Audit Engagement

 Refers to audit that auditor performs.

 Initial stage of audit where he accepts offer and tells about his
understanding of what the purpose of audit is, etc.
 Audit programme - Detailed plan of how the audit is to be
performed, specifying the procedures to be followed
 Written plan containing exact details with regard to conduct of
a particular audit, serves as guide in arranging and distributing
audit work.
 Audit working papers- record of planning and execution, retain
it for each year, current years is current working papers, WP
related to more than 1 year are kept separately as permanent
WP.
 Audit note book – a bound book, large variety matters
observed during course of audit are recorded, permanent
record, great evidential tool.
 Audit Risk – inherent ( suspectibility of a acc bal or class of
transactions ) control ( risk that misstatements could occur in
account balance ) detection ( risk that an auditor’s substantive
procedures will not detect misstatements )
 Audit evidence – Auditor come across various assertions,
Evaluate all of it and express his opinion, evaluation can be
made in light of facts and these facts and reasons are audit
evidence.
 He must obtain sufficient audit evidence.
 Audit report – preliminary work audit, conduct of actual audit,
conclusion of audit which means submission of audit report.


Internal Check And Internal Audit

 Internal Check = Number of steps in acc transactions like

posting recording etc, involves various no of staffs, thus
continuous internal audit is carried on by staff itself =, work of
1 indiv is checked by the other staff, it is valuable part of
internal control.
 Internal control questionnaires = evaluation of internal check
system is of great concern both to the auditor as well as
internal auditor, due to limitation of time he has to decide the
 extent of in depth audit of many areas, particularly checking
and verification of routine aspects of FS.
 Surprise Check- All audit procedures are applied not in general
routine, but are spontaneous in nature and are performed
without prior notice, ( features of it = spontaneous, random
selection of items, helps assure maintenance of up to date acc,
performed in situations facing weak internal controls.)
 Cut off procedures – periods usually coincide with calendar
months lead to need for specific demarcation between
transactions forming part of 1 period from those included in
the following period, cut off procedures are adopted to
allocate revenues and costs to the proper accounting period.
 Examination in depth = fixation of mac tolerable error,
selecting a few transactions, verification of those selected
transactions.
 Internal control = comprises all the method and procedures
adopted to assist in achieving objectives of efficient conduct of
business, ensure adherence to management policies,
safeguarding assets, etc.
 Internal audit = independent appraisal activity within the
organisation for review of financial accounting and other
operations done as a ba sis of service to the management.