The Procedures of Issuing Audit Report

Introduction
1

• Audit
• Auditing
• Why Audit is Important
• Need for Audit
• Result of Audit report of Sonali Bank
Limited
.
 Objectives of the study

The main objective of the study is to analyze the procedure of issuing the audit

report of Sonali Bank Ltd. The specific objectives are given below

Specific Objectives
1. To know about the overall audit procedures used in gathering audit evidence.
2. To know about the audit engagement procedure occurred with the audit firm.
3. To know about the client acceptance procedure for an audit engagement.
4. To know why an audit should be well planned.
5. To know about planning of the audit.
6. To know about testing and evidence of the audit.
7. To know how to prepare audit report.
 Limitations of the Study

At the time of preparing this report we have some limitations that are
pertinent to the study mentioned below: -
1. Lack of sufficient knowledge regarding process of issuing audit report.
2. Lack of previous experience and expertise.
3. Lack of sufficient data.
 Methodology

In order to complete the report, various methods of collecting data are needed to be adopted.
To increase the efficiency of the research, different methods of collecting data in different
researches are used. The methods, tools and techniques that are in this research are explained
below-
 
•Data Type
There are two types of data that can be collected. They are quantitative data and qualitative
data.  

•Data Collection
This report is prepared based on data that are collected directly from the internet.
 Discussion

Audit:
Audit is an exploratory, critical review of the underlying internal controls and accounting records of a business
enterprise.
Auditing:
A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic
actions and events to ascertain the degree of correspondence between those assertions and established criteria
and communicating the results to interested users.
Benefits of Audit
• Provide reliability
• Enhance Quality
• Provide assurance
Role of Audit
• Test the evidence
• Provide independent review
 Audit Procedures

1. Client Acceptance Phase:

•The objective of client acceptance involves the examination of the proposed client to determine if
there is any reason to reject the engagement (acceptance OF the client) and convincing the client to
hire the auditor (acceptance BY the client)
1. Evaluate the client’s background;
2. Determine whether the auditor is able to meet the ethical requirements regarding the client;
3. Communicate with the previous auditor;
4. Determine need for other experts;
5. Select staff to perform the audit and;
6. Obtain an engagement letter.
 Audit Procedures

2. Audit Planning Phase

•Planning an audit involves establishing the overall audit strategy for the engagement and developing
an audit plan. The audit strategy is a record of the key decisions considered necessary to properly plan
the audit and communicate significant matters to the engagement team.

1.Perform audit procedures to understand the entity and its environment, including the entity’s internal
control.
2.Assess the risks of material misstatements of the financial statements.
3.Determine materiality.
4.Prepare the planning memorandum and audit program containing the auditor’s response to the
identified risks.
 Audit Procedures

3. Testing and Evidence and Internal Control phase:

1. Tests of controls;
2. Substantive tests of transactions;
3. Analytical procedures;
4. Tests of details of balances.
5. Search for unrecorded liabilities.
 Audit Procedures

3. Testing and Evidence and Internal Control phase:

•Internal Control: Internal control is the process designed and effected by those charged with
governance, management, and other personnel to provider reasonable assurance about the
achievement of the entity’s objectives with regard to reliability of financial reporting, effectiveness
and efficiency of operations and compliance with applicable laws and regulations.
•Components of Internal Control
1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
 Audit Procedures

3. Testing and Evidence and Internal Control phase:

The audit evidence gathered by us was documented and organized to support our findings and
conclusions. Finally, when we were enforced to believe that sufficient audit evidence cannot be
obtained, we then could disclose this fact as a scope limitation within the audit report.
1. Tests of controls: Performed to obtain audit evidence about the effectiveness of controls in
preventing or detecting and correcting material misstatements at the assertion level.
2. Substantive procedures: Audit procedures performed to detect material misstatements at the
assertion level. They include:
 Tests of detail of classes of transactions, account balances and disclosures.
 Substantive analytical procedures.
 Evaluation and judgement phase:

Quality of Evidence
 External: Audit evidence from external sources is more reliable than that obtained from the
entity's records
 Auditor: Evidence obtained directly by auditors is more reliable than that obtained indirectly or
by inference
 Entity: Evidence obtained from the entity's records is more reliable when related control systems
operate effectively
 Written: Evidence in the form of documents (paper or electronic) or written representations are
more reliable than oral representations
 Originals: Original documents are more reliable than photocopies, or facsimiles
 Evaluation and judgement phase:

•Elements of an Audit Report:

•The audit report should include the following basic elements, usually in the following layout:
• Title
• Addressee
• Introductory paragraph
• Scope paragraph,
• Opinion paragraph
• Date of the report
• Auditor's address
• Auditor's signature
 Types of Audit Report:

There are five types of audit report opinion. The details about these opinions are given
below-
•Standard unqualified
•Unqualified report with explanatory paragraph
•Qualified Audit report or Opinion
•Adverse Audit Report or Opinion
• Disclaimer of Audit Report or Opinion:
 An Audit Report of Sonali Bank Limited

1. Opinion
TRUE AND FAIR VIEW is one of the most prominent principles of auditing. It
suggests that an enterprise should provide a true and fair view about its financial
conditions and operating results.

2. Basis for Opinion

• Accordance with ISA
• Independent responsibility
• Follow the code of ethics for auditor
 An Audit Report of Sonali Bank Limited

3. Managements responsibility
4. Auditor’s responsibility
 Findings

1. Auditing is an organized and systematic process.

2. From Pre-Engagement to Reporting, all auditing process steps need to be maintained step
by step.
3. In Pre-Engagement meeting a total framework of audit process needs to be drawn.
4. Good communication must exist between the audit team members and audit committee, the
organization being audited.
5. Audit Risk must be assessed properly - important to meet the audit standards concerning errors,
irregularities and illegal acts.
6. The auditor gives his opinion true and fair view.
 Conclusion

Audit is a n exploratory, critical review of the underlying internal controls and accounting records of a
business enterprise. Audit is independent examination of financial info of an entity, whether profit
oriented or not & irrespective of its size or legal form when such an examination is conducted with a
view to expressing an opinion thereon. The main purpose of auditing is to determine the degree of
correspondence between that which is being studied and established criteria (GAAP for financial audit).
The engaged audit firm always try to follow the rules and laws related with this. They always try to
draw a reasonable opinion on their observed evidences.
Thank
You