Sample Audit Programs

As per ISA 300 Planning, the auditor should develop and document an audit program setting out the
nature (what), timing (when) and extent (how much) of planned audit procedures required to implement
the overall audit plan. In preparing the audit programs, the auditor would consider the specific
assessments of inherent (IR) and control risk (CR) and the required level of assurance to be provided by
the substantive procedures. The audit programs should be revised as necessary during the course of the
audit because of changes in conditions or unexpected results of audit procedures. The reason for
significant changes would be recorded.
The following table shows how the acceptable level of detection risk (shaded area) may vary based on
assessments of inherent and control risk.
Auditor's Assessment of control
risk is:
Auditor's
Assessment of
inherent risk is:

High

Medium

Low

High

Lowest

Lower

Low

Medium

Lower

Medium

Higher

Medium

Higher

Highest

Low
Purpose

The purpose of an audit program is to group management assertions in the form of financial statements
into auditor's audit objectives and then link the understanding obtained during the planning phase related
to the financial statement assertions to the assessment of the risk of significant misstatement (ROSM) and
planned audit procedures. It documents:
n

A summary of the audit objectives related to this process and whether the audit objectives are critical

Financial statement assertions that were combined into each audit objective

The assessment of ROSM for each audit objective

Planned procedures to gain audit evidence to support ROSM for each audit objective (may also
include results of the procedures)

Planned substantive audit procedures for each audit objective (may also include results of the
procedures).

The enclosed list contains possible suggested audit procedures for different financial statement
components (mostly for the manufacturing concern). All of these procedures will rarely be selected to
minimize the detection risk to an acceptably low level.

The following alphabets have been used to indicate the assertion addressed in a step:
Assertion

Alphabet

Class of
transaction
and events

Account
balances at
period end

Presentation
and
disclosure

Occurrence

Completeness

Accuracy

Cut off

Classification

Existence

Rights and obligation

Valuation

Allocation

Understandability

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(a)

Fixed assets (tangible, intangible & CWIP)

Client:
Period:
Subject:
S. No.

Fixed assets (tangible, intangible & CWIP)

Audit Objectives

Assertions

Risk Assessment
IR

1.

Fixed assets are completely and accurately

recorded
All recorded fixed assets actually exist.

3.

Fixed assets are recorded at appropriate values.

4.

Fixed assets recorded are owned by the client

and title is also in the name of client.

Depreciation /amortisation expense and gain/

loss on disposal has been accurately calculated
and appropriately disclosed.

OCATL

Fixed assets are presented and all disclosures

have been given in accordance with the Fourth
Schedule of the Companies Ordinance, 1984
and relevant IASs.

OCAL
RVU

Audit Procedures

Objective

Assess the reasonableness of design of system

of internal control by enquiring relevant client
personnel and documenting the same (if not a
documented system manual has been
developed by the client). A walk through test
would be necessary to confirm the
understanding as documented. Identify the
preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions and
event) controls established by management to
support its assertions.

ALL

6.

S. No.
Test of Controls
1.

ROSM

CA

2.

5.

CR

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

3.

Check that proper fixed assets register has been

maintained and entries are made in the register
on prompt and consistent basis and the same is
reconciled with general ledger and physically
verified assets on periodical basis in
accordance with TR-6 of ICAP.

ALL

4.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of error/
fraud, proper steps have been taken to avoid
recurrence of the same.

CE

5.

Ensure that management does not override the

designed controls by

6.

Enquiring from the designated staff person

-Remain skeptical during performing test

of design and test of effective operation

Document the conclusion after performing test

of controls and required level of assurance
from substantive procedures.

N/A

Analytical Procedures
1.

Assess the appropriateness of depreciation/

amortisation method and rate in view of the
flow of economic benefits and life of the
assets.

2.

Check the reasonableness of depreciation

expense by applying depreciation rate to
closing cost/ carrying value as per the method
adopted

CAL

3.

Document logical commercial reasons for

major additions and disposal made during the
year

AU

4.

Compare current year balances and expense

with last year balances and ensure that any
significant variation should be properly and
logically reasoned.

CEA

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

1.

Obtain movement schedule of tangible and

intangible fixed assets and Capital work-inprogress both for cost and accumulated
depreciation. Check casting and cross casting
of the schedule.

CEA

2.

Trace opening balances from fixed assets

register, general ledger and last years
working papers.

3.

Make a selection of fixed assets held by client

at year-end and physically inspect them to
ensure that:

Test of Details

4.

5.

(a)

Asset is owned and held by client.

(b)

Remaining useful life appears to be

correct

For selected additions during the current

period:
(a)

For purchases in current year, capital

expenditure approvals and vendors
invoices.

(b)

Ensure that additions to fixed assets do

not include any amount of a nature of
revenue expenditure.

(c)

Ensure that where full payment has not

been made for what so ever reason, asset
is recorded at full cost and balance has
been recognized as liability.

For selected assets disposed of during the

current period:
(a)

Examine documents authorizing

disposal.

(b)

Examine documents supporting amounts

for which assets were sold e.g. cash
receipts

(c)

Calculate gain or loss on disposal of

fixed assts

CE

CEV

CEV

OAL

Done by

W. P. Ref.

S. No.
6.

7.

Audit Procedures
To check depreciation expense:
(a)

Determine the reasonableness of

accounting policy and depreciation
method, rates and their consistency with
prior years.

(b)

Check calculation of depreciation of

selected assets.

(c)

Assess the reasonableness of allocation

to manufacturing costs, admin cost etc.

Ensure that none of the assets is impaired or

the recoverable amount of an asset is not less
than its carrying amount. If the carrying
amount of an asset is more than its
recoverable amount, that same should be
reduced to recoverable amount recognising
the reduction as impairment loss

Objective
OCAL

Ensure that any subsequent addition should be

depreciated over remaining life and not simply
depreciated by applying the depreciation rate.
8.

Inspect evidence of ownership e.g. vehicle

registration, property documents, machinery
import documents etc.

9.

Ascertain the nature of each significant

intangible asset by inquiry or reviewing
information contained in prior-years working
papers.

10.

Ensure that all intangible assets fully comply

with the recognition criteria of the IAS 38 i.e.

EVR

11.

(a)

Flow of economic benefits to enterprise

is expected in future, and

(b)

Cost of the asset may be determined

For selected intangibles additions during the

year: (a)

Trace the recorded value to supporting

documents e.g. independent valuation
for purchases in current year.

(b)

Obtain authorization or board minutes.

Done by

W. P. Ref.

S. No.
12.

Audit Procedures
For selected intangible assets disposed-off
during the year: (a)

Examine supporting documents (e.g.

cash receipts).

(b)

Calculate gain or loss on sale of assets

Objective
CEV

13.

Determine that client's accounting policies for

amortization are appropriate and applied
consistently and are not inconsistent with the
IAS 38.

14.

For additions in leased assets during the year,

check from lease agreements that the lease is a
finance lease in substance.

CEKR

15.

Ensure that depreciation on leased assets is

calculated on the same rates as for owned
assets.

OCV

If there is no reasonable certainty that the

lessee will obtain ownership by the end of the
lease term, the assets should be fully
depreciated over the shorter of the lease term
or its useful life.
16.

For selected additions to CWIP during the

year: (a)

Check supporting documents like

vendors' invoices, contractor bills, and
other evidences.

(b)

Check proper authorization and

approval.

17.

For selected transfers to fixed assets during

the year, check contractor certificates of
completion of project and proper approval
thereof and examine the stage of completion.

18.

For items stuck-up for considerable period of

time, inquire about its status from the
management. Compute provisions if required
and ask for management representations.

19.

In case of revalued assets ensure that

Entire class of assets has been revalued on

periodical basis

Any asset's revaluation results in deficit

should not be adjusted against other
assets' surplus but should be
immediately charged.

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

20.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

N/A

21.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

Done by

W. P. Ref.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(d)

Long term loans and advances

Client:
Period:
Subject:
S. No.

Long term loans and advances

Audit Objectives

Assertions

Risk Assessment
IR

1.
2.
3.

4.
5.

6.

Long term loans and advances are

completely and accurately recorded

Long term loans and advances are recorded

at appropriate values and all bad and
doubtful balances have been provided for/
written off.

Long term loans and advances recorded are

the right of the company.

Long-term loans and advances to associated

undertaking were in accordance with legal
requirements.

Laws &
Regulation

Long term loans and advances are presented

and all disclosures have been given in
accordance with the Fourth Schedule of the
Companies Ordinance, 1984 and relevant
IASs.

OCAL
RVU

Audit Procedures

Objective

Assess the reasonableness of design of

system of internal control by enquiring
relevant client personnel and documenting
the same (if not a documented system manual
has been developed by the client). A walk
through test would be necessary to confirm
the understanding as documented. Identify
the preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions
and event) controls established by
management to support its assertions.

ALL

Test of Controls
1.

ROSM

CA

All recorded long term loans and advances

actually exist.

S. No.

CR

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

3.

Check that proper subsidiary records have

been maintained and entries are made in the
same on prompt and consistent basis and the
same is reconciled with general ledger.

ALL

4.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been taken to
avoid recurrence of the same.

CE

5.

For sample of disbursements made during the

year: -

EV

6.

7.

(a)

Check approval of appropriate level of

management.

(b)

Check that the employee has fulfilled

all formalities necessary before
disbursement of loans.

Ensure that management does not override

the designed controls by
n

Enquiring from the designated staff

person

Remain skeptical during performing test

of design and test of effective operation

Document the conclusion after performing

test of controls and required level of
assurance from substantive procedures.

N/A

Analytical Procedures
1.

Compare current year balances and expense

with last year balances and ensure that any
significant variation should be properly and
logically reasoned.

Test of Details

CEA

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

1.

Obtain a employee-wise movement schedule

of principal amount of loans and advances
and interest thereon and trace the opening
balances from the general ledger, subsidiary
records, and last year working papers. Check
casting and cross casting of the schedule.

CE

2.

For disbursements made during the year

check disbursements of funds with
disbursement register and bank statement.

3.

For a sample of repayments made during the

year: (a)

Ensure that amount and date of

repayment was accordance with
repayment schedule or agreement.

(b)

Check receipt of funds with receipt

records and bank statement.

(c)

Recovery of interest is in accordance

with the policy (i.e. along with
principal or after recovery of full
principal, as the case may be).

EVR

4.

Circularize confirmations to selected parties.

Match replies with the amounts outstanding
against each party.

CER

5.

Obtain age-analysis of long-term loans and

advances and perform the following:-

VK

(a)

Verify that loans have been classified in

correct categories.

(b)

Current maturity has been appropriately

calculated and separately disclosed.

(b)

Consider the value of securities

available against each loan for the
purpose of calculation of provision for
doubtful loans and advances.

6.

Check subsequent recovery of loans etc.

7.

Ensure that all loans and advances to

associated undertakings are granted after due
compliance with legal requirements.

EV
Laws etc.

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

8.

Ensure that none of the loans and advances

are impaired or the recoverable amount of a
loan or advance is not less than its carrying
amount. If the carrying amount of a loan/
advance is more than its recoverable amount,
then same should be reduced to recoverable
amount recognising the reduction as
impairment loss

9.

For items stuck-up for considerable period of

time, inquire about its status from the
management. Compute provisions if required
and ask for management representations.

10.

Ensure that loans and advances should be

measured at amortised cost using the
effective interest rate method.

11.

Re-perform calculation of interest income on

test basis: (a)

Verify rate of interest from agreement/

policy.

(b)

Check the number of days for which

interest is to be charged.

OATE

12.

Test check loan agreement and legal

documents to verify the terms and conditions
of the advances

RU

13.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

CE

14.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

Done by

W. P. Ref.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(e)

Long term deposits and prepayments

Client:
Period:
Subject:
S. No.

Long term deposits and prepayments

Audit Objectives

Assertions

Risk Assessment
IR

1.

2.

3.

4.

5.

Long term deposits and prepayments are

completely and accurately recorded

Long-term deposits and prepayments are

recorded at appropriate values and all bad
and doubtful balances have been provided
for/ written off.

Long-term deposits and prepayments

recorded are the right of the company.

Long-term deposits and prepayments are

presented and all disclosures have been given
in accordance with the Fourth Schedule of
the Companies Ordinance, 1984 and relevant
IASs.

OCAL
RVU

Audit Procedures

Objective

Assess the reasonableness of design of

system of internal control by enquiring
relevant client personnel and documenting
the same (if not a documented system manual
has been developed by the client). A walk
through test would be necessary to confirm
the understanding as documented. Identify
the preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions
and event) controls established by
management to support its assertions.

ALL

Test of Controls
1.

ROSM

CA

All recorded long term deposits and

prepayments actually exist.

S. No.

CR

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

3.

Check that proper subsidiary records have

been maintained and entries are made in the
same on prompt and consistent basis and the
same is reconciled with general ledger.

ALL

4.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been taken to
avoid recurrence of the same.

CE

5.

For sample of deposits and prepayments

made during the year: -

EV

6.

7.

(a)

Ensure the commercial and logical

reason.

(b)

Check approval of appropriate level of

management.

Ensure that management does not override

the designed controls by
n

Enquiring from the designated staff

person

Remain skeptical during performing test

of design and test of effective operation

Document the conclusion after performing

test of controls and required level of
assurance from substantive procedures.

N/A

Analytical Procedures
1.

Compare current year balances and expense

with last year balances and ensure that any
significant variation should be properly and
logically reasoned.

CEA

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

1.

Obtain a party-wise movement schedule of

deposits and prepayments and trace the
opening balances from the general ledger,
subsidiary records, and last year working
papers. Check casting and cross casting of the
schedule.

CE

2.

For deposits and prepayments made during

the year check disbursements of funds with
disbursement voucher and bank statement.

3.

For a sample of refund of deposits during the

year: -

Test of Details

(a)

Ensure that amount and date of refund

was in accordance with agreement.

(b)

Check receipt of funds with receipt

records and bank statement.

EVR

4.

Circularize confirmations to selected parties.

Match replies with the amounts outstanding
against each party.

CER

5.

Obtain age-analysis of long-term deposits and

perform the following:-

VK

(a)

Verify that deposits have been

classified in correct categories.

(b)

Current maturity has been appropriately

identified and separately disclosed.

6.

Check subsequent recovery of deposits and

adjustment of prepayments etc.

EV

7.

Ensure that none of the deposits or

prepayments are impaired or the recoverable
amount of same is not less than its carrying
amount. If the carrying amount of a deposits
or prepayments is more than its recoverable
amount, then same should be reduced to
recoverable amount recognising the reduction
as impairment loss

8.

For items stuck-up for considerable period of

time, inquire about its status from the
management. Compute provisions if required
and ask for management representations.

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

9.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

CE

10.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

Done by

W. P. Ref.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(f)

Stores, spares and stock-in-trade

Client:
Period:
Subject:
S. No.

Stores, spares and stock-in-trade

Audit Objectives

Assertions

Risk Assessment
IR

1.

Stock-in-trade is completely and accurately

recorded

CA

2.

All recorded stocks-in-trade actually exist.

3.

Recorded stocks-in-trade are valued

appropriately.

Recorded stock-in-trade are owned by the

client and title is also in the name of client.

Stock-in-trade are presented and all

disclosures have been given in accordance
with the Fourth Schedule of the Companies
Ordinance, 1984 and relevant IASs.

OCAL
RVU

4.

5.

Test of Controls
1.

Assess the reasonableness of design of

system of internal control by enquiring
relevant client personnel and documenting
the same (if not a documented system manual
has been developed by the client). A walk
through test would be necessary to confirm
the understanding as documented. Identify
the preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions
and event) controls established by
management to support its assertions.

ALL

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

CR

ROSM

3.

Check that proper inventory listing has been

maintained and entries are made in the same
on prompt and consistent basis and the same
is reconciled with general ledger and
physically verified inventories on periodical
basis at least on annual basis.

ALL

4.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been taken to
avoid recurrence of the same.

CE

5.

Ensure that management does not override

the designed controls by

6.

Enquiring from the designated staff

person

Remain skeptical during performing test

of design and test of effective operation

Document the conclusion after performing

test of controls and required level of
assurance from substantive procedures.

N/A

Analytical Procedures
1.

Assess the appropriateness of purchases and

consumptions method and rate in view of the
flow of economic benefits.

2.

Check the reasonableness of consumption

allocated to inventories at different stages.

CAL

3.

Document logical commercial reasons for

purchases and consumption made during the
year

AU

4.

Check the appropriateness of compilation of

overheads and allocation basis of the same to
different products.

OAL

5.

Compare current year balances and expense

with last year and ensure that any significant
variation should be properly and logically
reasoned.

CEA

Test of Details
1.

Observe physical counting of inventories

carried out by the client at year-end or at any
other date and perform tests of intervening
transactions to ensure existence and
conditions unless impracticable. Also check
on sample basis some items to ensure
reliability.

CE

2.

Check that third party inventories are

identified and excluded from physical count.

CR

3.

For items owned by client but not physically

held, obtain independent confirmations from
custodians.

ER

4.

Obtain final inventory compilation schedule

and perform the following:

(a)

Test casting and calculation of

schedule.

(b)

Trace balances to the general ledger.

(c)

Trace quantities from physical stock

take working papers.

(d)

Trace prices used to build up the

average cost to purchase invoices.

5.

To test check cut-off of inventory, select

transactions from purchases, purchase returns
and sales (stock outs) of some days before
and after the year end and ensure proper
recording of transactions in correct period.

CO

6.

Determine that the basis of valuation of e.g.

FIFO or average cost is appropriate and
followed consistently.

7.

Obtain stock card of some items and ensure

that cost formula is correctly applied on
receipts and issues.

AC

8.

Compare cost of closing stock with its NRV

by comparing raw material with last invoice
from supplier, WIP with expected cost to
completion and finished goods with market
value less expenses necessary to make the
sale.

9.

Obtain aging of inventories and compute

provision for obsolete, damaged, or slow
moving stocks, if any. Ensure that raw
material of loss making and discontinued
products are adequately provided for.

10.

Ensure that stores and spares related to

specific machinery should lie longer than the
machine.

10.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

N/A

11.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(g) Advances, Deposits, Prepayments & Other
receivables
Client:
Period:
Subject:
S. No.

Advances, Deposits, Prepayments & Other receivables

Audit Objectives

Assertions

Risk Assessment
IR

1.

2.

3.

4.

Advances, deposits, prepayments & other

receivables are completely and accurately
recorded

CA

All recorded advances, deposits,

prepayments & other receivables actually
exist.

Advances, deposits, prepayments & other

receivables are recorded at appropriate
values and all bad and doubtful balances
have been provided for/ written off.

Advances, deposits, prepayments & other

receivables recorded are the right of the
company.

5.

Advances to associated undertaking were in

accordance with legal requirements.

Laws &
Regulation

6.

Advances, deposits, prepayments & other

receivables are presented and all disclosures
have been given in accordance with the
Fourth Schedule of the Companies
Ordinance, 1984 and relevant IASs.

OCAL
RVU

CR

ROSM

S. No.

Audit Procedures

Objective

1.

Assess the reasonableness of design of

system of internal control by enquiring
relevant client personnel and documenting
the same (if not a documented system manual
has been developed by the client). A walk
through test would be necessary to confirm
the understanding as documented. Identify
the preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions
and event) controls established by
management to support its assertions.

ALL

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

3.

Check that proper subsidiary records have

been maintained and entries are made in the
same on prompt and consistent basis and the
same is reconciled with general ledger.

ALL

4.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been taken to
avoid recurrence of the same.

CE

5.

Ensure that management does not override

the designed controls by

Test of Controls

6.

Enquiring from the designated staff

person

Remain skeptical during performing test

of design and test of effective operation

Document the conclusion after performing

test of controls and required level of
assurance from substantive procedures.

N/A

Analytical Procedures
1.

Compare current year balances and expense

with last year balances and expense and
ensure that any significant variation should be
properly and logically reasoned.

Test of Details

CEA

Done by

W. P. Ref.

S. No.

Audit Procedures

1.

Obtain a party-wise movement schedule of

advances, deposits, prepayments & other
receivables and trace the opening balances
from the general ledger, subsidiary records,
and last year working papers. Check casting
and cross casting of the schedule.

2.

For disbursements made during the year

check disbursements of funds with
disbursement register and bank statement.

3.

For a sample of repayments made during the

year: (a)

Ensure that amount and date of

repayment was accordance with
repayment schedule or agreement.

(b)

Check receipt of funds with receipt

records and bank statement.

Objective
CE

EVR

4.

Inquire about the nature of trade deposits.

Corroborate movements in trade deposits
with supporting documents

CER

5.

Obtain age-analysis of advances, deposits,

prepayments & other receivables and perform
the following:-

VK

(a)

Verify classification in correct

categories.

(b)

Current maturities of advances,

deposits, prepayments, & other
receivables has been appropriately
calculated and separately disclosed.

(c)

Consider the value of securities

available if any, for the purpose of
calculation of provision for doubtful
loans and advances.

6.

Check subsequent realizations / adjustments

etc.

EV

7.

Ensure that all loans and advances to

associated undertakings are granted after due
compliance with legal requirements.

Laws etc.

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

8.

Ensure that none of the advances, deposits,

prepayments & other receivables are
impaired or the recoverable amount is not
less than its carrying amount. If the carrying
amount is more than its recoverable amount,
then same should be reduced to recoverable
amount recognising the reduction as
impairment loss

9.

For items stuck-up for considerable period of

time, inquire about its status from the
management. Compute provisions if required
and ask for management representations.

10.

Document the nature of other receivables,

check the movement with supporting
documents and compute the amount of
provision for doubtful receivables, if
required.

11.

For short-term loans and advances to staff,

review companys policies for disbursement
and recoveries thereof, and ensure the same
with supporting documents. Verify on a test
basis deductions from advances to staff from
their respective payroll register.

CEV

12.

Test check loan agreement and legal

documents to verify the terms and conditions
of the advances

RU

13.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

CE

14.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

Done by

W. P. Ref.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(h)

Trade debts

Client:
Period:
Subject:
S. No.

Trade debts
Audit Objectives

Assertions

Risk Assessment
IR

1.

Trade debts are completely and accurately

recorded

CA

2.

All recorded trade debts actually exist.

3.

Trade debts are appropriately valued.

4.

Trade debts recorded are owned by the client.

5.

Trade debts are presented and all disclosures

have been given in accordance with the
Fourth Schedule of the Companies Ordinance,
1984 and relevant IASs.

OCAL
RVU

CR

ROSM

S. No.

Audit Procedures

Objective

1.

Assess the reasonableness of design of system

of internal control by enquiring relevant client
personnel and documenting the same (if not a
documented system manual has been
developed by the client). A walk through test
would be necessary to confirm the
understanding as documented. Identify the
preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions and
event) controls established by management to
support its assertions.

ALL

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

3.

Check that proper party wise subsidiary ledger

has been maintained and entries are made in
the same on prompt and consistent basis and
the same is reconciled with general ledger.

ALL

4.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of error/
fraud, proper steps have been taken to avoid
recurrence of the same.

CE

5.

Ensure that management does not override the

designed controls by

Test of Controls

6.

Enquiring from the designated staff person

Remain skeptical during performing test of

design and test of effective operation

Document the conclusion after performing test

of controls and required level of assurance
from substantive procedures.

N/A

Analytical Procedures
1.

Assess the appropriateness of discount and

credit policy in view of the flow of economic
benefits.

2.

Check the reasonableness of impairment

expense.

CAL

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

3.

Document logical commercial reasons for

major balances' additions and deletions made
during the year

AU

4.

Compare current year balances and expense

with last year balances and ensure that any
significant variation should be properly and
logically reasoned.

CEA

Test of Details
1.

Obtain a party-wise movement schedule and

trace the opening balances from the general
ledger, subsidiary records, and last year
working papers. Check casting and cross
casting of the schedule.

CE

2.

Make a selection of customers' balances and

circularize confirmations of selected parties.
Compare replies to requests. Ensure that
reconciling items, if any, are properly
supported and appropriately adjusted.

EVR

3.

Check subsequent clearance.

ER

4.

Inquire into significant disputed balances, if

any.

5.

Obtain a movement schedule of allowance for

doubtful debts and ensure completeness.

6.

Obtain aging of debtors and ensure that no

unreasonably delayed balances are appearing.

7.

Ensure the recoverability of the debtors

considered good. No subsequent event has
raised any doubts about their recoverability.

8.

Assess the reasonableness of methods used by

management in the business circumstances of
the client to estimate that the doubtful debts
are appropriate and ensure that the same is
applied consistently.

9.

Calculate provision for doubtful debts based

on age-analysis of debtors.

10.

Review documents, supporting

correspondence and authorization for selected
write-offs during the year. Obtain board
approval for write-offs.

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

11.

Select transactions from sales invoices and

customer returns notes pertaining to some
days prior to and after year-end and ensure
that they have been recorded in the correct
period.

12.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

N/A

13.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

Done by

W. P. Ref.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(i)

Cash and bank balances

Client:
Period:
Subject:
S. No.

Cash and bank balances

Audit Objectives

Assertions

Risk Assessment
IR

1.

2.

3.

4.

5.

All cash and bank balances are completely

and accurately recorded

CA

All recorded cash and bank balances actually

exist.

All cash and bank balances are recorded at

appropriate values.

All cash and bank balances recorded are

owned by the client and title is also in the
name of client.

All cash and bank balances are presented and

all disclosures have been given in accordance
with the Fourth Schedule of the Companies
Ordinance, 1984 and relevant IASs.

OCAL
RVU

CR

ROSM

S. No.

Audit Procedures

Objective

1.

Assess the reasonableness of design of

system of internal control by enquiring
relevant client personnel and documenting
the same (if not a documented system manual
has been developed by the client). A walk
through test would be necessary to confirm
the understanding as documented. Identify
the preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions
and event) controls established by
management to support its assertions.

ALL

2.

Check on sample of selected transactions

covering the whole period that all preventive
controls are exercised on all transactions.

ALL

3.

Check on a sample of transactions that

detective controls are appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been taken to
avoid recurrence of the same.

ALL

4.

Check that proper bank reconciliations are

prepared, checked and approved. Long
outstanding items are followed up and proper
disposition of such items is made.

ALL

5.

Proper segregation of duties between

custodian and accounting and approving
personnel exist.

6.

Payments vouchers are appropriately

prepared and properly approved by
designated authority.

7.

Ensure that management does not override

the designed controls by

Test of Controls

8.

Enquiring from the designated staff

person

Remain skeptical during performing test

of design and test of effective operation

Document the conclusion after performing

test of controls and required level of
assurance from substantive procedures.

CE

ECA

N/A

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

1.

Document logical commercial reasons for

new bank accounts opened and closed during
the year.

AU

2.

Compare current year balances with last year

balances and ensure that any significant
variation should be properly and logically
reasoned.

CEA

Analytical Procedures

Test of Details
1.

Attend year-end cash count and deposit

verification.

2.

Circularize direct confirmations to all banks.

ER

3.

Trace opening balance in general ledger from

last year working papers.

CE

4.

Obtain and examine bank reconciliations

ensure the following: n

No long outstanding item should remain

unfollowed,

No revenue nature item should be

appearing

All deposit made should be cleared within

two days

No long outstanding cheques of

significant amount are unpresented; if
so then check their payment voucher
and ensure that no discrepancy is
involved.

CEA

5.

Ensure that all balances etc. reported by bank

in replies to bank confirmation request are
included in records of the client.

CA

6.

Ensure that no balances are subject any

encumbrance, if so then disclosure is made.

7.

Convert FCY accounts into PKR at year-end

rate.

8.

Ensure that all bank accounts are in

company's name.

Done by

W. P. Ref.

S. No.

Audit Procedures

Objective

9.

Ensure that closing balances as per our

working paper file are in match with general
ledger.

N/A

10.

Determine that disclosures have been made in

accordance with the requirements of Fourth
Schedule to the Companies Ordinance, 1984
and the applicable IASs.

OCAL
RVU

Done by

W. P. Ref.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(a)

Accrued Expenses

Client:
Period:
Subject:
S. No.

Accrued Expenses
Audit Objectives

Assertions

Risk Assessment
IR

S. No.

To ensure that accrued expenses

represent valid claims by suppliers
against goods delivered or services
rendered to the entity.

Existence, Rights
& Obligations

To ensure that all goods and services

received by the entity have been
accounted for in the books of the
company on a timely basis.

Completeness

To ensure that liability is recorded at

the correct amount.

Valuation

To ensure that payables have been

presented, classified and disclosed in
the financial statements in accordance
with the requirements of applicable
financial reporting framework i.e.
Companies Ordinance, 1984 and
applicable International Financial
Reporting Standards.

Presentation &
Disclosure

Audit Procedures

Objective

Test of Controls
Select purchase transactions over the
period under audit and ensure the
following controls have existed during
the period:
Purchase orders are approved at an
appropriate level.

Only authorized
purchases are
made

Purchase orders are serially numbered.

All purchase
orders are entered
into the records

CR

Done by

ROSM

W. P. Ref.

S. No.

Entries are made only on the basis of

approved Goods Received Notes
(GRN).

Credit to accrued
expenses represent
goods actually
received

Entry to accrued expense account is

authorized at appropriate level and
supported by appropriate calculations.

All entries to
Accrued expenses
are authorized

Suppliers invoices are checked for

calculation and casting by a person
independent of the purchase
department

Accrued expenses
are recorded in the
appropriate
amount

Price charged by the supplier is

verified for appropriateness, for e.g. by
agreeing the rates charged to approved
price lists or quotations.

Accrued expenses
are recorded at the
appropriate
amount

An independent person compares the

purchase orders, goods received notes
and suppliers invoices for consistency.

Accrued expenses
have been booked
at appropriate
amount and
represent valid
claims by third
party

Suppliers statements are obtained and

reconciled to accounting records on a
regular basis

Accrued expenses
are accurately
recorded

Audit Procedures

Done by

Credit notes are checked for

correctness of calculation by a person
independent of the preparer.

Credit Notes
issued are
properly
calculated and
recorded at
appropriate
amount

Credit notes have been entered in the

same period to which the purchases
relate.

Credit Notes are

recorded in an
appropriate period

Analytical Procedures
1.

Compare accrued expenses to prior periods and budgets

seeking explanations for unusual items and significant
variances.

2.

Review monthly movement of accrued expenses in order to

identify any inconsistency particularly towards the period
end.

W. P. Ref.

3.

Analyse the turnover of trade creditor ratio of creditors to

total operating costs and compare to prior periods and
budgets, seeking explanations for unusual items and
significant variances.

4.

Review the ratio of individual expense accounts to sales or

other appropriate base.

5.

Review the accrued expense, purchases or expense ledgers

to identify whether there are any significant purchases or
expenses towards the period end. Check that these have
been accounted for in the correct period.

Test of Details
1.

2.

TEST THE PROPRIETY OF ACCRUED EXPENSE

ACCOUNTING POLICIES AND PROCEDURES
A.

Review the information in prior-year working papers

and/or inquire concerning the nature of each
significant accrued expense account and the policies
and procedures used to account for them.

B.

Inquire as to the reasons for significant changes in

accrued expense balances since the prior year.

C.

Determine that the accounting policies and procedures

for identifying when liabilities should be recorded are
appropriate and applied consistently.

D.

In the course of performing the following procedures

in this Program, consider whether audit evidence we
examine supports our understanding of accrued
expense accounting policies and procedures and their
propriety.

TEST ACCRUED EXPENSES BALANCES

A.

Perform Procedure 1, Steps B to D, in the Model Audit

Program for Payables. For selected subsequent cash
disbursements or unpaid invoices that indicate
liabilities incurred but not recorded as accounts
payable in the audit period, ascertain that they were
recorded in an appropriate accrued expense account.

B.

Inquire and/or review information in prior-year

working papers concerning the nature of recorded
accrued expenses. Inquire and consider other
available evidence, if any, that unrecorded or underrecorded liabilities exist. Consider the following
sources of evidence, among others, as applicable:
prior-year balances of accrued expense accounts;
prior and current-year balances of related expense
accounts; minutes of meetings of the board of
directors; discussions with internal legal counsel;
responses to letters of inquiry to independent legal
counsel; employee benefit plans (e.g., pension,
medical, vacation, deferred compensation) and reports
from actuaries, insurance companies, etc.; subsequent
payroll records; significant contracts for services
performed in the audit period.

C.

Make a selection of the significant accrued expenses

noted while performing Steps A and B (including any
that appear to exist but are unrecorded or underrecorded).
1.

For selected accruals that are based primarily on

known data (i.e., that are not accounting
estimates), examine documents supporting the
amounts accrued (e.g., service contracts or
invoices, subsequent payroll records, property tax
statements).

2.

For selected accruals that are accounting

estimates (e.g., liabilities for certain employee
benefits plans and legal contingencies):

3.

2.1

Evaluate the reasonableness of the methods

and assumptions management used to
make the estimates.

2.2

If management's methods and assumptions

were reasonable, test the data and
assumptions underlying the estimates, and
re-compute the estimates.

2.3

If management's methods and assumptions

were not reasonable, develop an
independent range of reasonable estimates
and determine whether management's
estimates fall within that range. (Note:
The factors that might be considered will
vary according to the nature of the
liabilities.)

For selected accruals with significant balances in

the prior year that no longer exist or that have
significantly lower balances in the current year:

4.
3.

Assess whether the circumstances requiring

the accruals in the prior year no longer
exist or whether they warrant reductions in
the amounts accrued.

3.2

If the accounts consist of only one or very

few transactions (e.g., a prior-year accrual
for a legal liability), trace the disposition of
the liability (or partial disposition) to
supporting documents (e.g., cancelled
checks).

Evaluate results of the tests.

TEST PRESENTATION OF ACCRUED EXPENSES

A.

B.

4.

3.1

Determine that the following balances, if any, are

properly classified:
1.

Debit balances in accrued expenses.

2.

Non-current accrued expenses.

Determine that the following, if any, are properly

recorded, classified, and/or disclosed, as appropriate:
1.

Accrued expenses owed to related parties.

2.

Loss contingencies.

3.

Retirement plans.

4.

Post retirement health care and life insurance

benefit plans.

5.

Property taxes estimated with a substantial

measure of uncertainty.

6.

Lease obligations.

TEST BALANCES DENOMINATED IN FOREIGN

CURRENCIES
A.

Agree the closing exchange rate(s) used to published

records and test the translation calculations.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(k)

Short Term Borrowings

Client:
Period:
Subject:

S. No.

Short Term Borrowings

Audit Objectives

Assertions

Risk Assessment
IR

All short term borrowings on the

balance sheet represent valid claims by
banks or other third parties.

Existence, Rights
& Obligations

To ensure that all short term borrowings

have been accounted for in the books of
the company on a timely basis.

Completeness

To ensure that liability is recorded at the

correct amount.

Valuation

To ensure that short term borrowings

have been presented, classified and
disclosed in the financial statements in
accordance with the requirements of
applicable financial reporting
framework i.e. Companies Ordinance,
1984 and applicable International
Financial Reporting Standards.

Presentation &
Disclosure

CR

ROSM

S. No.

Audit Procedures

Analytical Procedures
1.

Compare current year balances with prior year and ensure

reasonableness of changes during the year.

2.

Enquire into and obtain explanations for any unexpected

changes.

Test of Details
1.

CONFIRM DEBT
A. Obtain a schedule of short term borrowing (including
debt outstanding at the end of the prior year, as well as
any new debt or renewal of debt) showing beginning and
ending balances and borrowings and repayments during
the year, and perform the following:
1.

2.
B.

To obtain assurance about the completeness of the

schedule:
1.1

Make inquiries of knowledgeable

management.

1.2

Consider any evidence of additional debt

obtained through examination of minutes of
the board, significant contracts,
confirmations of bank accounts, support for
subsequent cash disbursements (when
testing payables), and other documents.

Test the summarization and trace the ending

balances to the general ledger.

For each lender (or, in some circumstances, selected

lenders) with which the client had debt outstanding at
the prior year end or during the current year, prepare, or
have the client prepare, a confirmation request for the
amount(s) owed to the lender, and perform the
following:
1.

Ascertain that the confirmation asks for all

information likely to be relevant to our tests of
debt and related interest balances (e.g., applicable
interest rates, due dates, the date to which interest
has been paid, collateral and security interests).

Done by

W. P. Ref.

C.
2.

2.

Mail the requests under our control to a person

within the lending institution who would be
expected to be knowledgeable about the client's
obligations, including any contingent liabilities,
guarantees, letters of credit, security agreements,
or similar matters with which the lender may be
involved.

3.

Send second requests for non-replies.

4.

Compare replies to requests. Prepare, or have the

client prepare, reconciliations of exceptions.
Trace reconciling items to supporting documents.

Evaluate results of the tests.

TEST ACCRUED INTEREST

A. Obtain a schedule of accrued interest expense (which
may be prepared in connection with the schedule of debt
in Procedure 1 above). Test the summarization and trace
the total or the individual amounts, as applicable, to the
general ledger.
B.

C.
3.

Make a selection of debt instruments tested in Procedure

1 and, for each item selected, perform the following:
1.

Based on the information in the confirmation

concerning the date through which interest was
paid and the applicable interest rate, re-compute
the amount of accrued interest.

2.

If the information needed to re-compute the

amount was not confirmed:
2.1

Examine the debt agreement evidencing the

interest rate.

2.2

Obtain and examine cash disbursement

records (usually the paid check) evidencing
the most recent payment of interest.

2.3

Re-compute the amount of accrued interest.

Evaluate results of the tests.

TEST INTEREST EXPENSE

A. Calculate overall interest expense on loans for the year,
and compare with recorded interest expense.

4.

TEST VALUATION AND PRESENTATION OF DEBT

AND INTEREST ACCOUNTS

A. Determine that the following items, if any, are properly

recorded, classified, and/or disclosed, as appropriate:

B.

C.
7.

1.

Debt owed to related parties.

2.

Debt callable by the creditor (e.g., due to loan

covenant violations).

3.

Short-term obligations expected to be refinanced.

4.

Imputed interest (e.g., when there is no stated

interest rate).

5.

Discounts or premiums and related amortization.

6.

Unconditional purchase obligations.

Read the provisions in loan and debt agreements (and

update descriptions thereof contained in our permanent
files, if applicable) and perform the following:
1.

Test that the client is in compliance with loan

covenants and other significant provisions of the
agreements.

2.

If there are any provisions with which the client is

not in compliance, determine whether the debt
should be classified as current. If enforcement of
the provisions has been waived by the lender,
obtain confirmation of the waiver from the lender.

Determine that the accounting policies and methods of

recording debt are appropriate and applied consistently.

TEST BALANCES DENOMINATED IN FOREIGN

CURRENCIES
A. Agree the closing exchange rate(s) used to published
records and test the translation calculations.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(l)

Surplus on Revaluation

Client:
Period:
Subject:
S. No.

Surplus on Revaluation
Audit Objectives

Assertions

Risk Assessment
IR

S. No.

Surplus on revaluation represents valid

gains on revaluation of fixed assets.

Existence, Rights
& Obligations

To ensure that all transfers to and from

the account have been made in
accordance with the requirements of
applicable financial reporting
framework, i.e. Companies Ordinance,
1984 and applicable International
Financial Reporting Framework.

Completeness

To ensure that the surplus has been

stated on the balance sheet at an
appropriate amount.

Valuation

To ensure that Surplus on Revaluation

has been presented, classified and
disclosed in the financial statements in
accordance with the requirements of
applicable financial reporting
framework i.e. Companies Ordinance,
1984 and applicable International
Financial Reporting Standards.

Presentation &
Disclosure

Audit Procedures

Analytical Procedures
1.

Compare current year balances with prior year and ensure

reasonableness of changes during the year.

2.

Enquire into and obtain explanations for any unusual changes

during the year.

Test of Details
1.

TEST SURPLUS BALANCE

CR

Done by

ROSM

W. P. Ref.

A. Obtain a schedule of Revaluation of fixed assets

showing assets wise detail, cost of the assets, revalued
amount, name of valuer.

2.

1.

Test the summarization of the schedule.

2.

Trace totals to the general ledger.

3.

Examine the valuers report to ensure the

correctness of revalued amount of the fixed assets
and ensure independence of the valuer and
checked appropriateness of assumptions used by
valuer.

4.

Check the increase in value of the assets has been

transferred to separate account called surplus on
revaluation of fixed assets in accordance with
Section 235 of the Companies Ordinance, 1984.

5.

Check that the surplus on revaluation of the fixed

assets has been applied:
a)

Only to the extent actually realized on

disposal of revalued assets.

b)

On setting off any deficit arising from the

revaluation of any other fixed assets of the
company.

6.

Check incremental depreciation transferred from

surplus to unappropriated profit / accumulated
loss.

7.

Check compliance with the requirement of IFRS

12 Income Taxes (Revised) in respect of
deferred Tax on surplus on revaluation of fixed
assets.

TEST PRESENTATION OF SURPLUS ON

REVALUATION OF FIXED ASSETS
A. Determine that disclosures have been made in
accordance with the requirements of the Companies
Ordinance, 1984 and the relevant accounting
pronouncements.

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(a)

Sales

Client:
Period:
Subject:
S. No.

Sales
Audit Procedures

Audit Assertion
Addressed

TEST OF CONTROLS
1

Make a selection of sales transactions

from independent source records e.g.
shipping records, delivery orders,
purchase orders etc.

Occurrence

Test the completeness of source records

by ensuring their numerical sequences.

Completeness

For each item selected above:

Completeness

(a) Trace it to sales invoice

(b) Agree sales invoice prices to a price
list / agreements.
(c) Determine that the sales was
recorded in the correct period.
(d) Trace sales invoice amount to a
sales journal
(e) Trace sales journal total to the
general ledger
4

Make a selection of recorded sales

returns and each selected item: (a) Trace it to credit notes.
(b) Trace credit notes to goods
receiving documents and original
sales invoices.
(c) Determine that credit notes were
recorded in the correct period.

Check that sales data is input only once

and is subject to validation.

Completeness

Done by

W. P. Ref.

Access to sales system is restricted by

user ID and password.

7.

Check that prices charged in accordance

with the approved price list.

8.

Check that the quantity discount are in

accordance with the approved limits.
ANALYTICAL PROCEDURES

Perform analytical procedures on sales

by developing an expected amount of
sales based on prior years figures or
current period economic conditions and
then comparing it with actual amount
any significant differences should be
enquired into and corroborated.

Occurrence
Completeness

TEST OF DETAILS
1.

Make a selection of transactions from

recorded sales and shipping records for
prior and after period-end and ensure
proper cut-off.

Consider reasonableness of revenue by

multiplying the number of units with
the average selling price

3.

Determine that the accounting policies

and methods of revenue recognition are
appropriate and are applied consistently.

4.

Determine that disclosures have been

made in accordance with the
requirement of Companies Ordinance,
1984 and relevant accounting
pronouncements.

5.

Conclude on the result of the work

performed.

Completeness
Occurrence

Valuation
Measurement
Presentation /
Disclosure

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(b)

Cost of Sales

Client:
Period:
Subject:

Cost of Sales

S. No.

Audit Procedures

Audit Assertion
Addressed

TEST OF CONTROLS
1.

Select a sample of transactions from

each of the cost of sales transactions
and check the following:
n

Expenses are approved in

accordance with the companys
policy

Expenses are supported by

documentation.

Tax is deducted at source in

accordance with the Income Tax
Ordinance, 2001.

Payments are made only through

crossed cheques other than those
allowed by Income Tax
Ordinance.

Expenses are posted in the correct

account code.

ANALYTICAL PROCEDURES
1.

2.

Perform analytical review of cost of

sales and inquire and corroborate
significant variations from prior
period and budgeted amounts.

For other items in cost of sales:

Completeness
Occurrence

Occurrence

Done by

W. P. Ref.

a)

Review all heads analytically

and document reasons for
significant variations.

b)

Examine supporting documents

for selected items to ensure
their validity.

TEST OF DETAILS
1.

Perform tests of details as under:

Completeness

a) Reconcile recorded cost of sales

to corresponding credits in
inventory accounts.
b) Make a selection of debits to
inventory accounts (i.e.
purchases) during the year. For
each items selected:
(i)

Trace the item to a

purchases journal total.

(ii)

Make a selection of
individual purchases from
the journal.

(iii)

Trace the selected

purchases to a supplier
invoice and receiving
records.

(iv)

Determine that the

purchases were recorded
in the correct period.
Completeness

c) Ensure proper cut-off of

purchases.
2.

3.

Determine that disclosures have been

in accordance with the requirements
of Companies Ordinance, 1984 and
relevant accounting pronouncements.
Conclude on the results of work
performed.

Occurrence
Presentation/
Disclosure

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(c)

Admin Expense

Client:
Period:
Subject:
S. No.

Admin Expense
Audit Procedures

Audit Assertion
Addressed

TEST OF CONTROLS
1.

For salaries and other benefits

perform the test of details stated in the
salaries work programme

2.

Select a sample of transactions and

check the following:
n

Expenses are approved in

accordance with the companys
policy

Expenses are supported by

documentation.

Tax is deducted at source in

accordance with the Income Tax
Ordinance, 2001.

Payments are made only through

crossed cheques other than those
allowed by Income Tax
Ordinance.

Expenses are posted in the correct

account code.

ANALYTICAL PROCEDURES
1.

PL3

Perform analytical procedures to

evaluate administration / selling /
marketing expenses:
a) Develop expectations of
significant expenses.
b) Compare the expected amounts
with actual recorded amounts.
c) Inquire and document reasons for

Completeness

Performed
by

Reference

major variations.
TEST OF DETAILS
1.

Select a sample of recorded expenses

and examine proper supporting
documents for relevant expenses e.g.
rent agreements for rent expenses,
personal files and payroll for salaries
and other allowances etc.

Occurrence

2.

Scan general ledger of expenses and

investigate large and unusual items
and expenses were incurred for the
purposes of the business.

Completeness

3.

Determine that disclosures have been

made in accordance with the
requirements of Companies
Ordinance, 1984 and relevant
accounting pronouncements.

Presentation/

4.

Conclude on the result of the work

performed.

Completeness
Measurement

Disclosure

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(d)

Financial Charges

Client:
Period:
Subject:

Financial charges

S. No.

Audit Procedures

Audit Assertion
Addressed

TEST OF CONTROLS
1

Check that the company itself

recalculates the financial charges
levied by the bank. Check that such
calculation is reviewed by an
authroised personnel.

2.

Check that before obtaining financing

rates of financing are obtained from
different banks and financing is
obtained on most economical and
other terms.

3.

Carry out companys search at

registrars office to ensure that all
financings and their related finance
charges are appearing in the books of
accounts for which charge has been
registered.

ANALYTICAL PROCEDURES
Compare current year with prior year
and budgeted amounts to anyalyse the
variation in the expenses. Inquire and
document the reasons for variation
TEST OF DETAILS
1

Select a sample of recorded financial

charges and perform the following:

Occurrence

a) Examine supporting documents to

verify rates of financial charges.

Measurement

b) Re-calculate amount of financial

charges on the basis of amounts,
number of days and rates of
financial charges.

Completeness

Ensure that charge on WPPF, WWF

and CRF are calculated as per the

Valuation

Done by

PL 5

W. P. Ref.

rules of WPPF. Check that the

payments of prior year was made
within the stipulated time.
3

Determine that all loans, borrowings,

leases etc. have been considered to
ensure that there are no unrecorded or
under recorded financial charges.

Completeness

Determine that disclosures are in

accordance with the requirements of
Companies Ordinance, 1984 and
relevant accounting pronouncements
and no netting of is performed of
income and expenses.

Presentation/

Conclude on the result of the

performed.

Disclosure

WP Ref.:
Prepared by:
Date:
Reviewed by
Date

Audit Program
(e)

Other Income

Client:
Period:
Subject:
S. No.

Other Income
Audit Procedures

Audit Assertion
Addressed

TEST OF CONTROLS
1

PL 7

Obtain a sample of investments made

by the company and check that the:
n

Investments made are authorised

and in accordance with the
companys objects.

Check that the income on the

investments is checked and
accrued on a timely basis

2.

For scrap sales check that the sales

are made on the most economic
terms.

3.

Check that procedures are in place to

ensure that good material is not
transferred to scrap yard.

ANALYTICAL PROCEDURES
Compare current year with prior year
and budgeted amounts to anyalyse the
variation in the expenses. Inquire and
document the reasons for variation
TEST OF DETAILS
1

Review the marketable securities and

related accounts (e.g., interest and
dividend income) in the general
ledger for unusual items.

Test accrued interest and interest

earned during the period on
receivables; determine whether
interest should be imputed on longterm receivables arising during the
period.

Existence

Valuation and
Measurement

Done by

W. P. Ref.

Verify interest and dividend income

on marketable securities, investments,
and equity in earnings (losses) of
investees by calculating interest
earned or by referring to published
records of dividends paid or to the
financial statements of investees.

Valuation &
Measurement

Verify computations of gains and

losses from sales of marketable
securities and investments.

Measurement

Select a sample of assets retired

during the period and check:

Existence

Authorisation;

Computation of gain or loss on

disposal of fixed assets

Timely deletion from fixed assets

records.

Select a sample of scrap sales, and

check for:
n

Authorisation;

Proper recording of gain; and

Receipt of scrap proceeds.

Check that all material items have

been presented and disclosed in
accordance with the requirements of
Companies Ordinance, 1984 and
IASs.

Conclude on the results of work

performed.

Measurement

Presentation &
Disclosure