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ADVANCED AUDIT &

ASSURANCE
EXAM SPECIFIC SEMINAR
Summer 2012

BY: HASNAIN R. BADAMI


06 MAY 2012
AGENDA OF TODAYS SEMINAR
Time: 2.0 2.5 hours
Introduction
Analysis of the past five ICAP papers
Broad Key Areas
Audit Risk and Business Risk
How to deal with Ethics Questions
How to deal with Reporting Questions
Use of Open Book & Practice Materials
Question and Answer Session
INTRODUCTION
ANALYSIS OF PAST 5 ATTEMPTS
AUDIT RISK AND BUSINESS RISK

Audit Risk
Definition
How can possibly an audit risk arise?
Error
Fraud
Drafting Audit Risk
AUDIT RISK AND BUSINESS RISK

Business Risk
Financial, Operational and Compliance
Risk
Drafting Business Risk
LINKING
BOTH THE
RISKS
ADDRESSING THE
AUDIT RISK
AUDIT RISK AND BUSINESS RISK

Five rules for drafting an appropriate


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audit procedure
Dont be vague, use a proper verb!
What exactly you did in the procedure?
Must be addressing the risk!
Prioritize !
Practice !
PRACTICE QUESTION
ETHICS AND QUALITY
CONTROL CONSIDERATIONS
HANDLING ETHICS & QC QUESTIONS

Rules to answer ethics questions


Relate the threats to the fundamental
principles, where possible
Relate to local laws, where possible
Justify the threats!
Amend and Justify your safeguards
Think for other implications in the scenario!
HANDLING ETHICS & QC QUESTIONS

Important areas of Code of Ethics:


Independence (Link with ISQC requirements
on ethics)
Confidentiality
Fee and related matters
Professional appointments (Link with ISQC
client acceptance)
Ethical conflicts
HANDLING ETHICS & QC QUESTIONS

Important areas of Quality Control


Client acceptance and continuance
requirements
Engagement performance
PRACTICE QUESTION
DEALING WITH
REPORTING QUESTIONS
REPORTING QUESTIONS - Guidelines

State specific non-compliance;


Explain the correct treatment as per the criteria;
Any other implication?
Assess materiality to compare with the PM
Effects on the audit report;
If immaterial, consider with other misstatements
whether it becomes material or not;
If immaterial, it should be noted in schedule of
individually immaterial misstatements ;
Report to BL / ML if not in AR.
PRACTICE QUESTION
HOW TO MAKE USE OF
OPEN BOOK
OPEN BOOK STRATEGY
Lets consider ISA 550 Related Parties
Understand the objectives underlying this ISA.
Only paragraph 8 can be capitalized in case of open book,
which require listing of audit procedures to identify
completeness of related parties.
Other requirements require practical application. E.g.
paragraph 11 which discusses indications of existences of
previously unidentified related parties.
transactions processed in unusual manner.
Requirements of IAS 24. Most important is the definition and
disclosures. Link with fraud.
CCG clauses and changes in the review report of CCG.
Relevant sections of Companies Ordinance, 1984 including
section 3, 195 and 208.
PREPARATION
MATERIAL
TECHNICAL RELEASES
- REVISED 2012
QUESTIONS?