Audit Firm Assessment Questionnaire

Audit firm basic information [Section 1]

Please fill in the following information:
Full name: PK Chopra & Co.
Abbreviated name: PKC
Address: N-1001, Bombay Life Building, Connaught Place, New Delhi -110001
Contact name: Ms. Ruchika Bhagat / Mr. Rahul Jindal
Contact title or position: Partner
Telephone number 1: +91 9810158561/ +918800239990
Telephone number 2: +91 11 40043977
Fax number:
Email address: ruchika@pkchopra.com/ rahul@pkchopra.com
Website: www.pkchopra.com
Years in operation: 58 years
Cities in which the firm has offices: Gurugram, Mumbai, Gujarat, Kerala, Uttar Pradesh, Uttarakhand,
Bihar
General history of audit firm:
For over 5 decades we have been actively catering to small, medium-sized and big companies across the
world. Our clients range from a wide range of industries and sectors, and we are certified members of
most of the renowned global accountancy bodies. PK Chopra has been assisting companies by providing
optimized, reliable and cost effective solutions in the area of Audit services with its rich experience and
professional expertise. Our audit services have enabled clients experience the increased benefits of
maximizing their business capabilities by gaining a competitive edge over the others.
Country or countries where audit work is provided: News publications in Japan,
other US Donation Projects, Projects in Nepal
Is the audit firm part of a global network of audit firms? (yes/no) Yes
If yes, what global network? GGI
Upload the network agreement: (File upload)
Is the audit firm part of the country’s public accounting organization? (yes/no) Yes
News publications in japan
If yes, which PAO? ICAI CERTIFICATE

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What is the type of membership? (Member, associate, other) Member
Upload the PAO agreement: (File upload)

2. Leadership responsibilities [Section 2]: Leadership demonstrates responsibility for the firm's system
of quality control.

Describe your firm’s internal quality control system and explain how your internal control system
meets professional standards. (text answer)

Quality Policy

Our Firm’s quality policy is flexible ad conducive to create an environment for innovation and
development, customer centric, with team involvement, systematic process approach, continual
improvement, embedded with decision making and leadership to enhance our client relationship every
time
The management of our firm has framed an appropriate ‘Quality Policy’ stating the commitment to
complying with all strategical requirements and continual improvement The policy framed is
communicated and explained to the entire Staff within the audit firm.

 Planning: The Management has ensured that ‘Quality Objectives’ are established at all levels and
are consistent with the ‘Firm’s Quality Policy’. The partners make sure these objectives can be
measured at any point in time.

 Responsibility/Review: The respective responsibilities and decision making has been defined and
communicated by the senior partners for ensuring compliance of the Policies. Quarterly reviews
ensure that there has been no deviation in meeting the compliance of the Quality Policy.

 Resource management

 Provision of resources:  Adequate resources are always available to implement and maintain the
quality management system and to enhance Client satisfaction.

 Human Resources: We have an apt staffing based on education, training, skills and experience
and respective tasks have been duly assigned to all. We have a robust suite of qualified, and

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 audit trainee personnel and other clerical and administrative staff. We regularly identify the
training needs and impart it at all levels.

 Infrastructure: The firm has maintained the required infrastructure such as the premises,
workspace, equipment, hardware, software, and supporting services, with continuing
enhancement keeping pace with the developing technology.

 Work environment: The firm assesses the human and physical factor of the work environment
needed to achieve the conformity with the Quality Policy and Client satisfaction.

Professional Ethics

 Adhering to the Statement on Code of Conduct and Professional ethics issued by the Indian
Institute of Chartered Accountants (ICAI) especially relating to the principles of independence,
integrity, objectivity, confidentiality and professional behavior

 The Firm is staffed by personnel who have attained and maintained the technical standards and
professional competence required to enable them to fulfill their responsibilities with due
diligence

 To review client’s assignments on an ongoing basis, in making a decision related to client

retention, without compromising the firm's independence and abilities

 Delegating with supervision and review of work at all levels in order to provide reasonable
assurance that the performed task meets appropriate standards of quality

Quality Assurance

 Establishing the objectives and processes necessary to deliver results in accordance with client’s
requirements and the organization’s policies.
 Implementing the processes.
 Monitoring and measuring processes and product against policies, objectives and requirements
of the Client and reporting and documenting the results.

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  Take decisions to continually improve process performance
 Ensuing that a quality management system is established, implemented, maintained and
improved
 Reviewing the Quality Management Systems at planned intervals to ensure continuing
suitability, adequacy and effectiveness with maintenance of suitable records

 Planning and developing the processes required for providing various types of services to the
clients and these shall be consistent with the other processes of the quality management
systems.

Provide the quality objectives established by the audit firm leadership. (text answer)

Our system of internal control is built and operated to strategize our firm’s objectives, provide reliable
financial reporting to internal and external stakeholders, efficiently and effectively running the business,
while complying with all applicable laws and regulations in India.
We work on our internal control system constructed on serving our clients with complete solutions by
setting high standards of professional excellence combined with the best global practices and rich
experience. Our Quality policy is to maintain excellence in all aspects of our operations and to
persistently exceed our clients’ expectations. Our policy also serves to ensure that all processes and
activities, including quality goals and objectives, are continuously improved through frequent training,
monitoring, adjustment and management review. We are a framework of 16 Partners and have
maintained its original control, discipline and culture. Former India Associates of Horwath & Horwath
International, Binder Dijker Otte & Co., HVS International in Hospitality Sector, UK 200 Group.

Explain how the audit firm identifies and assesses risk to achieve the audit firm’s quality objectives.
(text answer)

While running through all applicable risk-assessment procedures, we use the results to figure out how
high the chance is that our client has material financial-statement errors. Below are some key practices:

 Recognizing the nature of the company

 Examining the quality of company management
 Another means is noticing high employee turnover, which can indicate employees are seeking
other employment because upper management fails to maintain a quality system of reporting.
 Asking employees for information: 

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  Our objective is to meet all legal and regulatory tax return filing obligations. Risks associated
with this objective include filing returns that aren’t materially correct and missing the filing
deadline.
 Analyzing processes and paperwork: We follow analytical procedures test to see if plausible and
expected relationships exist in both financial and nonfinancial data.

Below are three common analytical procedures we do while assessing audit risk:

 Trend analysis: You compare current financial figures to the same figures in the prior year.
 Ratio analysis: Some common ratios are the current ratio, and inventory turnover.
 Reasonableness

Describe how your audit firm designs and implements responses to address the assessed quality risks.
(text answer)

We shall design and perform further audit procedures whose nature, timing, and extent are based on
and are responsive to the assessed risks of material misstatement at the assertion level.
In designing the further audit procedures to be performed, we shall:

1. Consider the reasons for the assessment given to the risk of material misstatement at the
assertion level for each class of transactions, account balance, and disclosure, including
 The likelihood of material misstatement due to the particular characteristics of the
relevant class of transactions, account balance, or disclosure (that is, the inherent risk);
and
 Whether the risk assessment takes account of relevant controls (that is, the control
risk), thereby requiring us to obtain audit evidence to determine whether the controls
are operating effectively or not.

2. We shall design and perform tests of controls to obtain sufficient appropriate audit evidence as
to the operating effectiveness of relevant controls if:

3. Our assessment of risks of material misstatement at the assertion level includes an expectation
that the controls are operating effectively

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  Substantive procedures alone cannot provide sufficient appropriate audit evidence at
the assertion level.
 In designing and performing tests of controls, the auditor shall obtain more persuasive
audit evidence the greater the reliance the auditor places on the effectiveness of a
control.

Substantive Procedures Responsive to Significant Risks

If the auditor has determined that an assessed risk of material misstatement at the assertion level is a
significant risk, the auditor shall perform substantive procedures that are specifically responsive to that
risk. When the approach to a significant risk consists only of substantive procedures, those procedures
shall include tests of details.

Overall Responses.
Overall responses to address the assessed risks of material misstatement at the financial statement level
may include:

1. Emphasizing to the audit team the need to maintain professional skepticism.

2. Assigning more experienced staff or those with special skills or using experts.
3. Providing more supervision.
4. Incorporating additional elements of unpredictability in the selection of further audit
procedures to be performed.
5. Making general changes to the nature, timing, or extent of audit procedures, for example:
performing substantive procedures at the period end instead of at an interim date; or modifying
the nature of audit procedures to obtain more persuasive audit evidence.

Describe how leadership in your audit firm promotes a quality-oriented internal culture, including the
decision-making process, actions, and organization structure. (text answer)

The accomplishment of our goals does not come about from working exceptionally well just for a few
days, it is about consistency, everything great can only be accomplished with consistent effort and
dedication When values, thoughts, feelings, and actions of an organization are in alignment, the
organization becomes focused and its character is strengthened.

 Integrity

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  Communication
 Continuous Learning
 Partnering
 Team Work
 Relationship- Building
 Diversity

Decision Making Process:

Most auditing tasks are judgments, because auditors can hardly ever be certain that they made the right
decision. This also applies to the planning stage materiality and risk assessments that will be studied in
this dissertation.

Our firm’s Decision Making process is based on the following factors

1. Save Time: Policy tends to serve as precedents and reduce repetitive rethinking of all the factors
while making decisions by the individuals.

2. Coordination: As policies are in writing and communicate same message to all, it aids in
coordination. As number of individuals guided by the same policies, it is possible that can predict
accuracy in decisions of others.

3. Stability: Policies bring in portability in the organization. There is certainty of action. Even
though top management frames the policies, the action remains same. Normally policies are
framed for long time hence it promotes stability in the organization. Due to this it diminishes
frustration among the members.
4. Definite Decision: When the policies are clearly defined it encourages definite individual
decision. This is because each manager has clear understanding of the range within which he
can make decisions. He is more confident as he makes decision in accordance with policy
framework.

5. Evaluation of Performance: Policies specify route towards selected goals. Policies act as a
standard or measuring yard for evaluating performance. The results can be easily compared
with the policies to determine whether the decisions are well within the boundaries of the

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 policies. It also helps to determine how well the members of an organization have lived up to
their professed intention.

Organization Structure: attached in the Company Profile

Explain how the internal culture ensures compliance with professional standards and legal and
regulatory requirements. (text answer)

An organization’s culture is amorphous, varied from place to place, and changeable over time. And it
does not lend itself to be evaluated. Compliance Officers and Internal Auditors in our firm engage
themselves to evaluate culture by the use a variety of techniques — some quantitative, some qualitative
— with the goal of continually enriching management’s understanding of the organizations culture of
accountability, responsibility, ethical behavior and compliance.
At PK Chopra & Co., we have rich experience in such assessments in various organizations. When
designing employee surveys, we are phrasing questions so that employees assess aspects of the
environment created for them ensuring that the results are more reliable. In addition to building a
certain level of reliability into the survey process, we usually follow up on survey results by looking for
corroborating evidence. The result can be handed over so that Compliance Officers and Internal Auditors
can work cooperatively with the first line and coordinate their work in order to continuously measuring
and ensuring improvements towards the “right” culture of our organization. Practices we follow to
ensure they are compliant with the professional standards:
 
 Clear roles and responsibilities
 Reporting and evaluation
 Thorough and up-to-date training.

In fulfilling the audit requirement to determine compliance with agreement terms and applicable laws
and regulations related to USAID programs, the auditors must follow the reporting standards contained
in GAGAS for reporting on compliance which incorporate the AICPA Professional Standards. The
auditor's report on compliance must set forth as findings all material instances of noncompliance,
defined as instances that could have a direct and material effect on the fund accountability statement,
and/or the financial statements, as applicable. Nonmaterial instances of noncompliance must be
included in a separate management letter to the recipient and referred to in the report on compliance.

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A copy of the management letter should be provided to the cognizant USAID Operating Unit along with
the audit report.
The auditor's report must include relevant information about identified or suspected fraud based on
sufficient, appropriate evidence obtained that a fraud or illegal act either has occurred or is likely to
have occurred. In reporting material fraud, illegal acts, and abuse or other noncompliance, the auditors
must place their findings in proper perspective. In presenting material irregularities, illegal acts, or other
noncompliance, auditors must follow the reporting standards contained in GAGAS. If the auditors
conclude that sufficient evidence of any known or likely fraud or illegal acts exists, regardless of whether
material to the financial statements, they must contact the USAID cognizant Operating Unit or OIG and
exercise due professional care in pursuing indications of possible fraud and illegal acts to avoid
interfering with potential future investigations or legal proceedings.

In planning and conducting the tests of compliance the auditors must:

1. Identify the agreement terms and pertinent laws and regulations and determine which of those,
if not observed, could have a direct and material effect on the fund accountability statement.

The auditors must:

 List all standard and program-specific provisions contained in the agreements that
cumulatively, if not observed, could have a direct and material effect on the fund
accountability statement;

 Assess the inherent and control risk that material noncompliance could occur for each
of the compliance requirements;

 Determine the nature, timing and extent of audit steps and procedures to test for
errors, fraud, and illegal acts that provide reasonable assurance of detecting both
intentional and unintentional instances of noncompliance with agreement terms and
applicable laws and regulations that could have a material effect on the fund
accountability statement;

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  Prepare a summary audit documentation file that adequately identifies each of the
specific compliance requirements included in the review, the results of the inherent,
control and (detection) risk assessments for each compliance requirement, the audit
steps used to test for compliance with each of the requirements based on the risk
assessment, and the results of the compliance testing for each requirement. The
summary document should be cross-indexed to detail audit documentation that
supports the facts and conclusions contained in the summary document.

2. Determine if payments have been made in accordance with agreement terms and applicable
laws and regulations.

3. Determine if funds have been expended for purposes not authorized or not in accordance with
applicable agreement terms. If so, the auditor must identify these cost as questioned cost in the
fund accountability statement.

4. Identify any costs not considered appropriate, classifying and explaining why these costs are
questioned.

5. Determine whether commodities, whether directly procured by the recipient or directly

procured by USAID for the recipient’s use, exist or were used for their intended purposes in
accordance with the terms of the agreements. Ensure that commodities are marked in
accordance with grant or contract requirements. If not, the cost of such commodities must be
questioned.

6. Determine whether any technical assistance and services, whether procured by the recipient or
directly procured by USAID for the recipient’s use, were used for their intended purposes in
accordance with the agreements. If not, the cost of such technical assistance and services must
be questioned.

7. Determine if the amount of cost sharing / matching funds was calculated and accounted for as
required by the agreements or applicable cost principles.

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 8. Determine if the cost sharing/matching funds were provided according to the terms of the
agreements and quantify any shortfalls.

9. Determine whether those who received services and benefits were eligible to receive them.

10. Determine whether the recipient's financial reports (including those on the status of cost
sharing contributions) and claims for advances and reimbursement contain information that is
supported by the books and records.

11. Determine whether the recipient held advances of USAID funds in interest-bearing accounts,
and whether the recipient remitted to USAID any interest earned on those advances, with the
exception of up to $500 a year that the recipient may retain for administrative expenses. If the
recipient was required to place USAID funds in an interest-bearing bank account but did not,
then the auditor should determine the amount of interest that was foregone by the recipient,
and this amount should be classified as ineligible costs.

Provide the title and describe the role in the audit firm for the person(s) responsible for compliance
with individual requirements of client’s funding. (text answer)

CA Rahul Jindal and CA Arvind Mongia are the partners of PKC and they both are responsible for USAID
audits individually. They cater to all audit and evidences and all other compliance requirements during
the audit. They ensure due care and diligence during audit and those representations from management
are obtained, wherever necessary.

Upload policies and procedures for quality control system, including policies related to performance
evaluation, compensation, and promotion related to demonstrating a commitment to quality control.
(File upload)

Upload any supporting documents demonstrating and communicating the quality control system, such
as training documents or newsletters. (File upload)

3. Acceptance and continuance of client relationships [Section 3]

Policies and procedures related to COMPETENCY when ACCEPTING engagements and CONTINUANCE of
client relationships.

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3.1 Acceptance of Client Relationship:
Describe your firm’s experience conducting audits following the U.S. Generally Accepted Government
Auditing Standards. (text answer)

The Annual financial statements are prepared by the management of the reporting entity and
require examination and audit by an Independent Audit Professional with an in-depth expertise
to verify the financial information from audit evidence and an assessment of Internal Financial
Controls such that the reliance on available audit evidence is duly assured. We provide the
audit services to assure that the financial statements are prepared in accordance with law and
are in compliance with applicable US GAGAS and GAAP and Accounting Standards, and further
reliable audit evidence along with Internal Financial Controls are in place and thus we follow an
integrated audit approach of immaculate examination of audit evidence and financial controls.

Apart from Annual Financial Statements, we provide our Audit services with respect to various
financial reports prepared by the management for various stakeholders like financial
Institutions, prospective investors like private equity funds, collaboration partners and other
stakeholders. We strictly follow the International Auditing Standards and Innovative Audit
practices, analytical tools and data analytics to arrive at the audit inferences to provide highest
level of audit assurance to our clients in International regulatory framework.

Apart from general audit reporting, we provide services of customized audit for our clients directed
towards specific areas of enquiry and audit findings. Certain financial Information may need to be
certified for submission to various authorities like tendering process and we provide those attestation
services.

The audit practices and procedures are constantly updated to be commensurate with ever changing
reporting environment and ecosystem of business to be up-to-date with international audit practices
and regulatory reporting framework. Our auditing services are directed towards realizing the business
goals through informed financial decisions based upon reliable and authenticated financial information
at the backdrop of proper audit evidence.

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We don’t perceive audit function as a historical exercise, for us audit is a tool directed towards
accelerated business growth by way of leveraging expeditious decision making in business. 

Describe your firm’s experience conducting audits following International Standards of

Auditing issued by the International Federation of Accountants (IFAC).

Attached

Describe how your firm ensures the audit work will be completed in a timely manner. (text
answer)

We believe and ensure timely completion of the audits through the following steps:

The auditor may perform tests of controls or substantive procedures at an interim date or at the period
end. The higher the risk of material misstatement, the more likely it is that the auditor may decide it is
more effective to perform substantive procedures nearer to, or at, the period end rather than at an
earlier date, or to perform audit procedures unannounced or at unpredictable times (for example,
performing audit procedures at selected locations on an unannounced basis). This is particularly relevant
when considering the response to the risks of fraud. For example, the auditor may conclude that, when
the risks of intentional misstatement or manipulation have been identified, audit procedures to extend
audit conclusions from interim date to the period end would not be effective.

On the other hand, performing audit procedures before the period end may assist the auditor in
identifying significant matters at an early stage of the audit, and consequently resolving them with the
assistance of management or developing an effective audit approach to address such matters.

In addition, certain audit procedures can be performed only at or after the period end, for example:

• Agreeing the financial statements to the accounting records;

• Examining adjustments made during the course of preparing the financial statements; and

• Procedures to respond to a risk that, at the period end, the entity may have entered into
improper sales contracts, or transactions may not have been finalized.

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Further relevant factors that influence the auditor’s consideration of when to perform audit procedures
include the following:

 The control environment.

 When relevant information is available.
 by subsequent creation of false sales agreements, the auditor may wish to examine
contracts available on the date of the period end).
 The period or date to which the audit evidence relates.

Upload the policies and procedures related to the acceptance of clients. (File upload)
Upload any documents demonstrating the firm's determination of competence,
capability, or resources when accepting a client's engagement. (File upload)

A. Engagement letter is attached for your reference.

3.2 Continuance of Client Relationship:

Describe policies and procedures that ensure your audit firm has sufficient competence,
capabilities, and resources for the continuance of client engagements and explain how
this meets professional standards. (text answer)

System of Quality Control

 Competence of personnel through their recruitment and formal training.
 Independence through the accumulation and communication of relevant independence
information.
 Maintenance of client relationships through acceptance and continuance systems.
 Adherence to regulatory and legal requirements through the monitoring process.

Leadership Responsibilities for Quality on Audits

The actions of the engagement partner and appropriate messages to the other members of the
engagement team, in taking responsibility for the overall quality on each audit engagement,
emphasizes:

1. The importance to audit quality of:

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 (i) Performing work that complies with professional standards and regulatory and legal
requirements;
(ii) Complying with the firm’s quality control policies and procedures as applicable;
(iii) Issuing auditor’s reports that are appropriate in the circumstances; and
(iv) The engagement team’s ability to raise concerns without fear of reprisals; and

2. The fact that quality is essential in performing audit engagements.

Describe other services provided to clients in addition to audit engagements and any
policies related to non-audit work for audit clients. (text answer)

The firm has been restrictive in terms of providing other services in addition to audit engagements as
the same could lead to compromise of integrity, objectivity and independence of the auditor. Similarly,
no non-audit work has been accepted.

Explain how your audit firm’s policies related to continued client engagements meet
professional standards. (text answer)

Our firm follows the below elements of a System of Quality Control.

Our system of quality control includes policies and procedures addressing each of the following
elements:

1. Leadership responsibilities for quality within the firm (the tone at the top): This is designed to
promote an internal culture based on the recognition that quality is essential in performing
engagements. Such policies and procedures should require the firm's (managing partner or
board of managing partners, CEO, or equivalent) to assume ultimate responsibility for the firm's
system of quality control.

2. Relevant ethical requirements: the firm has established policies and procedures designed to
provide it with reasonable assurance that the firm and its personnel comply with relevant
ethical requirements.

3. Acceptance and continuance of client relationships and specific engagements:

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 4. The firm has established policies and procedures for the acceptance and continuance of client
relationships and specific engagements, designed to provide the firm with reasonable assurance
that it will undertake or continue relationships and engagements basis that our firm:
 is competent to perform the engagement and has the capabilities, including time and
resources, to do so;
 an comply with legal and relevant ethical requirements; and
 has considered the integrity of the client and does not have information that would lead
it to conclude that the client lacks integrity.

5. Human resources

6. Engagement performance

7. Monitoring Policies and procedures established by the firm related to each element are
designed to achieve reasonable assurance with respect to the purpose of that element.

Upload policies and procedures that demonstrate the firm’s system in place to determine
that there exists competency, capability, and resources to continue a client’s
engagement. (Upload file)

4.1 Human Resources [Section 4]

Policies and procedures related to personnel capabilities, continuing professional education and
professional licensing.

Provide count of audit staff by position, certification, and education level. (text answer)

Describe your audit firm’s recruitment strategies and any training programs to develop
personnel competence. (text answer)

The firm should establish policies and procedures designed to provide it with reasonable assurance that
it has sufficient personnel with the capabilities, competence, and commitment to ethical principles
necessary to perform its engagements in accordance with professional standards and regulatory and
legal requirements, and to enable the firm or engagement partners to issue reports that are appropriate
in the circumstances. 37. Such policies and procedures address the following personnel issues:

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  Recruitment;
 Performance evaluation;
 Capabilities;
 Competence;
 Career development;
 Promotion;
 Compensation; and
 The estimation of personnel needs.

Addressing these issues enables the firm to ascertain the number and characteristics of the individuals
required for the firm’s engagements.

The firm’s recruitment processes include procedures that help the firm select individuals of integrity
with the capacity to develop the capabilities and competence necessary to perform the firm’s work.
Capabilities and competence are developed through a variety of methods, including the following:

• Professional education.
• Continuing professional development, including training.
• Work experience.
• Coaching by more experienced staff, for example, other members of the engagement team.

Describe your audit firm’s system of evaluating personnel. (text answer)

The firm establishes procedures to assess its staff’s capabilities and competence. The capabilities and
competence considered when assigning engagement teams, and in determining the level of supervision
required, include the following:

 An understanding of, and practical experience with, engagements of a similar nature and
complexity through appropriate training and participation.

 An understanding of professional standards and regulatory and legal requirements.

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  Appropriate technical knowledge, including knowledge of relevant information technology.

 Knowledge of relevant industries in which the clients operate.

 Ability to apply professional judgment.

 An understanding of the firm’s quality control policies and procedures.

Describe your audit firm’s policies and procedures on personnel competence,

capabilities, and commitment to professional ethics and explain how they meet
professional standards. (text answer)

Our policies include the following:

We have designed policies and procedures designed to provide it with reasonable assurance that it has
sufficient personnel with the competence, capabilities, and commitment to ethical principles necessary
to:
 Perform engagements in accordance with professional standards and applicable legal and
regulatory requirements; and

 Enable the firm or engagement partners to issue reports that are appropriate in the
circumstances.

Assignment of Engagement Teams

1. The firm should assign responsibility for each engagement to an engagement partner and should
establish policies and procedures requiring that a. the identity and role of the engagement
partner are communicated to management and those charged with governance;

2. the engagement partner has the appropriate competence, capabilities, and authority to perform
the role;

3. the responsibilities of the engagement partner are clearly defined and communicated to that
individual.

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Our firm’s performance evaluation, compensation and promotion procedures give due recognition and
reward to the development and maintenance of competence and commitment to ethical principles. In
particular, the firm:

 Makes personnel aware of the firm’s expectations regarding performance and ethical principles;

 Provides personnel with evaluation of, and counseling on, performance, progress and career
development; and

 Helps personnel understand that advancement to positions of greater responsibility depends,

among other things, upon performance quality and adherence to ethical principles, and that
failure to comply with the firm’s policies and procedures may result in disciplinary action.

Upload policies and procedures on personnel competence, capabilities, and commitment

to professional ethics. (File upload)

Describe your audit firm’s CPE requirements and explain how it meets professional
standards. (text answer)

Both responsible partners take proper training on Audits

Upload documents demonstrating your audit firm’s CPE program and monitoring
process. (File upload)

4.3 Professional Licensing

Describe your audit firm’s requirements for professional audit licensing and explain how
it meets professional standards. (text answer)

PK Chopra & Co. is registered under The Institute of Chartered Accountants of India. ICAI is the national
professional accounting body in India under the jurisdiction of Ministry of Corporate Affairs, govt. of
India. In India, every audit firm is required to be registered under this supreme accounting and auditing
body.
ICAI has laid down Standards on Auditing and mandates the compliance of accounting standards during
the conduct of audit. It clearly states that an audit should be conducted in accordance with standards on
auditing and other professional and legal requirements.

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Upload policies related to requiring professional audit licensing and documents
demonstrating monitoring and maintaining proper records to ensure required licensing
is met. (File upload)

5. Engagement Performance [Section 5] Policies and procedures that ensure high quality
engagements.

5.1 High quality engagements

Describe your understanding of the work to be performed under the USAID audit
requirements. (text answer)

We, as Auditors must design steps and procedures in accordance with GAGAS. A financial audit of the
funds provided by USAID must be performed in accordance with GAGAS, or other approved standards
where applicable, and accordingly includes such tests of the accounting records as deemed necessary
under the circumstances. The specific objectives of the audit of the USAID funds are to:

1. Express an opinion on whether the fund accountability statement for the USAID funded awards
presents fairly in all material respects in relation to the recipient’s financial statements as a
whole, and in revenues received, costs incurred, and commodities and technical assistance
directly procured by USAID for the period audited in conformity with the terms of the
agreements and generally accepted accounting principles.

2. Evaluate and obtain a sufficient understanding of the recipient's internal controls related to the
USAID-funded programs, assess control risk, and identify reportable conditions, including
material internal control weaknesses. This evaluation must include the internal controls related
to required cost-sharing contributions.

3. Perform tests to determine whether the recipient complied, in all material respects, with
agreement terms (including cost-sharing/matching contributions, if applicable) and applicable
laws and regulations related to USAID-funded programs. All material instances of
noncompliance and all illegal acts that have occurred or are likely to have occurred must be
identified. Such tests must include the compliance requirements related to any required cost-
sharing contributions.

In addition, if applicable:

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  Determine if the recipient has taken adequate corrective action on prior audit report
recommendations.

 Review cost-sharing/matching contributions to determine whether cost-sharing / matching

contributions were provided and accounted for by the recipient in accordance with the terms of
the agreements. The auditors will review the cost-sharing/matching table to determine if the
computation is fairly presented in accordance with the basis of accounting used by the recipient
to prepare the schedule. The auditors should question all cost-sharing/matching contributions
that are either ineligible or unsupported costs.

 Perform an audit of the indirect cost rate(s) if the recipient has been authorized to charge
indirect costs to USAID using provisional rates. If so, the fund accountability statement should
be reconciled to the USAID funds included in the general purpose financial statements by a note
to the fund accountability statement. If the recipient does not have a USAID authorized indirect
cost rate, this fact must be disclosed in the report.

 The audit of the general purpose financial statements must be performed in accordance with
GAGAS. The objective of this audit is to express an opinion on whether the general purpose
financial statements present fairly, in all material respects, the results of its operations for the
year then ended, in conformity with generally accepted accounting principles.

Describe your understanding of the reports required under USAID audit requirements.
(text answer)

The Auditor should submit to the cognizant USAID Operating Unit a portable document format (PDF)
copy of the audit report in English and a PDF copy of the report in the country’s official language, if
considered appropriate. The format and content of the audit reports should closely follow this
Statement of Work and the illustrative reports. The audit report must specify the correct award
number(s) of each award covered by the audit.

The report must contain:

1. Title page (close-out audits must be clearly titled),

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2. Table of contents,

3. Transmittal letter, and

4. Summary, which includes:

 Background section with:

i. A general description of the USAID programs audited,

ii. Period covered,

iii. Program objectives,

iv. Clear identification of all entities mentioned in the report,
v. Follow-up of prior audit recommendation section,
vi. Cost-sharing/matching contributions explanation,
vii. ndirect cost rate details;

 Objectives and scope of the financial audit and clear explanation of the procedures performed
and any scope limitations;

 Brief summary of audit results on the:

i. Fund accountability statement,
ii. Questionable costs,
iii. Internal control,
iv. Compliance with agreement terms and applicable laws,
v. Indirect cost rates,
vi. Status of prior audit recommendations, and if applicable,
vii. General purpose financial statements on an organization-wide basis;

 A brief summary of the results of the review of cost-sharing/matching contributions; and

 A brief summary of the recipient’s management comments regarding its view on the audit and
results and findings.

5. The auditor’s report includes the following:

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  The auditor's report on the Fund Accountability Statement, identifying any material questioned
costs not fully supported with adequate records or not eligible under the terms of the
agreements The report must be in conformance with the standards for reporting in GAGAS and
must include the auditor's opinion on whether the fund accountability statement presents fairly,
in all material respects, program revenues, costs incurred, and commodities and technical
assistance directly procured by USAID for the year then ended in accordance with the terms of
the agreements and in conformity with generally accepted accounting principles or other basis
of accounting as well as the following report components.

 A report on internal control including significant deficiencies and material weaknesses in the
recipient's internal control. Deficiencies related to improving operational or administrative
efficiency or internal control, or control deficiencies that are not significant deficiencies or
material weaknesses – may be communicated through a separate management letter that
should be sent with the audit report

 A report on the recipient's compliance with agreement terms and applicable laws and
regulations related to USAID-funded programs. Nonmaterial instances of noncompliance should
be communicated to the recipient in a separate management letter that should be sent with the
audit report. All questioned costs resulting from instances of noncompliance must be included
as findings in the report on compliance

 A report and a table on the cost-sharing/matching contributions identifying the budgeted

amounts required by the agreements; any cost-sharing/matching contribution shortfalls; and
notes to the cost sharing/matching contributions providing an explanation on the basis for
questioned costs and shortfalls, if applicable. The notes must be cross-referenced to the
corresponding findings, if the questioned costs are material, in the report on compliance e. A
report on the audit of the indirect cost rate(s), if the recipient has been authorized to charge
indirect costs to USAID using provisional rates and USAID has not yet negotiated final rates

Firms are expected to exercise independent professional judgment throughout the audit engagement,
including in reporting on questioned costs. Findings that involve monetary effect must:

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 1. Be quantified and included as questioned costs in the fund accountability statement, the
Auditor’s Report on Compliance, and cost sharing/matching contributions schedule (cross-
referenced) if applicable.

2. Be reported without regard to whether the conditions giving rise to them were corrected.

3. Be reported whether the recipient does or does not agree with the findings or questioned costs.

4. Contain enough relevant information to expedite the audit resolution process (e.g., number of
items tested, size of the universe, error rate, corresponding U.S. dollar amounts, etc.).

The reports must also contain, after each recommendation, pertinent views of responsible recipient
officials concerning the auditor's findings and actions taken by the recipient to implement the
recommendations. If possible, the auditor should obtain written comments. When the auditors disagree
with management comments opposing the findings, conclusions or recommendations, they must
explain their reasons following the comments. Conversely, the auditors should modify their report if
they find the comments valid.

Any evidence of fraud or illegal acts that have occurred, or are likely to have occurred, must be included
in a separate written report if deemed necessary by USAID. This report must include an identification of
all questioned costs as a result of fraud or illegal acts, without regard to whether the conditions giving
rise to the questioned costs have been corrected or whether the recipient does or does not agree with
the findings and questioned costs.

Describe policies and procedures related to the supervision of the team during an
engagement and explain how the policies meet professional standards. (text answer)

FUNDAMENTAL REQUIREMENTS

Responsibility of the Engagement Partner for Supervision

The audit partner is responsible for an audit engagement team and its performance. Thus, the
engagement partner is responsible for the proper supervision of the work of the engagement team
members, and for compliance with PCAOB standards. This includes standards such as using the work of
specialists, other auditors, internal auditors, and others involved in testing controls.

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The engagement partner may obtain assistance from the engagement team members in fulfilling the
responsibilities stated by this standard. Those team members who assist the engagement partner with
supervision of the work performed by other engagement team members should comply with the
applicable requirements of this standard.

Supervision of Engagement Team Members

The engagement partner and those other engagement team members who perform supervisory
activities should do the following:

 Inform the engagement team members of their responsibilities, including the objectives, nature,
timing, and extent of the procedures to be performed, as well as matters that could affect the
procedures to be performed or the evaluation of the results of those procedures. These matters
could include relevant aspects of the company, its environment, and its internal control over
financial reporting, and possible accounting and auditing issues.

 Direct the engagement team to bring significant accounting and auditing issues to the attention
of the engagement partner or other team members performing supervisory activities, so they
can evaluate the issues and ensure that appropriate actions are taken in accordance with PCAOB
standards.
 Review the work of the engagement team members to determine whether the work was
performed and documented, objectives were achieved, and the results of the work support the
conclusions reached.

The engagement partner and those other engagement team members who perform supervisory
activities should take the following issues into account when determining the extent of supervision
needed:

 The nature of the company, which includes its size and complexity
 The nature of the assigned work for each team member, including the procedures to be
performed, and the controls or accounts and disclosures to be tested
 The risks of material misstatement
 The knowledge, skill, and ability of each team member

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Upload policies and procedures related to the supervision from engagement partners
with the team during an engagement. (File upload)

Provide the report from the most recent external engagement quality control reviewer,
such as a peer review from another independent audit firm, audit regulatory body or
public accounting organization. (File upload)

Provide the status of any findings or recommendations from most recent external
engagement quality control reviewer. (text answer)

There are no significant findings or recommendations as such from most recent external engagement
quality control review.

5.2 Timeliness of completing engagement and report.

Describe your audit firm process for setting out the nature, timing, and extent of an
engagement quality control review and explain how the process ensures the completion
of a timely audit report. (text answer)

The entity's timetable for reporting, such as at interim and final stages.

The organization of meetings with management and those charged with governance to discuss the
nature, timing and extent of the audit work.

1. The discussion with management and those charged with governance regarding the expected
type and timing of reports to be issued and other communications, both written and oral,
including the auditor’s report, management letters and communications to those charged with
governance.

2. The discussion with management regarding the expected communications on the status of audit
work throughout the engagement.

3. Communication with auditors of components regarding the expected types and timing of
reports to be issued and other communications in connection with the audit of components.

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 4. The expected nature and timing of communications among engagement team members,
including the nature and timing of team meetings and timing of the review of work performed.

5. Whether there are any other expected communications with third parties, including any
statutory or contractual reporting responsibilities arising from the audit

How are quality risks identified, assessed, and addressed during an audit in process?
(text answer)

The auditor shall identify and assess the risks of material misstatement at:
1. the financial statement level; and

2. the assertion level for classes of transactions, account balances, and disclosures, to provide a
basis for designing and performing further audit procedures.

Upload policies and procedures related to the estimation and tracking of engagement
quality control reviews and audit deadlines. (File upload)

6. Monitoring [Section 6]

6.1 Monitoring process of quality control

Describe your audit firm’s internal ongoing audit monitoring process and explain how it
meets professional standards. (text answer)

Monitoring is a crucial step to be followed by the firm, it should establish P&P to ensure that the tasks
performed by engagement team are:

 Relevant
 Operating Effectively and
 Complied with in practice by firm & its personnel.

Ongoing consideration and evaluation of the system of QC includes matters such as:

 Analysis of new developments in professional standards

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  Determination of corrective actions to be taken and improvements to be made.
 Communication to appropriate firm personnel of weaknesses identified in the system.
 Follow-up by appropriate personnel of the firm to make sure the modifications are made in the
QC.

Provide the title and role of the personnel responsible for the ongoing and periodic
monitoring. (text answer)

Upload policies and procedures on monitoring the quality control system. (File upload)

Upload any documents that demonstrate quality control inspections. (File upload)

6.2 Quality control deficiencies

Describe policies and procedures for responding to deficiencies discovered and explain
how it meets professional standards. (text answer)

 Develop and document all of its significant business processes

 Make the policies and procedures available to all personnel
 Ensure they are accurate, complete, and current at all times.
 Revise policies and procedures for changes in business processes and policies.
 This is particularly important when new systems are developed and implemented or
other organizational changes occur.
 Communicate significant changes to all affected personnel immediately to ensure they
are aware of any revisions to their daily duties and responsibilities.
 In the event that there are changes in personnel (i.e. new employees are hired,
promotions granted, etc.), documented policies and procedures will facilitate training
and provide guidelines for the respective positions.

Policies and Procedures

The auditor must evaluate the severity of each control deficiency that comes to his or her attention to
determine whether the deficiencies, individually or in combination, are material weaknesses as of the
date of management's assessment. In planning and performing the audit, however, the auditor is not

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required to search for deficiencies that, individually or in combination, are less severe than a material
weakness.

The severity of a deficiency depends on -

 Whether there is a reasonable possibility that the company's controls will fail to prevent or
detect a misstatement of an account balance or disclosure; and

 The magnitude of the potential misstatement resulting from the deficiency or deficiencies.

The severity of a deficiency does not depend on whether a misstatement actually has occurred but
rather on whether there is a reasonable possibility that the company's controls will fail to prevent or
detect a misstatement.

Risk factors affect whether there is a reasonable possibility that a deficiency, or a combination of
deficiencies, will result in a misstatement of an account balance or disclosure. The factors include, but
are not limited to, the following -

 The nature of the financial statement accounts, disclosures, and assertions involved;

 The susceptibility of the related asset or liability to loss or fraud;

 The subjectivity, complexity, or extent of judgment required to determine the amount involved;

 The interaction or relationship of the control with other controls, including whether they are
interdependent or redundant;

 The interaction of the deficiencies; and

 The possible future consequences of the deficiency.

Factors that affect the magnitude of the misstatement that might result from a deficiency or deficiencies
in controls include, but are not limited to, the following -

 The financial statement amounts or total of transactions exposed to the deficiency; and

 The volume of activity in the account balance or class of transactions exposed to the deficiency
that has occurred in the current period or that is expected in future periods.

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In evaluating the magnitude of the potential misstatement, the maximum amount that an account
balance or total of transactions can be overstated is generally the recorded amount, while
understatements could be larger. Also, in many cases, the probability of a small misstatement will be
greater than the probability of a large misstatement.

The auditor should evaluate the effect of compensating controls when determining whether a control
deficiency or combination of deficiencies is a material weakness. To have a mitigating effect, the
compensating control should operate at a level of precision that would prevent or detect a
misstatement that could be material.

Describe your audit firm’s process for responding to findings arising from the quality
control system monitoring. (text answer)

The firm communicates at least annually

 deficiencies noted as a result of the monitoring process and recommendations for appropriate
remedial action to relevant engagement partners and other appropriate personnel.

 Preparing a summary monitoring report for the firm’s senior management that evaluates the
overall results of the inspection and other monitoring procedures and reaches final conclusions
regarding whether the firm as a whole need to improve compliance with the firm’s policies and
procedures and whether revisions to the firm’s quality control policies and procedures are
necessary.

 Communicating findings to practice office personnel and determining the corrective actions to
be taken for the engagements reviewed. These findings are discussed and communicated in a
report issued to each office. The practice office responds regarding the specific corrective
actions or steps to be taken to improve compliance with the firm’s policies and procedures and
professional standards.

 Following up on planned corrective actions to determine whether those actions were taken and
whether they achieved the intended objective(s).

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  Communicating in partner-manager meetings and firm policy correspondence the need for
changes in the system of quality control.

 Communicating in training programs, partner-manager meetings, and firm policy

correspondence the need for improved compliance with the system of quality control.

Explain how your audit firm would investigate the root cause of identified deficiencies
and evaluate the severity and pervasiveness of the identified deficiencies. (text answer)

We, at PKC follow the below process:

1. Assessing the Severity of the Control Deficiency

2. Evaluating Findings and Identifying Deficiencies

The firm should evaluate findings to determine whether deficiencies exist, including in the monitoring
and remediation process.

Evaluating Identified Deficiencies

 The firm should evaluate the severity and pervasiveness of identified deficiencies by
investigating the root cause(s) of the identified deficiencies.

In determining the nature, timing and extent of the procedures to investigate the root cause(s), the firm
shall take into account the nature of the identified deficiencies and their possible severity.

 Evaluating the effect of the identified deficiencies, individually and in aggregate, on the system
of quality management.

Upload documents, policies, and procedures that demonstrate deficiencies discovered

from the monitoring process are noted, evaluated, communicated, and appropriate action
is taken. (File upload)

Declarations: I, [audit firm name], by completing this questionnaire make the following
declaration. [Section 9 of 9]

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1. I understand inclusion on the USAID List of Audit Firms is not a contract and does
not guarantee audit work.

2. I certify that the information provided is true, complete, and accurate to the best of
my knowledge. I am aware that any false, fictitious, or fraudulent information may subject
me to criminal, civil, or administrative penalties. (U.S. Code, Title 18, Section 1001)

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