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Preparation Before Commencement of Audit

Commencement of Audit

        Commencement of audit  means that  when an organization is going to start final audit
before commencement of audit the following instruction must be given by the auditor to his client.

  1. A list of book in use, list of employees, their duties and internal control should be provided to the audit staff.
  2. Books of original entry, ledgers, trial balance and Final account should be provided to the auditor.
  3. All supporting document should be properly arranged.
  4. List and schedule of assets and liabilities should be arranged properly for the examination to the audit staff managed properly for the examination to the audit staff.

        The auditor of the newly established company should also carry out the following primary work before commencing the audit.

Commencement of Audit
Commencement of Audit

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1.   Appointment of the auditor:

   The auditor can examine his appointment the shareholder have right to appoint an auditor .a copy of resolution shows the decision of management for appointment.

2.   Previous auditor:

   The auditor can write a letter to old auditor for obtaining his consent. He must have no objection to such appointment. it is moral duty of new auditor to inform old auditor for appointment.

3.   Time of Audit:

   The audit can consult the management for fixing time of audit the stating data is fixed with the consent of management. The time allocated utilized for proper audit work.

 4.   Time required:

   The auditor can decide the time required for completion of audit work he can engage sufficient audit clerks to complete work in time otherwise the cost of audit increases.

5.   Audit staff:

   The auditor can arrange audit staff on the basis of work load. The number of audit Clerks can be engaged on the basis of audit work. There should be no extra burden of work on audit staff.

6.   Audit duties:

   The auditor cannot fix audit duties such duties are usually stated in audit engagement letter. The duties stated in company’s ordinance cannot be overlooked.

7.   Nature of business:

   The auditor can check the nature of business. The nature may relate to manufacturing, trading or services. The auditor must know the nature of activities in order to conduct audit.

8.   Business History:

   The auditor should record the history of business. He can record year of establishment nature and number of products available in market.

9.   Types of product:

   The business may produce different products of successful working. One product or service is not sufficient to compete in the market the auditor should note the types of product.

10.  List of officers:

   The auditor can ask for list of officer their duties and specimens signature he must know authority and responsibility of officer.it is essential for completion of audit work.

 11. Copies of documents:

   The auditor can collect copies of document like memorandum of association and articles of association. He can examine all such document for the purpose of audit.

12. Books of account:

   The auditor can obtain lists of books of account he can check that legal requirement are followed in preparing books of account.

13. Internal control:

              The internal control system is tested to rely on it. Audit sampling is possible if it is effective the business work flow under proper accounting and administrative control.

14. Certificates of clients:

             The auditor can obtain certificate from client, the confirmation of accounts from debtors and creditor is possible. The client can issue stock valuation certificate for the auditor.

15.   Old reports:

   The auditor should examine old audit report. he can note the weakness stated in previous report he can check that weak point stated in old report are net repeated during this year.

16. Analytical review:

           The auditor can check the ration and percentage for a number of years he can examine the trend of various items in order to note the usual items.

17. Prepare report:

          The auditor can prepare report for work done by him. When he is fully satisfied there is clean report. In case of bad working he can submit qualified report to the shareholders.

About the author

Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

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