auditing in bangladesh

AUDITING: THE MOST RELIABLE ECONOMIC GUARD

INTRODUCTION

In today’s society the exercise of an auditor’s to the economic and ethical leadership sets

the bounding standard or in other words equips an auditor in such a way that recognizes

him as a reliable body. With the growing conscious recognition of the importance of

financial data in the ordering of everyday business and economic life, the need of basic

economic facts is providing a constantly enlarging opportunity for the accounting

profession. The auditors' reports have an especial capacity to fulfill the need for reliable and

authoritative financial material not only because of the reputation or prestige of the

certified statements, but also because of the significance generally attached by the business

man to the functions of the auditor and his reports. These functions, and the scope of these

reports, have in the past been definitely related to the character of and changes in business

activity.

Audits and reviews are basically procedures performed on the financial statements of a

company, for the purpose of determining whether the financial statements include any

material misstatements. Misstatements are essentially wrong numbers due to numerical

errors, fraud, or errors in interpreting the accounting rules. Misstatements are material if

they are large enough to make a difference to a user of the financial statements, such as a

bank or investor. And the person who involved in auditing is known as auditor. It also

provides the techniques necessary to examine the internal control system of a company and

perform operational or compliance audits by internal or external auditors.

The early conceptions of the functions of the auditor were such as to confine him to the

duties of a mere checker and verifier of debits and credits. As business became more

complex in its interrelationships there has been a compensating broadening demand for the

acceptance of new and formerly unrecognized responsibilities by the auditor. This has

progressed so far that the highest type of auditor is looked upon today as a financial expert.

The premises upon which most audits are predicated, however, are still largely those of the

checker-verifier. Recent economic trends have accentuated the new conceptions and

INTRODUCTION TO AUDITING | ACT 341

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demands upon the auditor. The control of business enterprises within and among

themselves has emphasized the importance of the budgetary and managerial aspects of the

accountants' reports in enabling business units to coordinate their internal and external

activities in the scheme of the economic plan.

Thus the word “audit” is derived from the Latin word ‘audire” which means “to hear”. In

olden times, whenever the owners of a business suspected fraud, they appointed certain

persons to check the accounts. Such persons sent for the accountants and “heard” whatever

they had to say connection with the accounts. It was an Italian, Luca Paciaio, who first

published his treatise on double entry system of book-keeping for the first time in 1494. He

mentioned and described the duties and responsibilities of an auditor, since then; there

have been lot of changes in the scope and definition of audit and the duties and

responsibilities of an auditor.

Spicer and Pegler , have defined Audit as “such as examination of the books, accounts and

vouchers of a business, as will enable the auditor to satisfy himself that the balance sheet is

properly drawn up, so as to give a true and fair view of the state of the affairs of the

business, and whether the profit and Loss account gives a true and fair view of profit or loss

for the financial period, according to the best of his information and the explanations given

to him and as shown by the books and if not, in what respect he is not satisfied.”

F.R.M. De Paula, an English authority on auditing literature, describes auditing as “ the

examination of a balance sheet and Profit and Loss account prepared by others, together

with the books, accounts, and vouchers relating thereto in such a manner that manner that

auditor may be able to satisfy himself and honestly report that, in his opinion, such balance

sheet properly drawn up so as to exhibit a true and correct view of the state of affairs to the

particular concern according to the information and explanations given to him, and as

shown by the books”. He further continues that an “audit of a balance sheet involves the

verification of the profit and loss account, as the balance of that account must be included

in some form or other in the former”.


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HISTORY OF AUDITING

The complicated evolution of auditing has been changing throughout the historical changes.

Thus the practice of auditing have always had a dramatic shift of change to cope with the

needs of everyday business environment. Auditing has been around since the beginning of

human civilization, focusing mainly, at first, on finding fraud. As the United States grew, the

business world grew, and auditing began to play more important roles. In the late 1800’s

and early 1900’s, people began to invest money into large corporations. The Stock Market

crash of 1929 and various scandals made auditors realize that their roles in society were

very important. Scandals and stock market crashes made auditors aware of deficiencies in

auditing, and the auditing community was always quick to fix those deficiencies. The

auditors’ job became more difficult as the accounting principles changed, and became easier

with the use of internal controls. These controls introduced the need for testing; not an in-

depth detailed audit. Auditing jobs would have to change to meet the changing business

world. The invention of computers impacted the auditors’ world by making their job at

times easier and at times making their job more difficult.

The practice of auditing has been in the human society since its beginning. Auditing was

used mostly for the detection of fraud and was done through extensive detailed

examination from ancient times until the late nineteenth century. Fraud was a great

concern during the early history of auditing, because internal controls were not used or not

used effectively until the twentieth century. To protect the public, the British Companies Act

of 1844 provided for mandatory audits. Soon afterward, in 1853, organizations of chartered

accountants were formed in Scotland. The same industrial revolution was occurring across

the Atlantic in the United States. By the late nineteenth century, British auditors were being

sent to audit American companies. Thus it was the British who built the infrastructure for

professional auditing in the United States.


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The late nineteenth century was a turning point in auditing history, when laws like the

English Companies Act of 1862 were enacted. “The English Companies Act of 1862 was a

general acceptance of the need for an independent review of accounts for both large and

small enterprises (Lee, 1988).” This Act of 1862 showed that there was a great demand for

specialized-trained professionals to perform these reviews reliably and independently.

The Late 1800’s to Early 1900’sDuring this era a lot of items were omitted from the records were overlooked by the

auditors, and the result was an auditing profession that was viewed by outsiders as more

clerical than professional. Auditing of the late nineteenth century involved a complete

review of transactions and the preparation of the corrected accounts and financial

statements. This was obviously an inefficient and expensive way to perform an audit.

England and the United States saw the need to make an audit more efficient and less

expensive. Around 1895, the technique of sampling emerged. The audits of the late 1800s

and early 1900s were largely devoted to the accuracy of bookkeeping detail. In most cases,

all vouchers were examined and all footings verified. Hence, items omitted from the records

were overlooked by the auditors, and the result was an auditing profession that was viewed

by outsiders as more clerical than professional.

In the late 1890’s, therefore the main objectives of auditing were the detection/prevention

of fraud and the detection/prevention of errors. Auditing in the United States began to

branch from the heavy influences of Britain in the 1900’s. The main objectives of auditing in

the United States were to obtain accurate financial conditions and earnings of an enterprise

and secondly to detect fraud and errors. Auditors in the early 1900’s were primarily used to

submit a certified balance sheet to banks to obtain credit. Bankers were no longer loaning

money based on good character, but now focused on the definite knowledge of the financial

affairs of the borrowers. Large life insurance companies also began using independent

public accountants to certify published statements since the Hughes investigation of 1905.

The improvement of accounting practices and standards were the main concerns of the

accounting community in the early 1900’s. Any deviation from the Interstate Commerce Act

was forbidden and punishable. The business world also began to feel the need for


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improvement of accounting principles when the businessmen’s pocketbooks were being

squeezed during the World War I era. Income taxes before World War I were at such a low

rate that they had no or little effect on the accounting practices of the business world. In

1917 and 1918, the U.S. Government significantly increased income taxes and a new tax was

enacted that was a heavy graduated excess profits tax. These taxes made the business world

see the need for improvement of accounting principles and the need for accountants to

mitigate the increase in taxes. Public accountants were now commonly called on for

financial advice and tax planning guidance. This led to periodical auditing of the companies’

accounts.

Between the 1920’s and the 1930’sWhen auditors and business managers learned about internal controls, they were able to

evaluate an entity’s controls. Through this evaluation, they can do less detailed testing if the

controls are strong, strong controls will save time and money. After the Stock Market Crash

of 1929, the government saw the need for more standards and audits. They were needed to

keep businesses and publicly traded securities to stay uniform and truthful with respect to

their financial condition.

In 1930’s, the Securities and Exchange Commission had rigorous control of public utility

holding companies and this would result in a very important accounting provision. The

Public Utility Act of 1935 specified the prevention of the payment of dividends out of capital

or unearned surplus without the approval of the Commission. This was a very significant

movement that made the distinction of earned and unearned surplus in statutory law,

which was previously only mentioned, in accounting practice and few corporate laws.

The responsibility to of fraud detection was a question that was unanswered for many years

until the McKesson & Robbins scandal case of 1939, which put this question in the spotlight.

Before 1940, the uniform agreement as to the audit responsibility for the detection of fraud

did not exist. By 1940, with heavy influence of the McKesson & Robbins scandal case, the

responsibility for fraud detection now began to shift to management. Auditors’ main

concern was to determine the fairness of the reported financial statements. By this time, a

uniform agreement was made that testing was the auditors’ technique, and detailed


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examination was only done when deemed necessary. Of course, the strength of the internal

controls was the deciding factor on how much testing should be done.

The 1950’s continued to reduce the importance of fraud detection on auditors. The belief

that fraud detection was the responsibility of the management of the company was

generally held. If auditors found any irregularities as they performed their audit, it was their

obligation to bring this to the attention of the management. Ironically, many audit

techniques of the period were specifically designed to assist in the detection of fraud.

Emphasis of the audit was placed on the determination of the truthfulness of the financial

statements. The late 1950’s and 1960’s brought more reform and brought up the concept of

reasonable assurance of financial statements. Also, materiality of misstatements was

brought to attention of the accounting profession. The auditor was required to perform

tests in line with G.A.A.S. to detect material misstatements that would influence the

confidence of investors in a company. The general concept to start an audit with an

examination of the companies’ internal controls and the extent of testing required was

decided from the test results. The computer had a great impact on how businesses and

accounting would be performed from the 1960’s to the present.

Technology changing the world of auditing The evolution of computers changed auditing forever. The first electronic computers were

analog devices that began in the 1920’s and developed through World War II. These

computers were used to perform complex mathematical computations such as integration.

The 1940’s brought the development of digital computers that used binary logic. With

binary logic, it was now possible to express exact numerical values instead of using

approximate analog quantities to approximate numerical values.

In 1958, the Institute of Chartered Accountants issued a statement entitled Accounting by

Electronic Methods. This statement referred to E.P.D. as he method of analyzing,

marshaling, recording and reporting business information by means of equipment, the

central feature of which is an electronic digital computer. Bookkeeping for accountant has

been time consuming and in the 1950’s accountants have looked around for new ways of

processing this data. Punch card machines was the first move but they were not fast enough


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for their needs, the digital computer was the next choice for providing a faster and more

detailed cost analysis. Accountants didn’t change their ways overnight; changing over from

manual system to computers took many years.

Auditing in general was changed forever, as data once on paper was now on magnetic tape

reels and later floppy disks. The detection of fraud was more difficult to discover when data

could be easily erased or changed. Auditing changed with the times as it always had. The

discovery for new internal controls was needed, as these controls were important to make

an audit successful and efficient. A computer system within a business with strong internal

controls made an audit easier and resulted in more dependable financial statements. The

computer of the 1970’s could handle large amounts of data and process the information in a

very short time. Computers made accounting jobs in general easier, with the computer

handling the bookkeeping work. This freed up time so accountants could focus on more

important jobs.


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THE AUDITOR

An auditor in general engages in the evaluation of an organization, system, process, project

or product. Auditors’ tasks are performed to ascertain the validity and reliability of

information; also to provide an assessment of a system's internal control. The goal of an

auditor is to express an opinion on the person/organization/system in question, under

evaluation based on work done on a test basis. Due to practical constraints, an audit seeks

to provide only reasonable assurance that the statements are free from material error.

Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of

financial statements are said to be true and fair when they are free of material

misstatements - a concept influenced by both quantitative and qualitative factors.

Traditionally, audits were mainly associated with gaining information about financial

systems and the financial records of a company or a business. However, recent auditing has

begun to include other information about the system, such as information about

environmental performance. As a result, there are now professions conducting

environmental audits.

An auditor also engages in an independent assessment of the fairness by which a company's

financial statements are presented by its management. It is performed by competent,

independent and objective person(s) known as auditors or accountants, who then issue an

auditor's report based on the results of the audit. However an auditor may be a watchdog

but not a bloodhound.

The task of an auditor is to determine the quality of financial & operational/administrative

control by examining and evaluating the records, system and procedure, operations and


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activities of an organization. Financial and operational control can be easily determined by

analytical reviews, intra and inter firm comparison and comparison of current information

with anticipated results. Profit as a percentage of sales, expenses as a percentage of sales,

working capital ratio, return on investment and important guidelines to measure a

concern’s performance. Through interpretation of significant ratios an auditor can find

firm’s strength and weaknesses and where to emphasize to detect fraud and error.

It is not possible for an auditor to check every single thing. In such a situation, the auditor

has to evaluate the internal control system introduced by the organization. By doing this, an

auditor also become aware of the operational control in force in an organization. For

example, if an auditor finds that the wages as a percentage of sales is far higher in this year

than last year, then he will decide to apply more substantive tests in this regard.

Internal auditor conclude whether the resource utilization of the enterprise is effective &

efficient or not by reviewing whether the accounting records have been properly

maintained, the assets adequately safeguarded and the procedure lay down by the

management properly compiled with. Auditors have to conduct an appraisal of the various

organizational functions and provide advice and recommendation on the activities and

operation reviewed by him.

The auditors are straightforward, honest, independent and sincere in his approach to this

professional work. Professional ethics ensure right action on the part of the members of the

profession. That is why everybody relies on auditor’s determination on the reliability of the

financial and operational control of an enterprise.

The auditor needs to follow a certain guidelines and standards. Standard is the means of

judging the level of professional competence and the degree of consistency attained by

auditors in the performance of their duties/functions. For this purpose, we are to study and

understand professional pronouncements on auditing which indicating the collective view of

the profession on: -

Principles and techniques of auditing and

The application of such principles and techniques to various auditing situations.


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Professional bodies of accountants of various countries have issued pronouncements on

accepted auditing practices for the guidance of their members. Most of these

pronouncements discuss various auditing practices primarily required for the purpose of

expressing an expert opinion on financial statements. The pronouncements issued by

professional bodies attempt to codify the auditing practices expected to be observed by the

auditor when he seeks to express an opinion on financial statement. These however, do not

interfere with the auditor’s individual judgment in selecting the procedure to be followed

and in determining the extent to which he should apply such procedures.

The analytical review steps for forming his overall conclusions about the consistency of

financial information as a whole with his knowledge of the entity’s business and relevant

economic conditions is also performed by the auditor. For example an auditor can compare

significant ratios for the entity with those of other entities in the same industry or with the

industry average. This review may assist an auditor in identifying an unusual and

unexpected balance, which was not previously identified. Though the procedures of

analytical review have been highly commendable in the arena of professional audit, the

extent of its reliance much depend on the substantive information that might be available

from the entity, nature of assertion the auditor might exert on the business logically and the

predictability of relationships among items of financial information (so that any deviation

there from can be taken as being indicative of potential miss statements) and the strength

of the evaluation of the internal control. If the auditor really faces any such circumstance

where the application of analytical review may not be expected to desired results as

expected of a good audit report, there is no barrier for the auditor for an extensive check,

as he may think proper and adequate. The system of analytical review adopted generally in

combinations of other method have in major cases yielded the desired results enabling the

auditor to present a good audit report; exhibiting a proper statement of financial

information of the entity under audit.

The auditor’s concept of internal control is fundamentally identical to the concept of control

or management control of the management theorists. It is one of the activities or functions

of management, but it is notable in its complete dependence upon the other functions of

management. This has led some management thinkers to suggest that it should not be


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regarded as a distinct function in its own right, just as others have suggested that

coordination should not be regarded as a separate function.

As we know, there can be no control unless there is a plan to be controlled. A successful

organization, which established individual responsibilities, is likewise an essential

component of control. Staffing must also be appropriate for control to be effective. All it

means is that when the auditor reviews an enterprise’s arrangements for internal control,

the evaluation is of the management process, embracing all the functions of management

viz: planning, organizing, staffing, directing and leading controlling and finally coordinating.

In practice an internal auditor may be restricted by the terms of reference to conducting

reviews only in certain sections of the enterprise. They may be asked to audit only up to a

certain level. Usually it is impossible for internal audit effectively above the organizational

level of the director of internal audit. They may audit only certain operations, such as

accounting and financial.

Even if internal audit has a restricted scope but within the areas where it does have a

mandate it should be concerned with all the functions of management (planning, organizing,

staffing, directing, controlling, and coordinating). The only exception to this is where internal

audit if restricted to checking for distributed compliance with laid down procedures and has

no role in connecting upon which procedures are the right ones: sterile mode of internal

auditing if fortunately seldom seen now a days. So it appears that internal audit is

concerned to review all the arrangements that have been made to manage the enterprise,

being limited only by any boundary that management themselves have prescribed defining

the scope of their internal auditing department. But within these boundaries internal audit

is concerned to review all the functions of management. Anyway the financial auditor has

no limitation like that of the internal auditor and hence, he can go for in depth auditing as

per acceptable audit practices.

The term ‘investigation’ in auditing means a systematic and in depth examination or enquiry

to establish a fact or to evaluate a specific situation. Professional accountants are often

called upon to investigate the accounts or related records of an undertaking. Such

assignments differ substantially from a normal audit tasks. Audit aims at collection on the


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financial statements or other data under examination. An investigation, on the other hand,

requires a special in depth scrutiny of the particular records or transaction’s with the object

of substantiating a fact or happening or assessing a particular situation.

In the backdrop of the basic differences between nature and objectives of an audit and

those of an investigation, the approach to an investigation is different from that followed in

an audit. An investigation calls for a more thorough examination of the selected areas than

what is required in an audit of the entire financial aspect of the entity under audit. This is

because the scope and objective of an audit are broad and general while those of

investigation are narrow and specific. The investigators are concerned with a particular task

in a given area but the audit cannot be completed without examination and scrutiny of the

whole area of the entity. It will this appear that an investigation looks for substantive and in

some cases, even conclusive evidence for establishing a fact, say a specific complain in

installing a machinery, whereas, an auditor may rely on a persuasive evidence for his

circumstantial audit report. An investigator does not accept a fact as correct until it is

substantiated. Unlike an auditor, an investigator cannot presume that in the absence of

suspicious circumstances, a figure or a stated fact is necessarily correct.

As an investigator to investigate the alleged misappropriation of closing stock or of finished

stock of the company under investigation, a professional accountant is engaged. His

objective would be to gather substantive evidence in support of the quantitative and

monetary figures of the opening stick, production, sales and dispatches and the stock

register. For these, he would check all the related records thoroughly, looking into every

item carefully. If he uses here the statistical sampling techniques like random sampling, he

would do so merely to narrow down his inquiry. Rather, he would scrutinizes and crosscheck

the various transactions till he is able to check precisely what he is looking for. In a financial

audit assignment on the other hand, the auditor i.e. a professional accountant would select

a representative sample from the transactions, examine it in depth and if nothing arouses

his suspicious, he would rely on the examination and report that the accounts and the

statements represent a true and a fair view of the affairs of the undertaking. To use the oft

repeated metaphor, an auditor is a watchdog and not a bloodhound. But the investigator


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shall stretch his nose for the faintest of scents of frauds, material misstatements, material

omissions from the record and the like.

Due to the very purpose and nature of investigators, an investigator, even though he is a

professional accountant is not bound unlike an auditor, by accounting conventions, IGAs,

ISAs (International Guidelines on Auditing, International Standard on Auditing) policies and

disclosure requirements. The exact nature and procedures to be followed in conducting an

investigation depend entirely upon the circumstances of the case, the nature of

appointment, requirement of the investigation results, etc. but the fundamental

achievements to be obtained through investigation entirely depends on the knowledge,

Intelligence Quest (IQ), honesty, integrity and the foresightedness of the professional

accountant being appointed as such as an investigator.

Now it is clear that the importance of audit of the financial data is so vast that it is much

more important in an organization in order to run it efficiently, effectively and in an orderly

manner.

Types of Auditors Involved in the Current Day’s AuditingThere are two types of auditors who are basically involved with present day’s auditing

practices:

Internal Auditor - Internal auditors are employees of a company hired to assess

and evaluate its system of internal control. To maintain independence, they present

their reports directly to the Board of Directors or to Top Management. They provide

functional operation to the concern. Internal Auditors are employees of the

company so that they can easily find out the frauds.

External Auditor – External auditors are independent staff assigned by an auditing

firm to assess and evaluate financial statements of their clients or to perform other

agreed upon evaluations. Most external auditors are employed by accounting firms

for annual engagements. They are called upon from the outside of the company.

Common types of Audit in Practice


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1) Single Audit

The Single Audit, is a rigorous, organization-wide audit or examination of an entity

that expends $500,000 or more of Federal funds received for its operations. Usually

performed annually, the Single Audit’s objective is to provide assurance to the US

federal government as to the management and use of such funds by different recipients,

such as States, cities, universities, and non-profit organizations, among others. The audit is

typically performed by an independent certified public accountant (CPA) and

encompasses both financial and compliance components. The Single Audits must be

submitted to the Federal Audit Clearinghouse along with a data collection form.

2) Clinical Audit

It is the process formally introduced in 1993 into the United Kingdom's National Health

Service (NHS), and is defined as "a quality improvement process that seeks to improve

patient care and outcomes through systematic review of care against explicit criteria

and the implementation of change".

The key component of clinical audit is that performance is reviewed (or audited) to

ensure that what should be done is being done, and if not it provides a framework to

enable improvements to be made.

3) Computer Security Audit

A computer security audit is a manual or systematic measurable technical

assessment of a system or application. Manual assessments include interviewing

staff, performing security vulnerability scans, reviewing application and operating

system access controls, and analyzing physical access to the systems. Automated

assessments, or CAAT's, include system generated audit reports or using software to

monitor and report changes to files and settings on a system. Systems can include

personal computers, servers, mainframes, network routers, switches. Applications

can include Web Services, Microsoft Project Central, Oracle Database.


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4) Conformity Assessment Audit

It is any activity to determine, directly or indirectly, that a process, product, or

service meets relevant standards and fulfills relevant requirements. Conformity

assessment activities may include:

Testing Surveillance Inspection Auditing Certification Registration Accreditation

5) Environmental Audit

Environmental audits are intended to quantify environmental performance and

environmental position. In this way they perform an analogous function to financial

audits. An environmental audit report ideally contains a statement of environmental

performance and environmental position, and may also aim to define what needs to

be done to sustain or improve on indicators of such performance and position.

Environmental Auditors can get certified through written exam and acceptance of

the Environmental Auditor Association code of ethics. Depending on the nature of

the audit, there are several different designations to choose from. CECAB

administers these designations.

6) Financial Audit

A financial audit, or more accurately, an audit of financial statements, is the

examination by an independent third party of the financial statements of a company

or any other legal entity (including governments), resulting in the publication of an

independent opinion on whether or not those financial statements are relevant,

accurate, complete, and fairly presented.


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Financial audits are typically performed by firms of practicing accountants due to the

specialist financial reporting knowledge they require. The financial audit is one of

many assurance or attestation functions provided by accounting and auditing firms,

whereby the firm provides an independent opinion on published information.

Many organizations separately employ or hire internal auditors, who do not attest to

financial reports but focus mainly on the internal controls of the organization. External

auditors may choose to place limited reliance on the work of internal auditors.

7) Internal Audit

Internal auditing is a profession and activity involved in advising organizations

regarding how to better achieve their objectives. Internal auditing involves the

utilization of a systematic methodology for analyzing business processes or

organizational problems and recommending solutions. Professionals called internal

auditors are employed by organizations to perform the internal auditing activity. The

scope of internal auditing within an organization is broad and may involve internal

control topics such as the efficacy of operations, the reliability of financial reporting,

deterring and investigating fraud, safeguarding assets, and compliance with laws and

regulations. Internal auditing frequently involves measuring compliance with the

entity's policies and procedures. However, internal auditors are not responsible for

the execution of company activities; they advise management and the Board of

Directors (or similar oversight body) regarding how to better execute their

responsibilities. As a result of their broad scope of involvement, internal auditors

may have a variety of higher educational and professional backgrounds. Publicly-

traded United States corporations typically have an internal auditing department, led

by a Chief Audit Executive ("CAE") who generally reports to the Audit Committee of the

Board of Directors, with administrative reporting to the Chief Executive Officer. The

profession is unregulated, though there are a number of international standard

setting bodies, an example of which is the Institute of Internal Auditors .

8) Performance Audit


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Performance audit refers to an examination of a program, function, operation or the

management systems and procedures of a governmental or non-profit entity to assess

whether the entity is achieving economy, efficiency and effectiveness in the

employment of available resources. The examination is objective and systematic,

generally using structured and professionally adopted methodologies.

In most countries, performance audits of governmental activities are carried out by

the external audit bodies at federal or state level. Many of these audit bodies have

established guides for conducting performance audits which explain how

performance audits are planned, conducted and its results reported.

INTOSAI, the international association of Supreme Audit Institutions, has published

generally accepted principles of performance auditing in its implementation

guidelines. In the United States, the standard for government performance audits is

the Generally Accepted Government Auditing Standards (GAGAS), often referred to

as the "yellow book", maintained by the federal Government Accountability Office (GAO).

Similarly, the European Court of Auditors (ECA) has developed a "performance audit

manual" for its audits of the sound financial management of the European

Commission and the programs funded through the EU budget.

Performance audits may also be conducted by Internal Auditors who are employees

of the entity being audited. However, some national governments require agencies,

departments and branches to periodically retain outside auditors to conduct them.

In the USA, all auditors who follow GAGAS standards are required to maintain

independence, supervision, continuing professional education, and conduct the

audit using a specific process designed to increase the quality of the audit and

reduce the politicization of audit work. Although there are separate professional

credentials and certifications for Financial Auditors, the persons that conduct

Performance Audits in the USA are often Certified Public Accountants, Certified Internal

Auditors, or have a broad background in public policy, business or public

administration.


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The scope of performance audits may include the detection of fraud, waste and

abuse, although often these are not included in the scope. Prior to engaging in a

performance audit, the auditor must have a scope and plan defined which will be

used to guide the audit process. Performance auditing differs from performance

measurement, the latter being the responsibility of management of the entity. In

addition, performance measurement may include a broad variety of activities that do

not meet the rigor of an independent external assessment.

THE PREVAILING AUDITING PRACTICES

Today, auditors utilize sampling techniques to test certain transactions during the

performance of an audit or review, since it would be nearly impossible and too expensive to

test every single transaction. The sampling may be aimed at the largest items or the items

on the financial statements that pose the most risk of misstatement. If material errors in the

financial statements are discovered, the auditors will direct management to correct them.

Auditing has been the backbone of the complicated business world and has always changed

with the times. As the business world grew strong, auditors’ roles grew more important. The

auditors’ job became more difficult as the accounting principles changed. It also became

easier with the use of internal controls, which introduced the need for testing, not a

complete audit. Scandals and stock market crashes made auditors aware of deficiencies in

auditing, and the auditing community was always quick to fix those deficiencies. Computers

played an important role of changing the way audits were performed and also brought

along some difficulties.

So how does fraud fit into the idea of material misstatements? Misstatements can be

caused by either error or fraud. Auditors have some responsibility for the detection of both

errors and frauds that are material, but this responsibility is not absolute. Auditors give

"reasonable" assurance that material misstatements have been uncovered, but not total

assurance. Errors are much more likely to be discovered during an audit than are fraud.

Fraud schemes are crafted to purposely exploit the accounting system and controls, and

therefore it is more difficult for an auditor to find them. Since auditors are not all-knowing


PAGE | 18


beings, the assurance that the financial statements are correct can only be "reasonable"

assurance and not total assurance.

Traditionally audits were mainly associated with gaining information about financial systems

and the financial records of a company or a business. However, recently auditing has begun

to include other information about the system, such as information about environmental

performance. As a result there are now professions that conduct environmental audits. In

financial accounting, an audit is an independent assessment of the fairness by which a

company's financial statements are presented by its management. It is performed by

competent, independent and objective person or persons, known as auditors or

accountants, who then issue an auditor's report on the results of the audit.

Such systems must adhere to generally accepted standards set by governing bodies that

regulate businesses. It simply provides assurance for third parties or external users that such

statements present 'fairly' a company's financial condition and results of operations.

Auditing Rules

It’s important to understand the guidance given to auditors on the topic of fraud.

Accountants performing audits in the United States follow Generally Accepted Auditing

Standards (GAAS) in their performance of audits. Additional guidance is provided in the

Statements on Standards for Auditing and Review Services (SSARS) and Statements on

Auditing Standards (SAS). These sets of authoritative guidance outline the responsibilities

that auditors have for finding fraud while performing audits and reviews.

SAS number 99, "Consideration of Fraud in a Financial Statement Audit," became effective in

late 2003. This statement directs auditors to use professional skepticism and to consider

that a fraud could have occurred and could materially affect the financial statements. The

auditors must consider and identify the risk of fraud, and must continuously evaluate

evidence throughout the audit to determine whether or not there are any fraud indicators.

The American Institute of Certified Public Accountants (AICPA) recently issued SSARS

number 12, "Omnibus Statement on Standards for Accounting and Review Services." This


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applies to reviews, rather than audits. Reviews provide less assurance on the financial

statements, as the review procedures are typically less thorough and less detailed than

audit procedures. This statement dictates that during a review, the auditor is not required

to assess the risk of fraud or develop plans specifically to identify fraud.

The guidance for auditors is continuously evolving as the accounting profession

acknowledges that fraud is becoming a bigger issue for clients. All of this alphabet soup can

be boiled down to the fact that it is management's responsibility, not the auditor's, to

prevent and detect fraud. The auditors must consider fraud throughout their procedures,

but they do not have an absolute responsibility for the detection of fraud.

The Auditing StandardsWhen we talk about standards it means of judging the level of professional competence and

the degree of consistency attained in the performance of their duties/functions. For this

purpose, we are to study and understand professional pronouncements on auditing which

indicate the collective view of the profession on (a) principles and techniques of auditing

and (b) the application of such principles and techniques to various auditing situations.

Various Professional bodies in various countries have issued pronouncements on accepted

auditing practice for the guidance of their members. Most of these pronouncements discuss

various auditing practices primarily required for the purpose of expressing an expert opinion

on financial statements.

The pronouncements issued by professional bodies attempt to codify the auditing practices

expected to be observed by the auditor when he seeks to express an opinion on financial

statements. These however, do not interfere with the auditor’s individual judgment in

selecting the procedure to be followed and in determining to the extent to which he should

apply such procedures.

In case a deviation is necessary in a particular situation that should be reported in the audit

report. Compliance of standard audit practices is expected in normal circumstances. In many

countries, the auditors are specifically required to state in their audit report whether the

audit was carried out in accordance with the generally accepted auditing standards. The


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institute of chartered accountants order, 1972 specifically provides that a chartered

accountant in practice shall be deemed to be guilty of professional misconduct if he fails to

invite attention to any material departure from the generally accepted procedure of audit

applicable to the circumstances. It is thus apparent that in normal circumstances, an auditor

in Bangladesh has to follow the generally accepted procedure of audit such as-international

Auditing guidelines.

The development of a coordinated worldwide accountancy profession, accountancy bodies

of different countries established the international federation of accountants (IFAC) in 1977.

The international auditing practices committee (IAPC) is a standing committee of the council

of IFAC and has been assigned specific reasonability and authority to issue international

guidelines on auditing and related fields. The guidelines issued by IAPC shall. However, in no

case override the local statutory professional regulations.

The statement on standard auditing practices (SAPs) issued by the institute of chartered

Accountants of Bangladesh are generally based on the corresponding international Auditing

Guidelines. However, in developing the SAPs, the institute also takes into consideration the

existing laws, customs, uses and business environments of Bangladesh.

The international accounting standards committee (IASC) developed by professional bodies

all over the world has been engaged in formulating and publishing standard of financial

accounting. Auditing and accounting professions are therefore correlated, coordinated and

interdependent subjects.

The institute of chartered accountant of Bangladesh (ICAB) can be briefly classified as-

a) statements on accounting and auditing, including statements of auditing

practices(SAPs)

b) Accounting standards

c) Guidance notes on matters relating to accounting, auditing, taxation, company law,

ethics and other related matters.

d) Opinion on specific queries

e) Research studies and other miscellaneous publications


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The council of the institute of chartered Accountant of Bangladesh regularly issues

statements on basic principles governing an audit. A member of the professional body is to

generally follow these guidelines while conducting an audit. The auditor should be

straightforward, honest and sincere in his approach to his professional work.

Last but not the least, the auditor should respect the confidentiality of information acquired

in the course of his work and should not disclose any such information to a third unless

there is a legal or professional duty to disclose.

The Behavioral Aspect of Auditing

During the course of auditing there is no doubt that an important aspect an auditor should

very carefully take note of. The conflicting role inherent in auditor’s position is principally a

conflict of reporting on people to whom an auditor apparently appears to be an adviser,

guide and a controller. The auditor should look it upon with multidimensional angles.

Generally, the auditor tries to play down formal authority although it is known that imposed

chances have a high risk of failure. Different people of different branches of an organization

will react in different ways on being reported upon. But the auditor’s reaction will be

absolutely nonpartisan provided the report addresses issues rightly and within areas of main

values and problems. But the auditor is not received in a negative, hostile way. There is an

inherent dislike of control system which evaluates people before they have chances of

evaluating themselves.

The behavioral aspects of auditing have now become a need nowadays. An auditor has the

needs of performing his audit jobs and so does the individual auditee for the purpose of a

representative verification of the financial state of affairs of the entity. When a need is not

met, then there is a dissatisfaction which is potentially damaging for the both. The auditor

should utilize their psychological balance in a way most suitable to his techniques and

programs. Relationship can be regarded as the other component of the human behavior.

There is a formal relationship, the nature of which is dependent on the personal qualities of

the persons involved. There is no meaningful relationship without proper communication.


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The auditor should be well aware of all these techniques of effective communications for his

success in profession.

Types of Behavioral Auditing StudyThe study of heuristics and biases appears to have been of limited relevance for behavioral

auditing research for several reasons. First, the results have failed to reveal any consistent

effects attributable to heuristics and biases. Second, only narrow ranges of auditing tasks

have been used in heuristics and biases research. Third, it's not clear that heuristics and

biases are connected to central issues in behavioral auditing. As a psychologist looking at

the field, there appear to have been three types of behavioral auditing studies. These are as

follows:

The Replication Study: The methods and procedures are borrowed in total. The major research question is:

Will the original findings replicate with auditors as subjects? For the most part,

behavioral auditing studies of heuristics and biases fall into this category. They offer

little advance in methodology, analysis, theory, etc., over the original Kahneman and

Tversky studies. One positive feature of replication studies is that they have

introduced many auditing investigators to behavioral research. On the negative side,

however, replication studies are limited in two important ways. First, they

investigate issues which originate with non-auditors and may be of questionable

relevance to auditing. Second, replication studies ask auditing subjects to answer

questions which have little relationship to their professional skills and knowledge.

The Adaptation Study: Another type of auditing study looks at a research problem originating from

accounting and/or auditing concepts, but using methods adapted from behavioral

research approaches. The procedures are borrowed, but the problems arise from

accounting. One example involves analysis of sunk cost effects (e.g., Arkes & Blumer,

1985; Thaler, 1980). The topic is of direct concern in accounting, but the methods

and analyses reflect procedures used in heuristics and biases research.


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Adaptation studies are obviously an advance over replication research, since the

research problems originate from accounting. However, behavioral methods may be

insufficient to investigate many complex auditing issues, e.g., the effects of a new

auditing policy. Instead, it may be necessary to combine behavioral and non-

behavioral methods in unique ways to investigate such issues.

The Problem-Driven Study: The third type of project involves research designed uniquely around the concerns of

behavioral auditing. Such studies lead to their own methods and procedures; in

contrast, the first two types of studies are largely spin-offs from behavioral research.

Thus, the methods and procedures flow from important auditing problems, not the

other way around. This type of research marks the dividing line as far as a non-

auditor is concerned – as a psychologist, I am no longer qualified to comment on

specific projects. I firmly believe, however, that this is the direction that behavioral

research in auditing should head. In summary behavioral auditing research on

heuristics and biases falls primarily into the replication category; such research can

be viewed as a transition stage. Adaptation studies may apply some of the methods

from heuristics and biases research to accounting problems; this is clearly an

improvement over replication research. Finally, problem-driven studies represent

the future of behavioral auditing research; it's not clear, however, that heuristics and

biases will play any role in that future.

The Management and Internal audit:Internal auditing involves conducting a systematic examination of the record,

systems and procedures and operations of an organization as a service to the

management. Internal audit department is an administrative unit of the

management, whereas statutory auditing is hired by the management or statutory

authorities for a counter auditor for external uses as per the requirements of the

law.

The traditional concept of internal auditing was thus primarily concerned with

questions like whether the assets of the organization were safeguarded and properly


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accounted for, whether the accounting or other records were reliable and whether

the organizational procedures and policies were complied with. With a significant

emphasis, on the detection of fraud and accuracy of financial records, the internal

auditor was perceived as a “status Quo” oriented auditor of financial records.

The Operating Procedures are:

1. Prepare Annual Internal Audit Plan

2. Communicate Annual Internal Audit Plan

3. Conduct Internal Audit Planning and Notification

4. Perform Audit Fieldwork

5. Report Results

6. Wrap-up Audit

7. Review Final Report

8. Disseminate Report

9. Evaluate and Follow Up

1. Prepare an Annual Audit Plan:

In cooperation with the senior management, perform the following:

Conduct a preliminary risk assessment session utilizing a facilitated group

interview.

Gather top management input on the preliminary risk assessment.

Prepare a Draft Annual Audit Plan based upon the results of the risk

assessment process.

Obtain the formal approval of the Audit & Governance Committee of the

Board of Trustees.


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The need to conduct special requested projects from the Audit & Governance

Committee and senior management may also require the deferral of planned

audits.

2. Communicate Annual Internal Audit Plan

Distribute the Annual Audit Plan to senior management.

Keep senior management informed of any changes to the Annual Audit Plan.

Ensure that appropriate senior management is informed at least a month

prior to each planned audit.

Note that special requested projects require different procedures involving

little or no notification to involved management.

3. Conduct Internal Audit Planning and Notification

Contact department management at least two weeks in advance of

scheduled audit date to discuss risk considerations that led to the audit being

on the annual plan, expected scope of the audit, and current management

concerns.

Develop preliminary audit program outlining anticipated scope, risk

assessment, procedures and schedule.

Schedule an Entrance Meeting with department management and staff, and

other stakeholders as appropriate, to go over and finalize the audit program,

obtain documents, schedule interviews and communicate expected audit

completion date.

4. Perform Audit Fieldwork

Carry out fieldwork as indicated in the audit program.


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Obtain cooperation from the line management and department staff as

necessary to identify, obtain documentation and conduct interviews, etc.

Conduct fieldwork with minimal disruption to department operations; for

example, whenever possible, obtain information from central sources rather

than from departmental staff or line management.

5. Report Results

In general, share important and sensitive findings with responsible managers

immediately upon verification by the auditor; short memo reports may be

used in this process.

Prepare a first draft final report and discuss it with responsible managers

immediately following the fieldwork.

6. Wrap-up Audit

Schedule an Exit Meeting after responsible managers have received the first

draft report; this meeting will provide the opportunity for responsible

managers to discuss findings, conclusions, and recommendations with the

auditor.

During or immediately after the Exit Meeting, ask responsible managers to

provide their responses to the auditor's findings and recommendations,

either in writing or in sufficient detail for the auditors to capture them and

reduce them to writing in the final draft report.

7. Review Final Report

Send final draft report to responsible managers and discuss suggested

changes. After processing changes, issue the final report to the distribution

indicated on the cover of the final draft.

8. Disseminate Report


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Provide the full report to members of the Audit & Governance Committee,

the President, the CFO and the department heads in the area being reported.

Provide the Controller with copies of any reports with financial system

findings. Provide to the Provost and Dean of each academic department

when appropriate.

9. Evaluate and Follow Up

At the completion of each audit, the auditor will send an evaluation survey

form to the primary clients of the audit. This form should be completed and

returned to the Office of Internal Audit, in order to ensure continuous

improvement of these procedures and the internal audit function.

Approximately six months following completion of each audit, the auditor will

conduct a follow-up review to verify the completion of agreed-upon

management actions and ascertain the status of open recommendations. A

follow-up report will be generated annually for distribution to senior

management and members of the Audit & Governance Committee.

Defining the Scope of Internal audit:

The scope of internal auditing encompasses the examination and evaluation of the

adequacy and effectiveness of the organization's system of internal control; and the

quality of performance in carrying out assigned responsibilities. Examinations and

evaluations are composed of the following types of audits:

Reliability and Integrity of Information

Compliance with Policies, Plans, Procedures, Laws, and Regulations

Safeguarding of Assets

Economical and Efficient Use of Resources


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Accomplishment of Established Objectives and Goals for Operations or

Programs

Dependability and Integrity of Information:Internal auditors should review the reliability and integrity of financial and operating

information and the means used to identify measure, classify, and report such

information. Information systems provide data for decision making, control, and

compliance with external requirements. Therefore, internal auditors should examine

information systems and, as appropriate, ascertain whether:

Financial and operating records and reports contain accurate, reliable, timely,

complete, and useful information.

Controls over record keeping and reporting are adequate and effective.

Conformity with Policies, Plans, Procedures, Laws, and Regulations :

Auditors especially internal auditors should review the systems established to ensure

compliance with those policies, plans, procedures, laws, and regulations which could

have a significant impact on operations and reports, and should determine whether

the organization is in compliance. Management is responsible for establishing the

systems designed to ensure compliance with such requirements as policies, plans,

procedures, and applicable laws and regulations. Internal auditors are responsible

for determining whether the systems are adequate and effective and whether the

activities audited are complying with the appropriate requirements.

1. Safeguarding of Assets:

Internal auditors should review the means of safeguarding assets and, as

appropriate, verify the existence of such assets. Internal auditors should review

the means used to safeguard assets from various types of losses such as those

resulting from theft, fire, improper or illegal activities, and exposure to elements.


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Internal auditors, when verifying the existence of assets, should use appropriate

audit procedures.

2. Economical and Efficient Use of Resources:

Internal auditors also should appraise the economy and efficiency with which

resources are employed. Management is responsible for setting operating

standards to measure an activity's economical and efficient use of resources.

Internal auditors are responsible for determining whether:

Operating standards have been established for measuring economy and efficiency.

Established operating standards are understood and are being met.

Deviations from operating standards are identified, analyzed, and communicated to those responsible for corrective action.

Corrective action has been taken.

3. Audits related to the economical and efficient use of resources should identify such conditions as:

Under-utilized facilities. Nonproductive work.

Procedures which are not cost justified.

Overstaffing or understaffing.

4. Accomplishment of Established Objectives and Goals for Operations or Programs

Management is responsible for establishing operating or program objectives

and goals, developing and implementing control procedures, and accomplishing

desired operating or program results. Internal auditors should ascertain

whether such objectives and goals conform to those of the organization and

whether they are being met. The term "operations" refers to the recurring

activities of an organization directed toward producing a product or rendering a


PAGE | 30


service. Such activities may include, but are not limited to, marketing, sales,

production, purchasing, human resources, finance and accounting, and

governmental assistance. An operation's results may be measured against

established objectives and goals which may include budgets, time or production

schedules, and/or operating plans. The term "programs" refers to special

purpose activities of an organization. Such activities include but are not limited

to the raising of capital, sale of a facility, fund-raising campaigns, new product or

service introduction campaigns, capital expenditures, and special purpose

government grants. Special purpose activities may be short-term or long-term,

spanning several years. When a program is completed, it generally ceases to

exist. Program results may be measured against established program objectives

and goals. Management is responsible for establishing criteria to determine if

objectives and goals have been accomplished. Internal auditors should ascertain

whether criteria have been established. If so, internal auditors should use such

criteria for evaluation if they are considered adequate. If management has not

established criteria, or if the established criteria, in the internal auditors'

opinion, are less than adequate, internal auditors should report such conditions

to the appropriate levels of management. Additionally, internal auditors may

recommend appropriate courses of action depending on the circumstances.

Internal auditors may recommend alternative sources of criteria to

management, such as:

Acceptable industry standards. Standards developed by professions or associations. Standards in law and government regulations.

With adequate criteria are not established by management, internal auditors

may still formulate criteria they believe to be adequate in order to perform an

audit, form an opinion, and issue a report on the accomplishment of established

objectives and goals. The internal auditors' evaluation of the accomplishment of

established objectives and goals may be carried out with respect to an entire

operation or program or only a portion of it. The objectives and goals


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established by management for a proposed, new, or existing operation or

program are adequate and have been effectively articulated and communicated.

The operation or program achieves its desired level of interim or final results.

The factors which inhibit satisfactory performance are identified, evaluated, and controlled in an appropriate manner.

Management has considered alternatives for directing an operation or program which may yield more effective and efficient results.

An operation or program complements duplicates, overlaps, or conflicts with other operations or programs.

Controls for measuring and reporting the accomplishment of objectives and goals are established and are adequate.

An operation or program is in compliance with policies, plans, procedures, laws, and regulations.

Internal auditors should communicate the audit results to the appropriate levels

of management. The report should state the criteria established by

management and employed by internal auditors and disclose the nonexistence

or inadequacy of any needed criteria. Internal auditors can provide assistance to

managers who are developing objectives, goals, and systems by determining

whether the underlying assumptions are appropriate; whether accurate,

current, and relevant information is being used; and whether suitable controls

have been incorporated into the operations or programs.

REGULATIONS PROFESSIONALISM AND

ETHICS OF AN AUDITOR

The professionalism of an auditor is of utmost significance in the light of the powers he

exercises while scrutinizing the financial state of affairs of an entity. He can go for in-depth

auditing in any case he deems fit. But at the same time, none would like that he would be


PAGE | 32


arrogant, unscrupulous and unreasonable while conducting an audit. So has been there

provided regulatory restrictions as to what he should do and what not.

In 1973 the institute of chartered account order aims at regulating the profession of

financial auditors of Bangladesh. Similarly, chartered accountants act, 1949 regulates the

Indian professional accountants. Similar, regulatory laws exist in all the industrially

developed nations. All persons passing certain specified qualifications or those having

passed the examinations and completed the training prescribed by the institute of chartered

Accountants, can become its members. There are two categories of members of Bangladesh

institute of chartered accountants (ICAB) associates and fellows. A person becomes an

associate member of the institute as soon as his name is entered in the membership

register. These entities he /she to write ACA after his/her name. An associate in continuous

practice in Bangladesh for at least five years and any other associate who has been a

member of the institute, can be enrolled as a fellow of the institute and is entitles to use the

words FCA after his/her name.

According to the ICAB order, 1973 clearly defines the ethical standard of a member of the

institutes. Any contravention of the prescribed ethical standard will invoke the penal

measures for such a breach as laid down in the statue. There have been provided different

penal measures for different types of professional misconduct. Membership of the institute

is not mandatory but for doing practice as a professional accountant, membership is

obligatory. Someone getting into a substantive cadre job may not be forced to become a

member of the institute. All these are about the institutional methods.

The IFAC considers the following to the fundamental principles by which an accountant

should be governed in the conduct of his professional relation with others.

Integrity : An accountant should be straightforward, honest and sincere in his

approach to his professional work.

Objectivity : An accountant should be fair and should not allow prejudice or

bias to override his objectivity. While on financial statements which come

under his review, he should maintain an impartial attitude.


PAGE | 33


Independence : When in public practice, an accountant should behold and

appear to be free of any interest which might be regarded, whatever be it

actual effects, as being incompatible with integrity and objectivity.

Confidentiality : An accountant should respect the confidentiality of

information’s required in the course of his work and should not disclose any

such information to a third party without a specific authority or unless there

is a legal or professional compulsion to disclose. The breach would charge

him for guilty of misfeasance.

Technical standard : An accountant should carry out his professional work in

accordance with the technical and professional standard relevant to that

work.

Professional competence : He should have duty to maintain his level of

competence through his professional career. He should only undertake works

which he or his firm can expect to compete with professional competence

and within reasonable time. Last but not the least, an accountant should

conduct himself and refrain from any conduct which might bring discredit to

the profession.

In fine the practice of professional ethics is largely a matter of conscience and the

determination of the members to distinguish between what is wrong and what is right. It

thus involves a high civic sense.

FUNDAMENTALS OF INTERNAL CONTROL

The Committee of Sponsoring Organizations (COSO) of the National Commission on

Fraudulent Financial Reporting (also known as the Tread way Commission), in 1992,

published a document called Internal Control Integrated Framework, which defined internal


PAGE | 34


control as a process, effected by an entity's board of directors, management and other

personnel, designed to provide reasonable assurance regarding the achievement of

objectives in three categories:

1. Effectiveness and efficiency of operations.

2. Reliability of financial reporting.

3. Compliance with applicable laws and regulations.

Internal control can be judged as effective in each of these categories if the board of

directors and management have reasonable assurance that:

1. They understand the extent to which the entity’s operations objectives are being

achieved.

2. Published financial statements are being prepared reliably.

3. Applicable laws and regulations are being complied with.

The COSO Framework consists of five interrelated components as follows:

Control environment:

Sometimes referred to as the tone at the top of the organization, meaning the

integrity, ethical values, and competence of the entity's people; management's

philosophy and operating style; the way management assigns authority and

responsibility and organizes and develops its people; and the attention and direction

provided by the board of directors. It is the foundation for all other components of

internal control, providing discipline and structure.

Risk assessment:

The identification and analysis of relevant risks to achieve the objectives that form

the basis to determine how risks should be managed. This component should

address the risks, both internal and external, that must be assessed. Before

conducting a risk assessment, objectives must be set and linked at different levels.


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Control activities:

Policies and procedures that help ensure that management directives are carried

out. Control activities occur throughout the organization at all levels in all functions.

These include activities such as approvals, authorizations, verifications,

reconciliations, reviews of operating performance, security of assets, and

segregation of duties.

Information and communication:

Addresses the need in the organization to identify, capture, and communicate

information to the right people to enable them to carry out their responsibilities.

Information systems within the organization are key to this element of internal

control. Internal information, as well as external events, activities, and conditions

must be communicated to enable management to make informed business decisions

and for external reporting purposes.

Monitoring :

The internal control system must be monitored by management and others in the

organization. This is the framework element that is associated with the internal audit

function in the organization, as well as other means of monitoring such as general

management activities and supervisory activities. It is important that internal control

deficiencies be reported upstream, and that serious deficiencies are reported to top

management and the board of directors.

These five components are linked together, thus forming an integrated system that can

react dynamically to changing conditions. The internal control system is intertwined with

the organizations operating activities, and is most effective when controls are built into the

organizations infrastructure, becoming part of the very essence of the organization.

Significant Conditions in Internal Control:

A small number of familiar internal control conditions are described as follows:


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Compensating Controls: Some organizations are not able to implement basic

controls such as segregation of duties by virtue of their size. It is vital that

management institute compensating controls to disguise for the lack of a basic

control in these cases, or if a straightforward control is not capable to function for

some period of time.

Material Drawback: Defined in the auditing journalism as a reportable circumstance

in which the outline or operation of one or more of the internal control mechanism

does not reduce to a relatively low level. The risk that misstatements caused by

errors or fraud in amounts that would be material in relation to the financial

statements being audited may occur and not be detected within a timely period by

employee in the normal course of performing their assigned duties.

Reportable Prerequisite : Has the same meaning as the term substantial

insufficiency. These two terms are used to define a substantial insufficiency in the

design or operation of internal control. These could adversely influence a

company's ability to record, process, summarize, and report financial data consistent

with the affirmation of management in the company's financial statements. A

material weakness could constitute an aggregation of significant deficiencies.

Limitation of Internal Control

Internal control cannot ensure success, or even survival. An effective system is not a

guarantee that the organization will be successful; such is important as an internal control

structure is to an organization. An effective internal control structure will keep the right

people informed about the organization's progress (or lack of progress) in achieving its

objectives, but it cannot turn a poor manager into a good one.

Internal control is not a solution to management and the board about the organization's

accomplishment of its objectives. Due to limitations inherent in all internal control systems,

it can only provide reasonable assurance. For instance, due to simple error or mistake;

breakdowns in the internal control structure can occur, faulty judgments that could be

made at any level of management as well. Controls can be inserted by collusion or by


PAGE | 37


management override. Lastly, there must be a cost-benefit analysis in the design of the

system, meaning that the design of the internal control system is a function of the resources

available.

Roles and Responsibilities:

Everyone in the organization has some role to play in the organization’s internal control

system.

Chief executive officer (CEO): Aside from setting the tone at the top, much of

the day-to-day operation of the control system is delegated to other senior

managers in the company, under the leadership of the CEO. The CEO has ultimate

responsibility and ownership of the internal control system. The individual in this

role sets the tone at the top that affects the integrity and ethics and other factors

that create the positive control environment needed for the internal control system

to thrive.

Chief financial officer (CFO): The audit committee should use interactions

with the CFO, and others, as a basis for their comfort level on the internal control

over financial reporting. Much of the internal control structure flows through the

accounting and finance area of the organization under the leadership of the CFO. In

particular, controls over financial reporting fall within the domain of the chief

financial officer.

This is not done on purpose to propose that the CFO must provide the audit

committee with a level of reassurance regarding the system of internal control over

financial reporting. Rather, through interactions with the CFO and others, the audit

committee should get a gut feeling about the completeness, accuracy, validity, and

maintenance of the system of internal control over financial reporting.

Controller/director of accounting or finance: The controller must

demonstrate respect for the system though his or her actions. Much of the basics of


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the control system come under the domain of this position. It is a key that the

controller understands the need for the internal control system, is committed to the

system, and communicates the importance of the system to all people in the

accounting organization.

Internal audit: Each organization should assess the need for this team, and

employ one as necessary. A main role for the internal audit team is to evaluate the

effectiveness of the internal control system and contribute to its ongoing

effectiveness. With the internal audit team reporting directly to the audit committee

of the board of directors and/or the most senior levels of management, it is often

this function that plays a significant role in monitoring the internal control system. It

is important to note that many not-for-profits are not large enough to employ an

internal audit team.

Board of director/audit committee: The audit committee is the board's

first line of defense with respect to the system of internal control over financial

reporting. A strong, active board is necessary. This is particularly important when the

organization is controlled by an executive or management team with tight reins over

the organization and the people within the organization. The board should recognize

that its scope of oversight of the internal control system applies to all the three

major areas of control: over operations, over compliance with laws and regulations,

and over financial reporting.

All other personnel: Employees throughout the organization should understand

their role in internal control and the importance of supporting the system through

their own actions and encouraging respect for the system by their colleagues

throughout the organization. The internal control system is only as effective as the

employees throughout the organization that must comply with it.


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Compensating Controls:

The audit committee should be tuned-in to the tone-at-the-top of the organization as a first

indicator of the functioning of the internal control system. It is important to realize that

both the design and compliance with the internal control system is important.

In addition, audit committees should realize that the system of internal control should be

scaled to the organization. Some organizations will be so small, for example, that they will

not be able to have appropriate segregation of duties. The message here is that the lack of

segregation of duties is not automatically a material weakness, or even a reportable

condition, depending on the compensating controls that are in place.

In this case, it is one and the same person, so the implication is that there are no checks and

balances on the accounts payable person, who could be writing checks to a personal

account, then passing on them during the bank reconciliation process (that is, there is no

one to raise the red flag that personal checks are being written on the company account).

For example, suppose an organization's accounting department is so small that it is not

possible to segregate duties between the person who does the accounts payable and the

person who reconciles the bank statements. Compensating controls could make up for this

apparent breach in the internal control system. Here are some examples of compensating

controls in this situation:

All checks are hand signed by an officer of the company, rather than using a

signature plate that is in the control of the person that prepared the checks.

The bank reconciliation may be reviewed by the person’s manager.

A periodic report of all checks that are cleared at the bank could be prepared by the

bank and forwarded to an officer of the company for review.

Audit committees should be aware of situations like this and be prepared to ask questions

and evaluate the answers when an obvious breach in internal control is surfaced.


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Management Override of Controls

Another area that an audit committee needs to focus on is the ability of management to

override internal controls over financial reporting to perpetrate a fraud. Examples of

techniques used by management in overriding internal controls over the financial reporting

function include:

Back dating or forward dating documents to a different period.

Making adjusting entries during the financial reporting closing process.

Reclassifying items improperly between the statement of activity and the statement

of financial condition.

Some of these override techniques were used in some of the recent scandals and have

gained considerable notoriety.

Questions about management override, and the controls over management override, as

well as audit steps to detect if a management override has occurred, should be addressed to

the CEO, CFO, and independent auditor during the respective executive sessions with the

audit committee as noted elsewhere in this toolkit. An audit committee has the

responsibility to help prevent or deter a management override of controls. It is important

for the audit committee to understand that there is a system to uncover an override, as well

as follow-up to determine its appropriateness.

This instrument was projected to provide a summary of what is meant by internal control.

The concepts are not complex, but sometimes the application of internal control can be a

challenge in an organization, depending on its size and culture. However, it is vitally

important to design the system of internal control to achieve the objectives of

a) Effectiveness and efficiency of operations b) Reliability of financial reportingc) Compliance with applicable laws and regulations.


PAGE | 41


WRITING AN AUDIT REPORT

Writing the Audit Report:This is the official record of what auditor has done, which can be returned to in future years.

A copy of his presentation slides is not likely to contain enough detail for people to see

exactly how the project was carried out, in order to duplicate it in other areas or for a re-

audit. Presentation is also unlikely to include the action taken / to be taken as a result of

the audit. One should be prepared to write up a report for each proven Audit project.

THINGS THAT MUST BE IN A CLINICAL AUDIT REPORTClinical Audit reports should include:

1. Front page :

o Name of the organization and name of division/specialty

o Project title

o Project lead/s (and name of the person who wrote the report, if different)

o Date of report

2. Table of contents :

Recommended if report runs to more than eight pages

3. Executive summary :

It is good practice to begin a report with an executive summary (or ‘abstract’). This

should be a short paragraph (certainly no more than 10% of the total length of the

report) that encapsulates the main thrust of the report. Identify the issue, state the

key findings, conclusions and what course of action is recommended. This will help

people identify whether they need to read the full report, and will be a Useful précis

for busy managers. You may (instead of or in addition to an executive summary)


PAGE | 42


want to produce a one A4 page summary of the report for this purpose, especially if

the report is very long.

4. Background :

This is essentially narration, clarifying why the audit was done. For example, was the

project prompted by an identified local problem or concern? The background should

explain the rationale for doing the audit, i.e. why this topic is a priority for quality

improvement. Summarize the evidence base for the audit topic, giving full

references at the end (see point 12). If you convened a team to undertake this audit,

this is a good point to say how this was organized and who was involved.

5. Objectives :

These explain what the project is trying to achieve and should have been identified

at the start.

6. Standards :

Assuming an auditor is measuring against standards, guidelines or benchmarks of

some sort, you need to state what these are (using the criteria/target/exception

format, as detailed in ‘How to set audit objectives and standards’) and where they

come from (the source and strength of evidence). State if the intention was to set

standards at the end of the project and if so, which aspects of care those standards

pertain to.

7. Methodology :

State the chosen population for this study (e.g. “patients referred to the one-stop

breast clinic for suspected cancer”) and then go on to say how one has selected the

sample for the audit, specifying whether a retrospective or prospective methodology

was used (e.g. for a prospective audit, “the first 100 patients referred to the clinic

starting from 1/10/04”, or for a retrospective audit, “all patients seen at the

8. Results :


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State how many subjects (e.g. patients) were included in the audit. This is the initial

‘n’ number. If the data is incomplete, explain why, e.g. auditor might not be able to

find every set of patient notes. How one has analyzed the data depends upon the

question. Ensure to include the number and percentage of cases meeting each

standard, making it clear what number are taken into consideration into Percentage

of ‘n’ number may change at different points of the report, e.g. 45/50 (90%). To use

a statistical test (e.g. Chi Square) to analyze data, state clearly what the test is and

whether the results are statistically significant. Data may be presented as tables or as

a chart. Be selective in use of charts – only illustrate the key findings in this way so as

not to overburden readers. Use the most appropriate chart for each piece of data,

e.g. pie charts to show proportions, or bar charts for easy comparison between

different areas or standards. Quote both raw figures & percentages in the chart

where possible. Where one can only have one or the other, pie charts should have

the raw figures as a label by each segment, rather than percentages, as this chart is

designed to visually show proportions (percentages). Charts showing only

percentages should be accompanied by a table showing the raw figures – these will

be needed when it comes to re-auditing and comparing results. Individual healthcare

staff should not be identifiable in the report - audit should not be used as a ‘witch

hunt’. If, for example, you are comparing the results of three consultant firms, you

could call them A, B and C. Have the decoder handy though - clinicians may wish to

identify themselves! Patients should also not be identified, for confidentiality

reasons.

9. Conclusions:

List the key points that flow from your results - use bullet points and avoid long

paragraphs. Ensure that the conclusions are supported by the data, or if the data

points to no firm conclusions, say so - don’t make claims that are not supported by

the evidence. Make objective, factual statements, not subjective ones, i.e. don’t say

“it is obvious that…” or “clearly, what is happening is…”

10. Recommendations:


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Where appropriate, recommendations for change should be made. Make sure these

are realistic and achievable. If you need money to implement recommendations,

have you got access to any suitable funds?

11. Action Plan :

When your report is presented (e.g. at an audit meeting), your recommendations

will either be accepted or revised. Once this has been done, an action plan should be

agreed (preferably at that meeting) saying what changes will be implemented, who

will be responsible for carrying them out and when this will be done. Include this

either in the body of the report, or if the report is already written, as an addendum

to the full report. If appropriate (i.e. changes are to be made), set a date for a re-

audit to complete the audit cycle.

12. References :

The full references of the evidence base referred to in the background. Try to be

consistent in the way reference – if one is hoping to get the project published, some

journals are quite particular about how references are listed. Give the names and

initials of all authors followed by the title of the article, the title of the journal, the

year of publication, the volume number and the first and last page numbers.

References to books should give the names of any editors, place of publication,

publisher and year.

13. Appendices :

Include a copy of the pro-forma/questionnaire that auditor used for data collection.

Practices of Auditing in BangladeshAuditing a systematic process of objectively, obtaining and evaluating evidence, regarding

assertions about economic actions and events to ascertain the degree of correspondence

between these assertions and established criteria. It is an independent examination of

financial statements or related financial information of an entity. The results of the

examination are finally expressed in the form of a specific opinion communicated to the


PAGE | 45


relevant parties. Auditing of financial statements of companies registered under the

company’s act 1994 is compulsory in Bangladesh. According to Sec 213(3), the auditor is to

make a report to be presented in the annual general meeting of the company on accounts

examined by him.

Before acceptance of the International Standards of Auditing (ISA) by the Institute of

Chartered Accountants of Bangladesh (ICAB), detection of errors and frauds, and prevention

of errors and frauds were the two important objectives of auditing in Bangladesh. At

present, Bangladesh follows ISA guidelines in auditing. Auditing practices are regulated by

the Companies Act 1994, the Banking Companies Act 1991, the Insurance Act 1938, the

Securities and Exchange Commission Act 1993, the Securities and Exchange Rules 1987, the

Foreign Donations Regulation Rules 1978, and the Co-operative Societies Ordinance 1984.

According to the Companies Act 1994, accounts of companies registered under this act must

be audited by chartered accountants within the regulations of the Bangladesh Chartered

Accountants Order 1973. Similarly, all books of accounts maintained by a NON-GOVERNMENT

ORGANIZATION receiving foreign donations shall be audited by a chartered accountant as

defined in the same Order. The accounts of every co-operative society are to be audited at

least once in every co-operative year. The audit is to be conducted by the Registrar, or by an

audit officer authorized by him, and by such date as may be prescribed. Accounts of

enterprises under sector corporations are audited at three levels - corporations' internal

audit departments, independent professional audit firms, and the Comptroller and Auditor

General (C&AG) of Bangladesh. Internal audit, sometimes similar to an investigation, and

often termed as management audit, is conducted by the employees of a corporation on

special issues. The purpose of this audit is to check whether the corporation's rules and

regulations are being properly followed at the time of execution of any policy. Independent

professional audit is conducted by chartered accountants to pass opinion about the financial

statements annually. The C&AG has the obligation to conduct a government commercial

audit where there is any government interest in the form of ownership, or investments, or

where the government provides help in the form of subsidies.


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The Constitution of Bangladesh empowers the C&AG of Bangladesh to conduct an audit of

the accounts of the Republic and report to the jatiya sangsad (parliament) on the findings. The

public accounts of the Republic and of all courts of law, authorities and officers of the

government are audited and reported on by the Auditor General. For that purpose he or any

person authorized by him has access to all records, books, vouchers, documents, cash,

stamps, securities, stores or other government property in the possession of any person in

the service of the Republic. In the exercise of his functions, the C&AG are not subject to the

direction or control of any other person or authority. Having derived his authority from the

Constitution, he with the assistance of nine Directors General placed under him, conducts

audit of all government departments, agencies, public sector corporations and public

companies having fifty percent or more government owned shares.

The purpose of government audit is to ensure transparency and accountability in the use of

resources in all types of government management. The objectives of audit work includes

verification of the statements of accounts and statement of income and expenditure to

determine whether these are prepared truly and correctly; examination of the adequacy of

the audited body's financial management systems and internal control framework; making

sure that sufficient arrangements have been made to achieve economy, efficiency and

effectiveness in the utilization of the entity's resources; examination of the trading,

manufacturing, profit and loss accounts and balance sheets and other subsidiary books of

accounts with regard to state-owned commercial organizations; and undertaking special

studies where necessary to determine if environmental legislation and procedures are being

strictly followed.

The audit directorates and training academy placed under C&AG are Commercial Audit;

Local Audit; Works Audit; Foreign Aided Project Audit; Civil Audit; railway Audit; Post,

Telephone and Telegraph Audit; Defense Audit; Mission Audit; and Financial Management

Academy (FIMA). Each of the Directorates mentioned above has its own functional set up

headed by a Director General.


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Commercial Audit Directorate:

The Commercial Audit Directorate was set-up in 1956 by the government of Pakistan to

undertake audit in state-owned commercial organizations. Following the independence of

Bangladesh, the role of the department of commercial audit expanded because of the

nationalization of industries, banks etc. At present, all autonomous and semi-autonomous

public enterprises, government-owned commercial bodies, including nationalized banks and

public enterprises, having minimum 50% government share are audited by the directorate.

Local and Revenue Audit Directorate:

The Director General, Local and Revenue Audit (DG, L&RA), conducts audit in two important

fields covering about 12,000 government units/individual offices in a wide range of areas.

These are the government offices (other than Post, T&T, Works, Roads & Highways,

Railways, Public Health Engineering and Defense directorates; hospitals; educational

institutions; sports and cultural bodies) and autonomous and local bodies (city corporations,

municipalities, universities, port authorities and other autonomous bodies).

Directorate of Works Audit:

The present office of the Directorate of Works Audit was established with effect from 18

May 1964 under the name Director of Audit and Accounts Works and WAPDA, East Pakistan,

Dacca. After liberation, it was renamed as Accountant General Works & WAPDA,

Bangladesh, DHAKA and entrusted with the accounting and auditing function of the works

expenditure and auditing the accounts of Bangladesh WAPDA. Following

departmentalization of government accounts, the present office of the Directorate of Works

was established in 1985.

Foreign Aided Projects Audit Directorate:

Different foreign countries and donor agencies provide grants and loans for different

development projects in the form of investment or technical assistance. The Director

General, Foreign Aided Projects Audit, is responsible for auditing all projects implemented

with funding by foreign aid. The main responsibilities of this Audit Directorate are to carry out


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audits in all donor funded development projects to prevent error and fraud, to ensure

accuracy and completeness of accounting records and examine the adequacy of rules and

regulation; to prepare the annual audit report and submit the same to C&AG for placement

before the parliament; to conduct audits of all Accounts and Financial Statements of donor

fund in accordance with the agreement between the government and donors; to express an

opinion as to whether the financial statements of the donor funded projects presented are

consistent with international standards on auditing, whether the accounts prepared are in

accordance with accepted principles and whether they present fairly the results of the

operation of the project. In terms of IDA and ADB loans, a separate opinion needs to be

furnished for the statement of expenditure.

Civil Audit:

Following the departmentalization of government accounts, the Civil Audit Directorate was

established in 1985 to strengthen the capability of the C&AG in discharging his duties. This

directorate carries out audits in the following accounts offices: office of the Controller

General of Accounts, Chief Account’s offices, Regional Accounts offices, District Accounts

offices and Upazila Accounts offices.

Railway Audit Directorate:

The present office of the DG Railway Audit, headed by a Chief Auditor, and located at the

Central Railway Building (CRB) CHITTAGONG, was established in 1950. This office was

entrusted with the audit responsibility of the Eastern Bengal Railway and Pakistan Eastern

Railway from 1950 to 1961 and from 1961 to 1971 respectively. Following the liberation of

Bangladesh in 1971, all audit functions of Bangladesh Railway were conducted by this office

which was renamed as the office of the DG Railway Audit in 1995. The office has 208

personnel including one director, two deputy directors, and 14 audit and accounts officers

working in the regional and divisional offices throughout Bangladesh.


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Auditing types, systems and procedures

Three main types of audit are the regularity or compliance audit, financial statements audit

and performance audit (value for money audit). The regulatory audit is very traditional and

it examines receipts and expenditures and the financial systems and transactions of the

audited organization to see whether it has complied with relevant rules, regulations, laws,

procedures, orders etc. A financial statement audit is the examination of the financial

statements of an audited body to express an opinion on whether they truly present the

expenditures and receipts in the case of the accounts prepared. It includes the audit of the

appropriation and finance accounts of the government and of the government owned

commercial enterprises. The performance audits examine an organization’s programs,

activities, functions or management systems and procedures to assess whether the

organization has achieved economy, efficiency, and effectiveness in the utilization of its

resources. Bangladesh recently adopted programs to conduct performance audits on

different issues in some organizations.

The auditing system adopted in all audit directorates is very similar. There are, of course,

slight variations depending on the nature and scope of the audited organization. Each audit

directorate prepares a year-wise audit plan at the beginning of the financial year and on the

basis of the budget and risk involved with the organizations under audit. Some organizations

are audited every year; some once in every two years and some are once in every three

years or more. The director general is entrusted with audit planning and a director and

deputy directors help him in the planning exercise. Each audit team has, in general,

two/three members assigned with fixed man-days based on risk and volume of work of the

concerned organization.

The DG Audit instructs the audit team as to what percentage of transactions will be subject

to audit. The general points taken into consideration in audit planning are volume of

transactions of the auditable unit, number of vouchers, and nature of expenditure. Prior to

the start of an audit in any organization, the audit team needs to be familiar with the

nature, activities and objectives of the organization as well as with the annual report and

past audit report including the budget book prepared on the organization.


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The audit team gives notice to the audited body well in advance letting them know the exact

date of commencing audit and the records required to be examined. Procedures followed in

carrying out an audit of any office include initial discussion with the head of the audited

body, collection of all the records and information needed for auditing, examination of the

records, checking the facts, collection of sufficient evidence in support of his statement,

discussions with relevant people, coming to a conclusion and preparation of the report.

The audit team follows the guidelines mentioned in the Audit Code and Manual and

Government Auditing Standards. In some cases, the team follows the special instructions

given by the Audit Directorate. In course of the audit work, all queries raised by the auditor

are to be clarified by the audited organization and are to be substantiated by proper

supporting documents. Queries not met with valid documents are included in the Inspection

Report. On completion of each audit, the audit team discusses the audit report with the

head of the audited organization and obtains his opinion on it. Then an Inspection Report is

issued to him. The Audit Report, along with the working papers and an observation

summary sheet is submitted to the Deputy Director Audit for review, after which the entire

report and the audit file, with his comments on it, are submitted to the Director/Director

General for final review and approval.

Paragraphs of serious irregularities known as Advance Clauses are communicated, after

proper scrutiny, to the concerned management, including the Principal Accounting Officer

(Secretary) of the concerned ministry. The Audi tees are given five weeks time to give

explanations on irregularities. One reminder is issued, allowing an additional two-week time

in case the explanations are not satisfactory, or if there is no response at all. A DO (Demi-

official) letter/Management letter for such clauses is written to the Principal Accounting

Officer giving four-week time. If the reply is not satisfactory or there is no reply at all, the

report is finalized (as draft clauses) and sent to the C&AG for his approval and for inclusion

in the audit report within thirteen days.

Serious financial irregularities along with audit comments are incorporated in the Annual

Audit Report, after they have been approved by the C&AG. The Audit Report is then

submitted to the President of the Republic by the C&AG to be laid before Parliament. The


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reports placed before the Parliament is discussed by the Public Accounts Committee (PAC)

and Public Undertaking Committee (PUC). PAC deals with Audit Reports and related issues,

whereas PUC attends to issues relating to efficiency and effectiveness of commercially run

government organizations.

CONCLUSION

In today’s world; auditing has become an incorporated segment of the association. All

association wants auditing not only for avoidance and recognition of fake but in addition for

organizational effectiveness. Auditing plays an essential part to appropriately finish the

accounting records and timely preparation of the consistent financial information. Internal

audit moreover helps organization to defend the property and maintaining the arranged

and effectively accomplish of the business including adherences to the management

policies. The manner of auditing is becoming easier day by day because of using computer

aided audit. The computer aided audit tools and technique software is simplifying and

automating the audit process. The auditor is now able to find any kind of fraud or material

misstatement through the use of CAATTs software. Government audit also helps the

government to find whether the resources are use effectively and efficiently. They evaluate

the data and directly report to the Comptroller and Audit general of Bangladesh. Also to

guard the shareholder, creditor and supplier from any kind of fraud, every corporation must

verify their financial report by an external auditor. The external auditor must be an

independent man also has to be a member of the ICAB in Bangladesh.

In modern business advancement audit is one of the core factor to be considered. Because

auditing provides support to the whole organization in such a way that it serves both the


PAGE | 52


external and internal users. For internal users it provides information to manager to make

judgment and for external user it provides guarantee that the financial report is all right and

out of any kind of material misstatement.

BIBLIOGRAPHY

o Lee, T. A., The Evolution of Audit Thought and Practice(New York: Garland

Publishing, Inc., 1988), p. 3, 5, 6

o Staub, Walter A., Auditing Developments During the Present Century(Massachusetts:

Harvard University Press, 1942), p.15, 17, 26, 29

o Carmichael, D.R. & Willingham, John J., Perspectives in Auditing(New York: McGraw-

Hill Book Company, 1979), p.8, 10, 55

o Pinkney, A., An Audit Approach to Computers(London: The Institute of Chartered

Accountants Press, 1966), p.11

o McRae, T. W., The Impact of Computers on Accounting(New York: John Wiley & Sons,


PAGE | 53


1964), p.38, 50, 182

o Needleman, T., Micro-Computers for Accountants(New Jersey: Prentice-Hall, Inc.,

1983), p.3, 7


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auditing in bangladesh

Documents