advanced audit & assurance –

ADVANCED AUDIT &ASSURANCE –

EXAM SPECIFIC SEMINARSummer 2012

BY: HASNAIN R. BADAMI06 MAY 2012

AGENDA OF TODAYS’ SEMINAR

Introduction Analysis of the past five ICAP papers Broad Key Areas Audit Risk and Business Risk How to deal with ‘Ethics Questions’ How to deal with ‘Reporting Questions’

Use of ‘Open Book’ & Practice Materials Question and Answer Session

Time: 2.0 – 2.5 hours

INTRODUCTION

ANALYSIS OF PAST 5 ATTEMPTS

AUDIT RISK AND BUSINESS RISK

Audit Risk– Definition– How can possibly an audit risk arise?

• Error• Fraud

– Drafting Audit Risk

AUDIT RISK AND BUSINESS RISK

Business Risk– Financial, Operational and Compliance

Risk– Drafting Business Risk

LINKING

BOTH THE

RISKS

ADDRESSING THEAUDIT RISK

AUDIT RISK AND BUSINESS RISK

Five rules for drafting an appropriateaudit procedure– Don’t be vague, use a proper verb!– What exactly you did in the procedure?– Must be addressing the risk!– Prioritize !– Practice !

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PRACTICE QUESTION

ETHICS AND QUALITYCONTROL CONSIDERATIONS

HANDLING ETHICS & QC QUESTIONS

Rules to answer ethics questions

Relate the threats to the fundamentalprinciples, where possible Relate to local laws, where possible Justify the threats! Amend and Justify your safeguards Think for other implications in the scenario!

HANDLING ETHICS & QC QUESTIONS

Important areas of Code of Ethics: Independence (Link with ISQC requirements

on ethics) Confidentiality Fee and related matters Professional appointments (Link with ISQC

– client acceptance) Ethical conflicts

HANDLING ETHICS & QC QUESTIONS

Important areas of Quality Control

Client acceptance and continuancerequirements

Engagement performance

PRACTICE QUESTION

DEALING WITHREPORTING QUESTIONS

REPORTING QUESTIONS - Guidelines

State specific non-compliance; Explain the correct treatment as per the criteria; Any other implication? Assess materiality to compare with the PM Effects on the audit report; If immaterial, consider with other misstatements

whether it becomes material or not; If immaterial, it should be noted in schedule of

individually immaterial misstatements ; Report to BL / ML if not in AR.

PRACTICE QUESTION

HOW TO MAKE USE OF‘OPEN BOOK’

OPEN BOOK STRATEGY

Lets consider ISA 550 “Related Parties”– Understand the objectives underlying this ISA.– Only paragraph 8 can be capitalized in case of open book,

which require listing of audit procedures to identifycompleteness of related parties.

– Other requirements require practical application. E.g.paragraph 11 which discusses indications of existences ofpreviously unidentified related parties.

“transactions processed in unusual manner”.– Requirements of IAS 24. Most important is the definition and

disclosures. Link with fraud.– CCG clauses and changes in the review report of CCG.– Relevant sections of Companies Ordinance, 1984 including

section 3, 195 and 208.

PREPARATIONMATERIAL

TECHNICAL RELEASES- REVISED 2012

QUESTIONS?