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Audit engagement process: The entry conference Field audit process Developing audit question

Objective of this session is to test the understanding of the participants with reference to the previous Theory Session which covered the following:. Audit engagement process: The entry conference Field audit process Developing audit question Developing the audit programme

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Audit engagement process: The entry conference Field audit process Developing audit question

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  1. Objective of this session is to test the understanding of the participants with reference to the previous Theory Session which covered the following: • Audit engagement process: The entry conferenceField audit process • Developing audit question • Developing the audit programme • Audit programme in the context of audit jurisdiction • Audit approaches • Level of details in the audit programme • Audit test programmes • Study & evaluation of internal controls • Lessons learnt from sensitivity to error • Developing recommendations

  2. IMPLEMENTING THE PERFORMANCE AUDIT PLAN FOR THE SELECTED SUBJECT Q1.What steps are to be taken to implement the PERFORMANCE AUDIT plan?

  3. IMPLEMENTING THE PERFORMANCE AUDIT PLAN FOR THE SELECTED SUBJECT Solution:1 (i)  Entry conference to establish contact with higher officer of the entity, to satisfy their co-operation for easy access to research, their offices and obtaining information. (Not done on MAT) (ii) audit questionnaire in the form of “issue analysis” and “study design matrix”.

  4. IMPLEMENTING THE PERFORMANCE AUDIT PLAN FOR THE SELECTED SUBJECT (iii) adopt a suitable audit approach for a)   analysis of procedure b)   use of existing data c)   analysis of results d)   case studies e)   survey f)   quantitative analysis (iv) midterm appraisal to ensure the audit programme and technology remaining appropriate. (v) optimum utilisation of resources available

  5. IMPLEMENTING THE PERFORMANCE AUDIT PLAN FOR THE SELECTED SUBJECT (vi) Auditor has to use the internal control mechanism as an important tool in p.a. (vii) developing findings relating to audit observations to audit criteria are based on analysis of information collected during audit. (viii) developing recommendations

  6. IMPLEMENTING THE PERFORMANCE AUDIT PLAN FOR THE SELECTED SUBJECT Q.4. Prepare an analysis Matrix on the Audit objectives in relation to MAT?

  7. Audit Objective Analysis Matrix with reference to MAT Theme/Segment 1 Audit Objective 1.1 Sub-Audit Objective 1.1.1 Sub-Audit Objective 1.1.2 Sub-Audit Objective 1.1.3 1 Purpose of introduction of MAT was to mobilize tax resources by bring in the hitherto zero tax / marginal tax companies to the tax net 1.1 To see whether Zero tax companies have been brought to tax net 1.1.1 how many zero tax companies existed prior to the scheme 1.1.2 how many of these companies have been assessed under the scheme 1.1.3 how many of these companies continued to be out of the tax net despite introduction of the scheme 2.1 to see whether all the provisions of the MAT have been complied with 2.1.1 whether additions as enumerated in the MAT provisions have been made. 2.1.2 whether inadmissible adjustments claimed by the assesses has been disallowed 2.1.3 whether assesses’ attempts deflate book profits have been detected and curbed 2. To ensure compliance to the provisions of MAT 3. To ensure adherence to provisions of the Companies Act while the drawing up the Profit and loss account 3.1 to see whether the provisions of the Companies Act have been observed 3.1.1 whether depreciation has been properly claimed 3.1.2 whether depreciation as per books has been inflate by various means such as revaluation of assets, change in method of depreciation 3.1.3 whether provisions for unascertained liabilities claimed by the assesses have been disallowed

  8. IMPLEMENTING THE PERFORMANCE AUDIT PLAN FOR THE SELECTED SUBJECT Q.5. Prepare a Matrix on Audit examination with reference to MAT?

  9. Audit examination Matrix Audit objective Criteria Evidence Sources of evidence Data gathering methods Data analysis method Audit objective AO-1 AO-1-C1. The hither to zero tax companies have been brought to tax AO-1.C1-E1 Assessment orders AO-1.C1-E2 Financial statements Assessment records Audit Scrutiny Comparative Sub audit objective AO-1.1 AO-1.1-C1 Database of zero tax assesses Database with the department Database Correspondence Sub audit objective AO-1.2 AO-1.1-C1 Database of zero tax assesses Database with the department Database Correspondence Sub audit objective AO-1.3 AO-1.1-C1 Database of zero tax assesses Database with the department Database Correspondence 2.1,2.1.1, 2.1.2 & 2.1.3 Assessment orders Financial statements Assessment records Audit scrutiny Scrutiny

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