ASSETS - 4G Accounts



| |AUDIT OBJECTIVES | | | | |

| | | | | | | |

| | |To determine whether: | | | |

| | | | | | | |

| | |A. |The cash and bank balances represent all cash that are owned and on| | | |

| | | |hand, in transit to or from financial institutions, or in financial| | | |

| | | |institutions or held in custody by others for the account of the | | | |

| | | |entity, and are properly recorded. | | | |

| | |B. |The cash and bank balances are properly described and classified, | | | |

| | | |and adequate disclosures (including amounts restricted, committed | | | |

| | | |or pledged) with respect to these amounts have been made. | | | |

| | | | | | | |

| | |SUBSTANTIVE PROCEDURES | | | |

| | | | | | | |

| | |1. Overall Analytical Review | | | |

| | | | | | | |

| | |1.1 |Compare the balance of each significant cash and cash equivalent | | | |

| | | |account with the comparable balance for the preceding period. | | | |

| | | |Investigate significant or unusual fluctuations. | | | |

| | |1.2 |Trace the opening balances from last year’s working paper file and | | | |

| | | |initial them. | | | |

| | |1.3 |Compare the ratio of available cash to cash invested with the | | | |

| | | |comparable ratio for the preceding period. Investigate significant | | | |

| | | |or unusual fluctuations. | | | |

| | |1.4 |Relate changes in working capital and in debt balances to changes | | | |

| | | |in cash balances and compare cash balances to seasonal fluctuations| | | |

| | | |in the entity’s business. | | | |

| | | | | | | |

| | |2. Circularization | | | |

| | | | | | | |

| | |2.1 |Have the client prepare "Standard Bank Confirmation" forms | | | |

| | | |(Scope/Sample: __________) and confirmations of investments. | | | |

| | | |(Scope/Sample: __________.) | | | |

| | |2.2 |Control mailing of first request. Retain copies. | | | |

| | |2.3 |Follow-up on confirmation requests and send second and third | | | |

| | | |requests as necessary. (First reminder to be sent after 15 days and| | | |

| | | |second reminder after 07 days of the first reminder with a copy to | | | |

| | | |the President of the bank). | | | |

| | |2.4 |Obtain representation from client for opening and closing of bank | | | |

| | | |accounts and confirm it, from the bank and cross refer it with the | | | |

| | | |general representation letter list of bank accounts provided. | | | |

| | |2.5 |Obtain confirmations/certifications duly addressed to us and | | | |

| | | |preferably directly provided to us with regard to cash balances | | | |

| | | |held by employees etc., on behalf of the Company not physically | | | |

| | | |counted by us. | | | |

| | | | | | | |

| | |3. Bank Balances | | | |

| | | | | | | |

| | |3.1 |Prepare summary of all bank balances and deposits on standard | | | |

| | | |schedule. | | | |

| | |3.2 |Obtain a copy of bank reconciliations/prepare using short form/long| | | |

| | | |form bank reconciliation format (Scope/Sample: __________ ) and | | | |

| | | |check clerical accuracy. | | | |

| | |3.3 |Trace balances on the reconciliations to the bank confirmations and| | | |

| | | |to the lead schedule or trial balance. | | | |

| | |3.4 |Obtain a list of outstanding cheques (Scope/Sample: __________). | | | |

| | | |Foot each list and compare the total to the bank reconciliation. | | | |

| | | |Test completeness of list through upstream and downstream | | | |

| | | |comparison of __________ checks with the post-year end bank | | | |

| | | |statement. Review list and bank statement for large or unusual | | | |

| | | |items and follow-up as deemed necessary. | | | |

| | |3.5 |Review the reconciliations and investigate any large or unusual | | | |

| | | |items. Test reconciling items greater than Rs. __________. | | | |

| | |3.6 |Investigate other reconciling items (e.g., bank errors, deposit | | | |

| | | |corrections, bank charges, returned cheques, etc.) for each account| | | |

| | | |included in the summary, maturity of those outstanding for long | | | |

| | | |periods. | | | |

| | |3.7 |Verify significant items by reference to the cutoff or subsequent | | | |

| | | |bank statements and supporting critical forms and documents ( | | | |

| | | |). Scope/Sample: ( ) | | | |

| | |3.8 |Obtain an explanation for other reconciling items that have not | | | |

| | | |cleared the bank in the subsequent period. | | | |

| | |3.9 |If the reconciliation is performed as of the balance sheet date, | | | |

| | | |propose adjustments for reconciling items that cleared the bank | | | |

| | | |before the reconciliation date but are recorded on the books at a | | | |

| | | |subsequent date (bank charges etc). | | | |

| | |4. Foreign Currency Balances | | | |

| | | | | | | |

| | |4.1 |Ensure cash and bank balances in foreign currencies are | | | |

| | | |re-translated at the balance sheet date at the exchange rate at | | | |

| | | |that date. | | | |

| | |4.2 |Ensure that hedge accounting practices in accordance with IAS-39 | | | |

| | | |have been followed with regard to any balances covered under | | | |

| | | |forward exchange contracts. | | | |

| | |4.3 |Obtain a schedule of re-translation, from rate at initial | | | |

| | | |recognition and at balance sheet date, of all balances. Cross-refer| | | |

| | | |exchange differences with financial charges/other income. | | | |

| | |4.4 |Where the company uses forward exchange contracts, such contracts | | | |

| | | |should be accounted for as assets and liabilities. Gains and losses| | | |

| | | |on such financial instruments used for hedging of foreign currency | | | |

| | | |transactions should be recognized as income and expense on the same| | | |

| | | |basis as the corresponding hedged item. Foreign exchange contracts | | | |

| | | |are translated at exchange rates prevailing at the balance sheet | | | |

| | | |date (representing their fair value). | | | |

| | | | | | | |

| | |5. Restrictions | | | |

| | | | | | | |

| | |5.1 |Inquire as to restrictions on any cash accounts; compare inquiry | | | |

| | | |results to cash, debt and legal confirmation replies. Ensure | | | |

| | | |disclosure of restrictions. | | | |

| | | | | | | |

| | |6. Cash Payments | | | |

| | | | | | | |

| | |6.1 |Obtain management’s authorization regarding maximum limit of | | | |

| | | |payment through Petty Cash Voucher. | | | |

| | |6.2 |Review (Scope/Sample:_________) Petty Cash Vouchers to check | | | |

| | | |whether all petty cash payments are within limits prescribed by the| | | |

| | | |management. | | | |

| | |6.3 |Obtain management’s authorization regarding maximum limit of each | | | |

| | | |individual to sign check. | | | |

| | |6.4 |Review (Scope/Sample:__________) cheque counter foil to ensure that| | | |

| | | |the cheques are signed by individuals authorized by the management | | | |

| | | |in this behalf and their initials are present on cheque counter | | | |

| | | |foils. | | | |

| | |7. Scanning of Cash Book and Bank Statement | | | |

| | | | | | | |

| | |7.1 |Scan cash book (Scope/Sample:________) to identify unusual entries.| | | |

| | |7.2 |Scan bank statement (Scope/Sample:______) to identify unusual | | | |

| | | |entries. | | | |

| | |7.3 |Have the client prepare a list of interbank and intrabank | | | |

| | | |transfers for ( ) days before and after the | | | |

| | | |reconciliation date. Scope/Sample:( ). | | | |

| | |7.4 |Determine whether any interbank or intrabank transfers noted in | | | |

| | | |testing bank reconciliations and reviewing the cash records have | | | |

| | | |been included in the listing. | | | |

| | |7.5 |Compare listed amounts with the appropriate bank reconciliations | | | |

| | | |and determine whether transfers as of the reconciliation date were | | | |

| | | |properly accounted for as outstanding cheques and deposits in | | | |

| | | |transit. Scope/Sample:( ). | | | |

| | |7.6 |Consider matching cash book and bank statement for a month for | | | |

| | | |selected accounts, if the risk status of client is “High”. | | | |

| | |7.7 |Scan bank statements to identify any payments made through “Cash” | | | |

| | | |or “Bearer Cheques”. Investigate each significant item and check | | | |

| | | |postings in cash book. If such instances are frequent cover in | | | |

| | | |ML/Covering letter to the board /Report, as appropriate. | | | |

| | | | | | | |

| | |8. Physical observation of cash | | | |

| | | | | | | |

| | |8.1 |Determine if any yearend observations/ counts of cash, cheques held| | | |

| | | |is required. Observe cash count and use cash and security count | | | |

| | | |checklists. Note last documents. | | | |

| | |8.2 |Check whether cash in hand is adequately insured. | | | |

| | |8.3 |Obtain approval of amount of imprest signed by a responsible | | | |

| | | |official. | | | |

| | |8.4 |Obtain approval of any increase / decrease in amount of imprest | | | |

| | | |alongwith reasons thereof. | | | |

| | |8.5 |Obtain certificate of cash in hand of places where cash count was | | | |

| | | |not performed by audit staff and give reason of not carrying out | | | |

| | | |cash count. Conclude whether such classification may be accepted on| | | |

| | | |the basis of materiality and risk involved. | | | |

| | |8.6 |Obtain reconciliation of difference, if any, of physical cash and | | | |

| | | |cash in hand as per books and check its accuracy and propriety. | | | |

| | |8.7 |Review the reasonableness of the amount of imprest. | | | |

| | |8.8 |Where cash in hand also includes undeposited cheques, check | | | |

| | | |subsequent credit of these cheques in bank statement (to ensure | | | |

| | | |that the cheques are genuine and these are not fabricated to cover | | | |

| | | |up deficiency of physical cash). If these cheques are not cleared | | | |

| | | |(either side) these should be reversed back to their individual | | | |

| | | |account. | | | |

| | |8.9 |Perform surprise cash count subsequently and document the | | | |

| | | |exceptions, if any. | | | |

| | |8.10 |Ensure that the last documents noted during cash count were | | | |

| | | |actually the last documents. If necessary, perform cut-off tests. | | | |

| | | | | | | |

| | |9. Cash in Transit | | | |

| | | | | | | |

| | |9.1 |Obtain details of any cash/cheques in transit and consider any | | | |

| | | |extra-ordinary item. | | | |

| | |9.2 |Verify subsequent clearance in the bank statements. | | | |

| | |9.3 |Particularly review any subsequent reversal in the cash in transit | | | |

| | | |account and consider its reversal as of the balance sheet date. | | | |

| | |9.4 |Review deposit slips to ensure that these were actually deposited | | | |

| | | |as of the balance sheet date before year end. | | | |

| | | | | | |

| | |10. Other Tests | | | |

| | | | | | | |

| | |10.1 |Obtain bank reconciliations where applicable and compare balance | | | |

| | | |per books with balance per books shown in reconciliaiton. | | | |

| | |10.2 |Review confirmations received from banks for accuracy with books | | | |

| | | |for all balances and with balance shown in bank reconciliation and | | | |

| | | |bank statements (where applicable). | | | |

| | |10.3 |Review bank reconciliations (and check casts of reconciliations), | | | |

| | | |noting at what intervals and how long after cut-off date these are | | | |

| | | |prepared. If not prepared at least monthly and reasonably soon | | | |

| | | |after the date upto which reconciliation is prepared consider this | | | |

| | | |for management letter and if very late for exception in auditors | | | |

| | | |report. | | | |

| | |10.4 |Check subsequent clearance of reconciling items by reference to | | | |

| | | |subsequent bank statements and bank records. | | | |

| | |10.5 |Items recorded by other bank / branch but not responded by client | | | |

| | | |should be particularly reviewed by reference to relevant | | | |

| | | |correspondence etc. for appropriate reasons for delay. Old items | | | |

| | | |should be particularly reviewed. | | | |

| | |10.6 |Deposits by client not responded by bank within a reasonable time | | | |

| | | |should be reviewed against relevant correspondence and considered | | | |

| | | |for M.L if satisfactory explanations is not received. | | | |

| | |10.7 |Large and unusual uncleared items should be particularly examined | | | |

| | | |by reference to original documents / vouchers and correspondence | | | |

| | | |for follow-up procedures. | | | |

| | |10.8 |Ensure that there are no unrecorded differences. | | | |

| | |10.9 |Ensure that foreign currency balances are being converted to local | | | |

| | | |currency at appropriate rates at year-end, consistent with the | | | |

| | | |bank’s policy and with policy of previous year. | | | |

| | |10.10 |Where mark-up / interest is receivable on deposits test calculation| | | |

| | | |thereof. | | | |

| | |10.11 |Call lending: | | | |

| | | | | | | |

| | | |Ensure that lending proposal is approved by the authorised | | | |

| | | |personnels. | | | |

| | | |Check that deal slip is made for the transaction. | | | |

| | | |Check that entry is made in the general ledger | | | |

| | | |Check that SBP’s cheque has been issued to the borrower bank | | | |

| | | |Follow-up for the rate of mark-up and ensure that appropriate | | | |

| | | |changes were made as per the market fluctuations. | | | |

| | | |Ensure that mark-up is accrued and taken to income on timely basis.| | | |

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| | |10.12 |Ensure that “due from” balances are properly disclosed, classified | | | |

| | | |and described in the financial statements in conformity with the | | | |

| | | |prescribed accounting principle and relevant statute. | | | |

| | |Other tests as deemed necessary | | | |

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| | |Management Letter | | | |

| | | | | | | |

| | | |Prepare management letter points including: | | | |

| | | | | | | |

| | | |Internal control weaknesses. | | | |

| | | |Business improvement opportunities. | | | |

| | | |Legal non-compliance. | | | |

| | | |Accounting system deficiencies. | | | |

| | | |Errors and irregularities not material at the financial statements | | | |

| | | |level. | | | |

| | | | | | |

| | |Disclosure | | | |

| | | | | | | |

| | | |Ensure appropriate disclosure in accordance with the reporting | | | |

| | | |framework and fill relevant portion of FSDCL. | | | |

| | | | | | | |

| | |Supervision, review and conclusion | | | |

| | | | | | | |

| | |1. |Perform Senior review and supervision. | | | |

| | |2. |Resolve Senior review points. | | | |

| | |3. |Resolve Partner and Manager review points. | | | |

| | |4. |Conclude response to the audit objectives. | | | |

Audit conclusion

Based on the substantive test procedures, I/we performed as outlined above, it is my/our opinion that the audit objectives set forth at the beginning of this audit program have been achieved, except as follows:

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

______________ ___________ ________ _______

Date:____________ Work Performer Job Incharge Manager Partner

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C /AP

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