invoices to

ensure reasonableness for proper recording.
ejy.
ekc.
ekf.

119
D
o
n
e
b
y

ekg.
ekh.
Ensure that sales are made and recorded in

accordance with approved sales policy.
eki.
ekk.
Reconcile the sales invoices with sales orders for

particular of the customer, product description,
quantities and price of the product.
Review selected sales invoices and shipping
documents to ensure the accuracy and validity of
purchases/ Receipt.
Statement
in
accordance
with
Companies
Ordinance, 1984 and IASs.
ekl.
ekj.
0
ekm.
ekn.
ekp.
ekq.
eks.
ekt.
eku.
ekv.
ekw.
ekx.
eky.
ekz.
ela.
eko.
ekr.
Date
Partner
Engagement
Date
Senior Partner

120

elb.
Appendix AF
elc.
Form 032
eld.
ele.
elf.
elg.
elh.
eli.
elj.
elk.
ell.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
elm. Reference No.

elo. Prepared By
elp. Approved By
elq.
elr.
els.
elt.
COST OF SALES
eln.
Date
Lead Schedule
Description
elu.
elv.
elw.
elx.
elz.
ema. Audit Objectives
ely.
A
m
o
u
n
t
i
n
R
s
.
emd. R
emb.
S
eme.
0
e
m
a
r
k
s
emc. Description
emf.
To ensure that the cost of revenue is completely and

company. Also that the costs recorded are existing for
the current accounting period only
emg.
emh.
121

emi.
emj.
Audit Procedures
emm. D
emk.
S
eml.
Procedure
emn. Test of Controls

emp. Select sample transaction from each component
emo.
of cost of sales transaction and ensure that
01
o
n
e
b
y
emq.
expenses are approved as per companys policy

and are supported with complete documents.
emt.
ems. Ensure that payments are made through cross
emr.
cheque for the limits prescribed by Income Tax
02
Ordinance, 2001 and withholding tax is deducted
at the prevailing rates.
emu. Analytical Procedures
emw. Reconcile the cost of sales of current period with
emx.
emv.
previous audit period and analyze the unusual
01
variation.
emz. Compare gross profit margin with comparable
ena.
margins for preceding periods with comparable
emy.
margins of industry and with budget and margins
02
of the current period. Investigate unusual
fluctuations of the profits.
enb.
enc. Review the gross profit ratios and evaluate the
end.
03
results
ene. Test of Details
enh.
enf.
eng. Check cost of sales by product line and division
01
or other business segments.
enj. Review the budget expenses with actual
enk.
expected and evaluate the variances. For
eni.
unusual changes investigate the reasons and
02
obtain explanation from the management for
remedial action.
enm. Review purchase/ supply agreement for charging
enn.
enl.
the prices and investigate any unusual
03
transaction.
enp. Reconcile cost of sales recorded in the book of
enq.
eno.
accounts with corresponding credit to inventory
04
accounts.
ens. Ensure that purchase price of imported items are
ent.
enr.
translated and recorded in according with IAS 21
05
and IAS 39, as applicable.
enu.
env. Select few to check clients inventory cut off
enw.
06
procedures and controls transactions (few after
physical inventory data and few before physical
122

enx.
eny.
07
eoa.
eob.
08
eod.
eoe.
09
eog.
eoh.
10
eoj.
eok.
eol.
eom. Date
inventory data).
Check that disclosures are in accordance with
Companies Ordinance, 1984 and relevant IAS.
Check that basis for allocation of overheads is
rational.
Check the treatment of overhead variance and
obtain reasons for abnormal variances.
Ensure that basis for allocation of overhead is
consistently applied.
enz.
eoc.
eof.
eoi.
Engagement
Partner
eon.
eoo.
eop.
eoq.
eor.
Date
Senior Partner

123

eos.
Appendix AG
eot.
eou.
Form 033
eov.
ADMIN EXPENSES
eow.
eox. Name of CMA Firm / Auditor
eoy.
eoz. Particulars of the client
epa. -------------------------------------------------------------epb. -------------------------------------------------------------epc. -------------------------------------------------------------epd.
epe. Reference No.
epf.
epg. Prepared By
eph. Approved By
epi.
epj.
epk.
epl.
Date
Lead Schedule
Description
epm. A
m
o
u
n
t
i
n
R
s
.
epn.
epo.
epp.
epr.
eps.
epq.
Audit Objectives
epv.
ept.
S
epw.
0
epz.
eqa.
epu. Description
epx.
To ensure that the expenses are completely and

company and that the expenses recorded are existing
for the current accounting period only.
epy.
Audit Procedures
124
R
e
m
a
r
k
s

eqd. D
eqb.
S
eqe.
eqf.
eqc.
eql.
0
Procedure
Test of Controls
eqg.
eqi.
o
n
e
b
y
Ensure that payrolls are prepared as per the

attendance sheet, received from HR Department.
eqj.
Select sample transactions that expenses are

approved as per companys policy and approved by
appropriate authority.
eqm. Verify that expense vouchers are supported with
complete documents as per companys policy.
eqo. Analytical Procedures.

eqp.
eqq. Reconcile admin expenses of the current period with
0
eqh.
eqk.
eqn.
eqr.
previous period to evaluate any unusual change.
eqs.
0
eqt.
Reconcile the budget and amount with actual

expenses and inquire the circumstances for unusual
variation.
equ.
eqv.

125

eqw. Test of Details
eqx.
eqy. Obtain and review rent agreement and ensure that
0
era.
erb.
erd.
ere.
erg.
erh.
eri.
erj.
erk.
erl.
erm.
ern.
ero.
eqz.
payments are made, strictly according to the

approved agreement.
Get schedule of legal and professional expenses and
ensure that payments are made for the services
rendered according to approved contract agreements.
Ensure that disclosures in the financial statements is
accorded as per Companies Ordinance, 1984 and
relevant laws.
erc.
erf.
Date
Partner
Engagement
Date
Senior Partner

126

erp.
Appendix AH
erq.
Form 034
err.
ers.
ert.
eru.
erv.
erw.
erx.
ery.
erz.
FINANCIAL CHARGES

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
esa. Reference No.

esc. Prepared By
esd. Approved By
ese.
esf. Lead Schedule
esg. Description
esb.
Date
esh.
esi.
esj.
esk.
esm.
esn. Audit Objectives
esl.
esq.
eso.
S
esr.
esp.
Description
ess.
To ensure that the expenses are completely and

company and that the expenses recorded are existing
for the current accounting period only.
est.
esu.
esv.Audit Procedures
127
A
m
o
u
n
t
i
n
R
s
.
R
e
m
a
r
k
s

esy.
esw.
S
esz.
eta.
0
etd.
0
etg.
0
etj.
etk.
0
esx.
Procedure
Test of Controls
etb.
Ensure that client recalculate the financial charges,

levied by the bank. Check few transactions by
calculating the financial charges.
ete. Check that before obtaining finances, rates from
different banks were obtained. Ensure that finances
are obtained from the bank/ DFI offering most
economical rates and better terms.
eth. Reconcile the financial charges levied by bank/ DFI
with the books of accounts, for accuracy of recording
the transaction.
etl.
Reconcile the current period balances with budgeted
amount. Analyze the variation, if any.
etn.
eto.
etp.
etq.
etr.
ets. Test of Details
ett.
etu. Examine the supporting documents, to verify the
0
etc.
etf.
eti.
etm.
etv.
financial charges from selected transactions.
etw.
etx.
Recalculate the financial charges of few transactions

for ensuring the accuracy.
ety.
eua.
Ensure that netting is not performed for income and

expenses.
eub.
eud.
Ensure that disclosure is accorded as per Companies

Ordinance, 1984 and the applicable IAS and relevant
clauses of the loan agreements.
eue.
etz.
0
euc.
0
euf.
eug.
euh.
eui.
euj.
euk.
eul.
Date
Partner
Engagement
Date
Senior Partner
128
D
o
n
e
b
y

eum.

129

eun. Appendix AI
euo.
Form
035
eup. OTHER INCOME

euq.
eur. Name of CMA Firm / Auditor
eus.
eut. Particulars of the client
euu. -------------------------------------------------------------euv. -------------------------------------------------------------euw. -------------------------------------------------------------eux.
euy.
eva.
evb.
evc.
evd.
eve.
Reference No.
Prepared By
euz.
Date
Approved By
Lead Schedule
Description
evf.
evg.
evh.
evi.
evk.
evl.
evj.
Audit Objectives
evo.
evm.
S
evn.
Description
evp.
evq.
To ensure that the other incomes have been

completely and accurately recorded in the books of
accounts of the company.
evs.
evt.
A
m
o
u
n
t
i
n
R
s
.
evr.
Audit Procedures
130
R
e
m
a
r
k
s

evw. D
evu.
S
evx.
evv.
o
n
e
b
y
Procedure
Test of Controls
evz.
Ensure that normal sales are not included in the

other income and other income items do not
appear in normal sales.
Check that selected transaction that investments
are made after proper approval.
ewa.
For scale of scrap ensure that a good material is

not sold along with scrap and scrap is sold on
03
the most economic terms.
ewh. Analytical Procedures.
ewj. Reconcile the balances of the current period with
ewi.
budgeted amount and inquire for excessive
01
variation.
ewm. Calculate interest and ensure that income
ewl.
received from Banks/ DFIs is as per the
02
approved documents.
ewo.
ewp. Review income received from marketable
03
securities and investigate any abnormality.
ewg.
evy.
01
ewb.
ewc.
02
ewe.
ewf.
ewd.
ewk.
ewn.
ewq.
ewr.

131

ewt.
Verify selected transactions of sale of scrap for

authorization, proper recording of gain and
receipt from vendors for sale of scrap.
eww. Check that proper disclosure is accorded in the
financial
statement
in
accordance
with
Companies Ordinance, 1984 and IAS and other
applicable laws and regulations, if any.
ews.
04
ewv.
05
ewy.
ewz.
exa. Date
ewu.
ewx.
Engagement
Partner
exb.
exc.
exd.
exe.
exf.
exg.
exh.
Date
Senior Partner

132

exi.
Appendix AJ
exj.
exk.
exl.
exm.
exn.
exo.
exp.
exq.
exr.
exs.
Form 036
Workers Welfare Fund / Workers Profit Participation Fund

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ext. Reference No.

exv. Prepared By
exw. Approved By
exx.
exy.
exz.
exu.
Lead Schedule
Description
eyb.
eyd.
eyf.
Date
eya.
A
m
o
u
n
t
i
n
R
s
.
eyc.
eye.
eyg. Audit Objective

eyi.
Procedure
eyj.
eyh.
S No.

133
D
o
n
e
b
y
/
R
e
m
a
r
k
s

eyl.
eyk.
01
eyn.
eyo.
01
eyr.
eys.
01
eyv.
02
eyy.
03
ezb.
ezc.
ezd.
eze.
ezf.
ezg.
ezh.
ezi.
To ensure that contributions of Workers Welfare

Fund (WWF) / Workers Profit Participation Fund
are calculated and paid as per workers
Welfares Fund Ordinance, 1971 and The
Companies Profits (Workers Participation) Act
1968, respectively.
Audit procedure
eyp. Reconcile the balances of WWF/WPPF with
budgeted amount and investigate for any
unusual variation.
Test of Details
eyt. Check that computation of WWF/WPPF
charges is appropriate.
eyw. Check that proper disclosures are accorded in
accordance with Companys Ordinance 1984
and IAS.
eyz. Check that contributions to WWF / WPPF is
calculated and paid in accordance with the
applicable Ordinance / Act.
Date
Engagement Partner
Date
Senior Partner
eym.
eyq.
eyu.
eyx.
eza.

134

ezj.
Appendix AJ
ezk.
Form 037
ezl.
LAWS AND REGULATIONS
ezm.
ezn. Name of CMA Firm / Auditor
ezo.
ezp. Particulars of the client
ezq. -------------------------------------------------------------ezr. -------------------------------------------------------------ezs. -------------------------------------------------------------ezt.
ezu. Reference No.
ezw. Prepared By
ezx. Approved By
ezy.
ezz.
ezv.
Date
faa. Audit Objective

fac.
Procedure
fad.
faf.
Obtain a general understanding of entitys legal

and regulatory framework applicable to the
entity and its industry by obtaining sufficient and
appropriate audit evidence.
Client is complying with the applicable legal and
regulatory framework.
fag.
fab.
S No.
fae.
01
fah.
fai.
0w
fak.
fal.
Audit Procedures
fan. Procedure
faj.
fao.
fam.
S No.
fap.
faq.
01
fas.
fat.
Understand the legal and regulatory frame work

of the entity and industry.
Ensure compliance of the laws and regulations.
far.
fau.
02
fav.
03
faw.
R
e
m
a
r
k
s
fax.
If there is any instance of non-compliance of law
or regulation, enquire from management for the
reasons, Inspect the correspondence for any
135
D
o
n
e
b
y

faz.
fay.
04
exception.
When non-compliance of law and regulation is
conformed, document the findings after
discussion with the management. Communicate
the non-compliance to audit committee, Board
of Directors and senior management. Obtain
evidence that they have been informed about
the non-compliance of laws and regulations.
fba.
fbb.
fbc.
fbd.
fbe.
Applicable Laws in Pakistan
1. Companies Ordinance, 1984

2. Listing Regulations (Applicable to listed entities only)
3. Income Tax Ordinance, 2001
4. Workers Welfares Fund Ordinance, 1971
5. The Payment of Wages Act, 1939
6. The Factories Act, 1934
7. The Workmens Compensation Act, 1923
8. The Provisional Employees Social Security Ordinance, 1969
9. The Minimum Wages Act, 1961
10. The West Pakistan Industrial and Commercial Employment(Standing Order) Ordinance,
1968
11. The West Pakistan Shop Establishment Ordinance, 1969
12. The Industrial Relation Ordinance, 1969
13. The Employees Old Age Benefit Act, 1976
14. Companies Profit (Workers Participation) Act 1968,
15. (Others laws relevant to specific business e.g., Insurance Ordinance etc.
fbf.
fbg.
fbh.
fbi.
fbj.
fbk.
fbl.
Instance relating to non- compliance

1.______________
2.______________
3.______________
fbm.
fbn.
fbo.
fbp.
fbq.
fbr.
fbs.
fbt.
fbu.
fbv.
Date
Engagement Partner
Date
Senior Partner

136

fbw.
Appendix AL
fbx.
Form 038
fby.
fbz.
fca.
fcb.
fcc.
fcd.
fce.
fcf.
fcg.
GOING CONCERN

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
fch. Reference No.

fcj.
Prepared By
fck. Approved By
fcl.
fcm. Audit Objective
fci.
Date
fcp.
fcn.
S
fcq.
fcr.
fco.
Test of Controls
fcs.
01
fcu.
fcv.
fcw.
Procedure
Determine that the entity is able to continue as a

going concern and the management assumption
about entitys ability to continue as going concern
is appropriate.
fct.
Audit Procedures
fcz.
fcx.
S
fda.
fdb.
fcy.
02
Procedure
Test of Controls
fdc.
01
fde.
R
e
m
a
r
k
s
fdf.
Evaluate managements assessment of the

entitys ability to continue as a going concern, if
such an assessment has been performed.
If managements assessment covers less than
twelve months from the date of the financial
statements, request management to extend its
fdd.
fdh.

137
D
o
n
e
b
y

assessment period to at least twelve months
from the date of the financial statements, or to
the longer period of time that may be required by
the applicable financial reporting framework, by
law or regulation or by auditing standards.
fdg.
fdj.
fdi.
03
fdl.
04
fdo.
05
Evaluating management's assessment may

include an evaluation of the process
management followed to make its assessment,
the assumptions on which the assessment is
based and management's plans for future action.
fdm. If management has not yet performed such an
assessment, discuss with management the basis
for its intended use of the going concern
assumption and request management to make
such an assessment.
fdp. Consider whether management has taken into
account all relevant information of which the
engagement team is aware as a result of the
audit.
fdq.
fdt.
fds.
06
fdv.
fdw.
07
fdy.
08
fdz.
Consider whether to corroborate managements

assessment by review of budgets and forecasts
for the period covered by the managements
assessment, including the ability to comply with
debt covenants.
Obtain sufficient appropriate audit evidence to
determine whether or not a material uncertainty
exists through performing additional audit
procedures.
In assessing management's plans for dealing
with the adverse effect of the conditions or
events giving rise to going concern uncertainty,
consider and discuss with management the
following:
fdk.
fdn.
fdr.
fdu.
fdx.
fea.
prospective operating and financial information (e.g.,

cash flow, profit and other relevant forecasts)
plans to dispose of assets
plans to borrow money or restructure debt
plans to reduce or delay expenditures (e.g., workforce
reductions and plant closures)
plans to increase ownership equity
plans involving significant revenue growth or increases in
gross margin, and
138

plans that involve support by a parent company or other
related party.
feb.
fec.
fed.
fee.
fef.
feg.
feh.
fei.
fej.
Date
Engagement Partner
Date
Senior Partner

139

fek.
Appendix AM
fel.
Form 039
COMPLIANCE OF COMPANIES ORDINANCE, 1984
fem.
fen.
feo.
fep.
feq.
fer.
fes.
fet.
feu.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
fev. Reference No.

fex. Prepared By
fey. Approved By
fez.
few.
Date
ffa.
Ensure that following documents, regulators are properly maintained by

the client in accordance with Companies Ordinance, 1984:-
ffd.
ffb.
S.
ffe.
0
ffh.
0
ffl.
ffc.
Description
fff.
Register of the Directors and other officers and its

employees
ffi.
Register of shares and securities not held in the name of

the company
ffj.
ffm.
Minutes books of all meetings
ffp.
Register of transfer of shares and debentures
ffs.
Register of mortgages
ffv.
Register of debentures and index of debentures
ffx.
ffy.
Register of contracts, engagement or applicant
ffo.
0
ffr.
0
ffu.
ffg.
ffk.
ffn.
S
e
c
t
i
o
n
2
0
5
2
0
9
1
7
3
ffq.
7
6
fft.
1
3
5
1
4
9
2
1
ffw.
ffz.
0
140

9
fga.
0
fgd.
0
fgg.
1
fgj.
11
fgb.
Ensure the following forms are filled with SECP in

accordance with Companies Ordinances, 1984
fge.
Return of allotment of shares
fgh.
Annual return for shares capital
fgk.
Special resolution particulars
fgc.
fgf.
7
3
fgi.
1
5
6
1
7
2
1
2
9
fgl.
fgo.
fgm.
1
fgp.
1
fgn.
Memorandum of complete stratification of mortgage
fgq.
Notice of change of registered office (if any)
fgr.
fgu.
fgs.
1
fgt.
Increase in share capital
&
fgx.
fgv.
1
fgy.
1
fgw.
fgz.
Particulars of mortgage or change in mortgage
Register for participation term certificate, term finance

certificates and debentures
&
4
6
3
1
4
2
9
2
9
4
1
2
2
&
fha.

141
4
6
3
1
2
3
,
1
2
4

&
fhb.
1
fhe.
1
fhh.
1
fhk.
2
fhd.
fhc.
Statutory Report
fhf.
Consents of Directors /CE
fhi.
Notice of modification of register of members
fhl.
Issuance of prospectus and commencement of business
fhg.
fhj.
fhm.
fhp.
fhq.
fhn.
2
fho.
Other statutory requirements
fhr.
4
6
3
1
5
7
1
8
4
1
5
4
1
4
6
2
0
8
,
2
2
2
,
2
2
4
,
2
3
0
,
2
5
1
&
4
6
4
fhs.
fht. Ensure following, in case of Foreign Companies:fhu.
fhv.
01
fhy.
fhx.
fhw.
Documents submitted for registration
fhz.
Particulars of Directors CEO and other Officers.

fia.
142
4
5
1
4
02
fid.
fib.
03
fie.
fic.
Return showing registered office address.
fif.
Check that disclosures are in accordance with

companies ordinance, 1984
fii.
Compliances of 4th schedule in financial statement of

listed companies
fil.
Compliance of 5th schedule in financial statement for

non-listed companies.
fio.
Auditor shall ensure provisions of the section.
04
fih.
05
fik.
06
fin.
5
1
,
4
5
2
4
5
1
,
4
5
2
fig.
fij.
fim.
fip.
07
fiq.
fir.

143
2
3
4
2
3
4
9
5
,
1
9
1
,
1
9
6
,
2
0
0
,
2
0
8
,
2
0
9
,
2
1
4
,
2
fis.
fit.
1
5
,
2
2
6
,
2
2
7
,
2
3
0
,
2
3
4
,
2
3
7
a
n
d
2
5
7
fiu.
fiv.
fiw.
fix.
fiy.
fiz.
fja.
fjb.
Date
Engagement Partner
Date
Senior Partner
fjc.
fjd.
fje.
fjf.
fjg.
fjh.
fji.
144

fjj.
fjk.
fjl.
fjm.
fjn.
fjo.
fjp.
fjq.
fjr.
fjs.
fjt.
fju.
Appendix AN
Form
040
fjv.
fjw.
fjx.
fjy.
fjz.
fka.
fkb.
fkc.
fkd.
fke.
fkf.
fkg.
SUGGESTED LETTER FOR CONFIRMATION OF BANK BALANCES AND

OTHER RELATED TRANSACTIONS
The Manager,
______________
______________
(Bank Address)
Client Name
Standard request for bank report for audit purposes
Dear Sir,
fkh.
In accordance with your above-named customer's instructions given hereon,
please send DIRECT to us at the above address, as auditors of your customer, the
following information relating to their affairs at your branch as at the close of business
on __________________________ and, in the case of items 2, 4 and 12 during the
period since _____________________ the end of the previous accounting period.
fki.
fkj.
Please state against each item any factors which may limit the completeness of
your reply; if there is nothing to report, state 'NONE'.
fkk.
fkl.
It is understood that any replies given are in strict confidence, for the purposes
of audit.
fkm.
Information Requested
fkn.
fko.
fkp.
fkq.
Response
Bank accounts
(1) Full titles of all accounts together with the account numbers
and balances therein, including NIL balances:
fkr.

145

(a) where your customer's name is the sole name in
the title;
(b) where your customer's name is joined with that
of other parties;
(c) Where the account is in a trade name.
fks.
(2) Full titles and dates of closure of all accounts closed during
the period.
(3) The separate amounts accrued but not charged or credited
as at the above date, of:
fkt.
fku.
fkv.
(a) mark-up I interest; and

(b) provisional charges (including commitment fees)
Facilities and
Securities
fkw.
(4) Details of leasing facilities, loans, overdrafts, cash credit

facilities
(including
standby
facilities),
and
associated guarantees I indemnities specifying
agreed limits, unused facilities, mark-up/ interest
terms, overd ue rentals I instalments and in the
case of term loans, date for repayment or review.
fkx.
(5) In respect of facilities, contingent liabilities and derivatives,
please give details of any security formally charged in
favor of bank including the date and type of charge
(i.e. pledge or hypothecation etc)
fky.
(6) Details of contingent liabilities
fkz.
(7) Details of assets under lease etc.
fla.
(8) Any other relevant information
flb.
flc.
(a) .
fld.
(b)
fle.
flf.
flg.
flh.
fli.
flj.
flk.
fll.
Address of the auditor is as under:M/ S_________________

_____________________
_____________________

146

flm.
fln.
flo.
flp.
flq.
flr.
fls.
flt.
flu.
Yours sincerely
(______)
Authorized Client
Signature

147

flv.
flw.
Appendix AO
Form
041
flx.
fly.
flz.
fma.
fmb.
fmc.
fmd.
fme.
fmf.
fmg.
fmh.
fmi.
fmj.
SPECIMEN LETTER FOR CONFIRMATION OF DEBIT/ CREDIT BALANCE

Name of Debtor/ Creditor
______________________
______________________
______________________
Confirmation of Balances
Dear Sir,
As part of their normal audit procedures, we have been requested by our
auditors M/S ____________________ to ask you to confirm direct to them
balance payable to / receivable from you of Rs. ________ as
at__________________.
fmk.
fml.
fmm.
fmn. If the amount is in agreement with your records, please sign in the space
fmo.
provided below and return this letter directly to our auditors at the below
mentioned address
______________________________
fmp.
______________________________
fmq.
______________________________
fmr.
If the amount is not in agreement with your records please notify our auditors
directly of the amount shown by your records and, if possible, send them full
particulars of the difference.
fms.
For your reply to be of assistance to our auditors please give this request your
early attention.
fmt.
Yours faithfully,
fmu. For and on behalf of

fmv.
FMW.
PLEASE DO NOT DETACH

Name of Debtor / Creditor
fmx.

148

fmy.
The amount shown above of Rs ___________ due to / from us *is/ [is not] in
agreement with our records at ___________________. *The details of
discrepancies are annexed.
fmz.
fnb.
fnc.
Authorized Signature & Stamp

fna. Title of Position
Delete as appropriate

149

fnd.
fne.
Appendix AP
fnf.
Form 042
fng.
fnh. RELATED PARTIES TRANSACTIONS
fni.
fnj.
fnk.
fnl.
fnm.
fnn.
fnp.
fnq.
fnr.
fns.
fnt.
fnv.
fnx.
fnz.
Reference No.
Prepared By
fno.
Date
Approved By
Lead Schedule
Description
fnu.
fnw.
fny.
i. Evaluate the design and implementation of the entitys controls for:
identifying, accounting for, and disclosing related party relationships and transactions
in accordance with the applicable financial reporting framework
authorizing and approving significant transactions and arrangements with related
parties, and
authorizing and approving significant transactions and arrangements outside the
normal course of business.
2. In order to identify related parties and transactions with such parties, obtain from
management a list of related parties, transactions (including transactions not given
accounting recognition) with such parties and, if relevant, the business rationale for such
transactions.
150
A
m
o
u
n
t
i
n
R
s
.

i. To test the completeness of the above lists, perform the following
specific procedures:
inspect other information obtained during the audit that may indicate the existence of
related parties or related party transactions including bank confirmations and legal
letters.
review transactions that the entity may have entered into that, because of their nature,
may indicate the existence of related parties or related party transactions.
3. Consider whether fraud risks may arise from the identified related party relationships and
transactions (including circumstances relating to the existence of a dominant party) and
whether additional risk assessment procedures should be performed.
i. As a result of our further audit procedures, if we identify related parties
or related party transactions that management has not previously
identified or disclosed:
promptly communicate any newly identified related parties to the other members of
the engagement team to enable them to determine whether this information affects
the results of, and conclusions drawn from, audit procedures already performed,
including whether the risks of material misstatement, including the risks of fraud,
need to be reassessed;
request management to identify all transactions with the newly identified related
parties for our further evaluation;
inquire as to why the entitys controls over related party relationships and transactions
failed to enable the identification or disclosure of the newly identified related party
relationships or transactions.
foa.
fob.
foc.
fod.
foe.
fof.
fog.
foh.
Date
Engagement Partner
Date
Senior Partner

151

foi.
Appendix AQ
foj.
Form 043
fok.
fol.
COMPLIANCE OF LABOUR LAWS
fom.
fon. Name of CMA Firm / Auditor
foo.
fop. Particulars of the client
foq.
for.
fot.
fou.
fos.
Reference No.
Prepared By
Date
Approved By
fox.
fov.
fow.
foy.
foz.
fpb.
fpc.
Establishment
Commercial
fpa.
Industrial
fpd.
fpe.
fpf.
fpg.
Gratuity
fph. Description
fpi.
fpk.
fpl.
fpj.
1
fpm.
fpn.
Does employer pay gratuity to his workers in case of

retired, resignation or termination of services except
removed in account of misconduct?
Does Employer pay benefits other than gratuity?
fpo.
2
152
N
o
o
f
e
m
p
l
o
y
e
e
s

fpp.
3
fpv.
fpq.
fpr.
fps.
fpt.
fpw.
What is method of calculation of gratuity?

-------------------------------------------------------------------------------------------
fpu.
Does employer maintain fund of gratuity?
fpx.
fpz.
fqa.
fqo.
Is gratuity fund maintained in accordance section

2(3) of Income Tax Ordinance, 2001
Has the gratuity fund satisfied the condition set in 6th
schedule of the Income Tax Ordinance,2001
Had employer furnished the return as per Rule 7 of
Part III of 6th schedule of Income Tax Ordinance, 2001
Check that disclosure in the financial statement as
per IAS -19
Check compliance of Workers Profit Participation
Fund
No of workers in the company
fqr.
Does the company pay 5% of its profit to the fund?
fqs.
fqu.
The amount allocated to the fund is
fqv.
fpy.
5
fqb.
fqc.
fqe.
fqf.
fqh.
fqi.
fqk.
fql.
fqn.
fqd.
fqg.
fqj.
fqm.
fqp.
fqq.
1
fqt.
1
(a) Available to company

(b) Invested according to board of Directors decision
fqw.
fqx. Investment made in the following.
1
(i) _____________
fqy.
(ii) _____________
(iii) _____________
fqz.
1
fre.
fra.
frb.
In case amount allocated was made available to the

company, does company pay interest on dividend?
(i)___________________
frc.
frf.
(ii)__________________
Is list of trustee obtained?
fri.
Has the company ensured compliance of Companies

Profits (Workers Participation) Act?
frd.
frg.
frh.
1
frk.
frl.
frm.
frn.
fro.
Date
frj.
Engagement Partner
153

frp.
frq.
frr.
frs.
frt.
Date
Senior Partner

154

fru.
Appendix AR
frv.
Form 044
frw.
frx. PROVISION OF INCOME TAX
fry.
frz.
fsa.
fsb. Particulars of the client
fsc.
fsd.
fsf.
fsg.
fsh.
fsi.
fsj.
fsk.
fsl.
fsm.
fso.
Reference No.
Prepared By
NTN NO
Income year end
Tax year
Tax Deducted
fsn.
fsp.
Description
Total Income
Tax liability / provision total
Current
Prior
Deferred
Applicable tax rates
Taxed at deferred rate
fth.
ftk.
ftl.
Date
Approved By
fsr.
fsu.
-
fse.
C
u
r
r
e
n
t
y
e
a
r
fsq.
fss.
fsv.
fsx.
fsz.
ftb.
ftd.
ftf.
fti.
fst.
fsw.
fsy.
fta.
ftc.
fte.
ftg.
ftj.
ftn.
fto.
P
r
e
v
i
o
u
s
y
e
a
r
Tax Returns
ftm.

155

n
it
i
a
l
s
ftp.
Prepared by
fts.
Revised by
ftv.
Approved by
fty.
ftz.
fua.
fub.
fuc.
ftq.
ftt.
ftw.
ftr.
ftu.
ftx.
Provision of Tax
fue.
fud.
fug.
fuj.
fum.
fup.
fus.
fut.
Audit In charge
Audit Manager
Tax Manager
Tax Returns
P
a
r
ti
c
u
l
a
r
s
fuf.
fuh.
fuk.
fun.
fuq.
I
n
it
i
a
l
s
fui.
ful.
fuo.
fur.
fuv.
fuu.
Description
Am
fuw.
fux.
Has adequate provision been made for companys tax and

withholding tax liabilities?
Appropriate disclosures have been made for overall taxes?
fuy.
Check compliance of following clauses of Income Tax

Ordinance, 2001:Description
fvh.
Sectio
fve.
fuz.
fva.
fvb.
fvc.
fvd.
fvf.
fvg.
fvj.
fvk.Dividend
fvl.
fvi.
fvm.
fvn. fvo.
fvr.
fvs.
fvp.
Royalty
Shipping and Transportation Fee
fvq.
fvt.
fvu.
7
156

fvv.
fvw.
fvx.
Income from Business/ Property
fvz. fwa.
fwb.
Income from property
fwd. fwe.
fvy.
11
fwc.
15
fwf.
Rent received
fwh. fwi. No adjustable amount
fwj.
fwl. fwm.
fwn.
fwg.
15
fwk.
16
Income from business
fwp. fwq.
fwr.
Speculation Business
fwt. fwu.
fwx. fwy.
Inadmissible deduction
fww.
20
fwz.
fxb. fxc.Deprecation
fws.
19
fwv.
Admissible deduction
fwo.
18
fxa.
21
fxd.
fxe.
22
fxf.
fxg.
fxj.
Initial allowance on eli8able assessment

fxk.Intangibles
fxh.
fxi.
23
fxl.
fxm.
24
fxn. fxo.
fxr.
fxp.
Pre commencement Expenditures

fxs.Scientific Research Explanation
fxq.
25
fxt.
fxu.
26
fxv. fxw.
fxx.
Trading
fxz. fya.
fyb.
Profit on debts- Lease payment etc.
fyd. fye.
fyh.
fxy.
27
fyf.
Profit on non-performing debts of ball

fyi. Transfer of participatory resources
fyc.
28
fyg.
30
fyj.
fyk.
31
fyl.
fym.
fyn.
Income from accrual basis
fyp. fyq.
fyr.
Liabilities charged against profit
fyt.
fyu.
fyx.
Percentage of completion Long term contracts

fyy. Capital Gains
fyo.
32
fys.
34
fyv.
fyw.
36
fyz.
fza.
37
fzb. fzc.Income of other source
fzd.
fze.
39
fzf.
fzg.
fzh.
fzj.
Deduction against expenditures

fzk.Examples of taxes
fzl.
fzi.
40
fzm.

157

54
fzn. fzo.
fzr.
fzp.
Assessed business losses and deprecation

fzs.Tax credit on deduction of zakat
fzq.
57
fzt.
fzu.
60
fzv.
fzw.
fzx.
Tax credit on donations
fzz.
gaa.
gab.
Tax credit on investment
gad. gae.
Property owned by two or more person
gal.
gam.
gap. gaq.
gat.
gau.
Allowed deduction
gbb. gbc.
gbf. gbg.
gbj.
gbk.
Assets acquired with foreign currency loan
gbr. gbs.
gbv. gbw.
gbz. gca.
Credit for taxes paid outside Pakistan
gcc.
103
gcf.
Separation of foreign losses

gch. gci.Admissibility Head Office Expenditure
gby.
98
gcb.
gcd. gce.
gbu.
79
gbx.
Percentage of ownership
gbq.
78
gbt.
NO gain /loss on disposal of asset
gbm.
76
gbp.
Assets disposed of under arms length transaction
gbi.
75
gbl.
gbn. gbo.
gbe.
72
gbh.
Personal case of business assets
gba.
71
gbd.
Amount received foreign source income ceased
gaw.
70
gaz.
Currency conversations
gas.
68
gav.
gax. gay.
gao.
67
gar.
Transaction related to property rent etc.
gak.
67
gan.
Classification of income and expense
gag.
66
gaj.
Explanation relates to derivation
gac.
62
gaf.
gah. gai.
fzy.
61
gcg.
104
gcj.
gck.
105
gcl.
gcm.
gcn.
Foreign Resident controlled company
gcp. gcq.
gct.
106
gcr.
Avoidance of Double taxation
gcu.
gcx. gcy.
gcw.
108
gcz.
Categorization of income and donations
gcs.
107
gcv.
Transaction with Associates
gco.
gda.
109

158

gdb. gdc.
gdd.
Tax payment for resident company or AOP
gdf. gdg.
gdh.
Presumptive Tax Regime
gdj.
gdk.
gdl.
gdn. gdo.
gdq.
147-
gdr. gds.
gdt.
Income from Import
gdu.
148
gdv. gdw.
gdx.
Income of resident companies
gdy.
153
gdz. gea.
geb.
Realization of foreign exchange procedures
ged. gee.
gec.
154
gef.
Prize on prize bond
geg.
156
geh. gei.
gej.
Presumptive Tax Regime
gek.
169
gem.
gen.
Credit of proceeding year refundable
geo.
170
gep. geq.
ger.
Credit of Advance Tax
ges.
233
geu.
gev.
Tax collected from owner of good transport vehicle
gex.
gey.
gez.
gfa.
gfb.
gdm.
118
gdp.
Credit for advance tax paid
get.
gdi.
115
Available of audited accounts provisioning for tax
gel.
gde.
113
Date
Engagement Partner
Date
Senior Partner
gew.
238
gfc.

159

gfd.
gfe.
Appendix AT
Form 046
gff.
gfg.
CHECK LIST BEFORE ISSUANCE OF DRAFT AUDIT REPORT
gfh.
gfi.
gfj.
gfk.
gfl.

gfm. Reference No.

gfo. Prepared By
gfp. Approved By
gfq.
1.
gfn.
Date
Reconcile the financial statement with the following:(a) Amount in trial balance
(b) Ensure mathematical accuracy of the trial balance.
(c) Ensure that grouping of the accounts is appropriate.
gfr.
2. Ensure that accounting policies are reflected in comparative information are consistent.
gfs.
3. In case material misstatement have been identified then perform additional audit procedures.
gft.
4. Review the report for spelling and typing error.
gfu.
5. Check mathematical accuracy for consistency and cross referring.
gfv.
6. Check supporting schedules for disclosures.
gfw.
7. Perform audit procedures to evaluate the overall presentation of financial statements and
relevant disclosures.
gfx.
gfy.
gfz.
gga.
ggb. Date
ggc.
ggd.
gge.
ggf. Date
ggg.
ggh.
Engagement Partner
Senior Partner
ggi.
160

ggj.
ggk.
ggl.
ggm.
ggn. Appendix AU
ggo.
ggp.
Form 047
ggq. AUDIT COMPLECTION CHECKSLISTS

ggr.
ggs. Name of CMA Firm
ggt.
ggu. Particulars of the client
ggv.
ggw. Reference No.

ggy. Prepared By
ggz. Approved By
ggx.
Date
gha.
ghb.
ghc.
ghd. Date of the auditors report (dd/mm/yy):
ghe.
Prior to the date of the auditors report, all necessary auditing procedures were
completed and sufficient appropriate audit evidence was obtained to support the
representations in our report.
ghf.
Signature and date (dd/mm/yy):
ghg.
Partner: _________________________
_________________________
Manager:
ghh.
ghi.
ghj.
Audit file assembly date (dd/mm/yy): 20/07/2010
ghk.
When undertaking an audit under ISAs, the audit file assembly date is the date
by which an engagement team assembles a complete and final set of working
papers for retention.
ghl.
A complete and final set of audit documentation has been assembled as of the
audit file assembly date.
ghm. Signature and date (dd/mm/yy):

ghn.
Partner: _________________________
_________________________
Manager:

161

gho.
ghp. Consideration and procedures
ghq.
ghr.
ghs. Procedures
ght.
S.
ghu.
ghv.
ghx.
ghy.
gia.
gib.
gid.
gie.
gig.
gih.
gij.
gik.
gim.
gin.
gip.
giq.
gis.
git.
giv.
giw.
giy.
giz.
We have performed and documented

appropriate evaluation procedures
prior to commencement of the
engagement and determined the
suitability of accepting or continuing
the audit engagement. In determining
the suitability we have considered all
risks, including fraud risks that were
identified during the acceptance /
continuance process.
We have sent consent letter to client
and obtained an appropriate
engagement letter confirmed by the
client.
Appropriate procedures have been
followed to express the opinion in
financial statement.
The engagement team collectively
has the appropriate capabilities,
competence and time to perform the
audit engagement in accordance with
professional
standards
and
regulatory and legal requirements,
and to issue an auditors report that is
appropriate in the circumstances.
Determining the materiality in audit is
planned.
Working papers are appropriately
managed.
Obtained the understanding about
environment of the entity.
Obtained assessment regarding risk
that fraud or error which may cause
material misstatement in the financial
statements.
Documentation of fraud risk factors,
which were identified to be present
during audit.
Conformation from the management
regarding auditors understanding
about entity.
Obtained the understanding of
Partner /
Manager
Sign off
ghw.
ghz.
gic.
gif.
gii.
gil.
gio.
gir.
giu.
gix.
gja.

162
gjb.
gjc.
gje.
gjf.
gjh.
gji.
gjk.
gjl.
gjn.
gjo.
gjq.
financial statement risk and financial

statements controls.
Obtained sufficient audit evidence to
support and planned appropriate
audit procedures.
Performed substantive procedures as
planned and documented in the audit
program.
Reviewed and reconcile the amounts
audited in the working paper to the
amounts to reported in the financial
statements.
Check all adjusting entries.
gjd.
gjg.
gjj.
gjm.
gjp.
gjr.
Obtained sufficient audit evidence to

form audit opinion and had reported
the finding to the management.
Requirement of specialist evaluated.
gjt.
gju.
Role of specialist defined.
gjv.
gjw.
gjx.
gjz.
gkc.
gkf.
gki.
gkl.
Obtained feedback from specialist,

considered the results and document
the findings.
gka. Obtained sufficient appropriate audit
evidence that work of independent
auditor is adequate as per a specific
arrangement.
gkd. Considered the need for use of an
external expert, properly addressed
his professional competence and
documented the details.
gkg. Obtained sufficient understanding of
internal auditor activities, performed
preliminary assessment for planning
of audit.
gkj. Obtained sufficient appropriate audit
evidence for use of internal auditor
work.
gkm. Engagement has been appropriately
executed in accordance with the
policies.
gjs.
gjy.
gkb.
gke.
gkh.
gkk.
gkn.

163

gkp. Auditor shall clarify the following:(a) I been sufficiently involved in the audit
process, including key meeting with
entitys management.
(b) I have the financial statements and am
satisfied that the disclosures and
presentation is appropriate.
(c) I have read the audit report at satisfied that
it is appropriate.
gko.
gkq.
gkr.
gks.
gkt.
gku.

164

gkv.
gkw.
gkx.
gky.
Appendix AV
Form 048
CHECKLIST FOR SUBSQUENT EVENTS REVIEW
gkz.
gla.
glb.
glc.
gld.
gle.
glg.
glh.
Reference No.
Prepared By
glf.
Date
Approved By
gli.
1. Auditor shall consider the changes in following as they affect the financial statements
other information in the annual report of the entity.
and
glj.
(a)
(b)
(c)
(d)
(e)
(f)
Management significant decisions

Interest and currency rates.
Banking arrangements.
Key product, customers and venders.
Government policies and regulations.
Key management or employees.
glk.
2. Significant knowledge through
gll.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Review of minutes of meetings

Press comments.
Internal audit report.
Changing in client trading partner.
Major changes in technology.
Security incidents.
Any other matter of significant importance.
glm.
gln.
glo.
glp.
glq.
glr.
Date
gls.
glt.
glu. Date
glv.
Engagement Partner
Senior Partner

165
glw.
glx.
gly.
glz.
gma. SAMPLE LETTER TO MANAGEMENT / BOARD
gmb.
gmc.
gmd. M/s _____________
gme. _________________
gmf.
gmg.
gmh. AUDIT
OF
FINANCIAL
STATEMENTS
FOR
Appendix AW
Form 049
THE
THE
YEAR__________________ ________________
gmi.
gmj. Dear Sir,
gmk.
gml.
We are pleased to enclose herewith the financial statements of ABC (the

Company) for the period from __________________________ prepared by
the management, together with our audit report thereon duly initialed by us for
the purpose of identification only.
gmm.
gmn. We shall be pleased to sign the audit report in its present or amended form
after you have approved the financial statements and we have received the
following:
gmo.
a) the audited financial statements duly signed by the CEO and Chief Financial Officer
duly authorized in this behalf;
b) a representation letter signed by the CEO and Chief Financial Officer; (draft enclosed)
c) Outstanding information (if any) as outlined in Para 3 below.
gmp.
1 Managements Responsibility for the Financial Statements
gmq.
gmr.
The Companys management is responsible for the preparation and fair
presentation of these financial statements in accordance with International Financial
Reporting Standards (IFRSs) and the Companies Ordinance, 1984. This responsibility
includes: designing, implementing and maintaining internal controls relevant to the
preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the
circumstances.
gms.
2 Auditors Responsibility
gmt.
gmu.
Our responsibility is to express an opinion on these financial statements

prepared by the Companys management based on our audit.
gmv.
166

3 Outstanding Information
gmw.
gmx. 3.1
gmy.
(Include here)
4 Matters for Specific Attention
gmz.
gna. 4.1
(Include here)
gnb.
gnc.
gnd. We take this opportunity to express our appreciation for the courtesy and
cooperation extended to us during the course of our audit by the management
of the Company.
gne.
gnf.
gng.
gnh. Sincerely Yours,
gni.
gnj. XYZ
gnk. Cost and Management Accountants
gnl.
gnm.
gnn.

167

Audit Manual For CMA Firms

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TABLE OF CONTENTS

Related Party Transactions........................................................................................................ 22

AUDIT PRACTICE MANUAL

1. Pre Engagement Activities

Acceptance of New Client

Continuance of Existing Client

Institute of Cost and Management Accountants of Pakistan

AUDIT PRACTICE MANUAL

Once an auditor has decided to accept a new or existing clients request to

Objectives and scope of audit.

2.2.2 Obtain management

a. For reparation of financial / cost statements in accordance with applicable

Institute of Cost and Management Accountants of Pakistan

AUDIT PRACTICE MANUAL

recurring audits, the auditor shall evaluate the client whether

3. Changes in Terms of Audit Engagement

The change in terms of an audit engagement would not be justified if it

Institute of Cost and Management Accountants of Pakistan

AUDIT PRACTICE MANUAL

b. Determine whether there is any obligation to report the circumstances to

Institute of Cost and Management Accountants of Pakistan

Intelligent observations of the entitys environment.

Inspection of the entitys documents and related management

The engagement partner shall discuss the material misstatement in

Business risk results from significant condition or circumstances, which could

Information about Client

Objectives of the clients business.

Business Control Environment

Computer Information Systems

C IS p e r so n a l structure and skills,

Security and access controls,

Backups and recovery procedures,

Reliability of the CIS and data integrity,

Data processing and reporting control

Financial / Management Reporting Environment

Critical Audit Area

Risk Assessment in Small Entity

Risk from related parties transactions

Risk from uncertainty in measurement and estimates

Risk from unusual and complex transactions

Control Activities of Audit

qualitative aspects. The auditor shall calculate materiality using quantitative

Assessment of Fraud Risk

Discussion among Engagement Partners

Discussion with Management

Computer Information System Check List

Analytical Procedure for Risk Assessment

Evaluation of Internal Audit Functions

Conducting Audit of Group of Companies

Points Brought Forward from Previous Years

Staff Planning and Time Allocation

2. Selection of items for testing

Substantive Test of Details - Risk of Incorrect

This is the incorrect conclusion that sample estimates of accounts

inappropriate audit procedures, misinterpretation of audit evidence and failure to

7. Planning the Sample Selection

Size of the Sample

8. Sample Selection and Testing

9. Evaluating Results of Audit Sampling

Error or deviation has isolated effect.

Sample Audit Programs

Compliance of Regulatory Framework