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Our Approach

AUDIT
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KSI Shah & Associates audit approach is based on the following steps :

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  • Understand the client and fill up the “Know Your Client” [KYC] form.

  • Understand the industry in which the client is.

  • Understand the local laws, rules and regulation in which the client operates.

  • Plan the audit.

  • Prepare audit requirements and issue the list of audit requirements to the clients, in advance.

  • Request for third party confirmation / external evidences, directly, from the company’s.

    • Trade debtors.

    • Trade creditors.

    • Bankers.

    • Lawyers.

    • Staff / key personnel.

    • Shareholders, investors, etc.

    • Associate companies / related parties / business associates.

  • Determine the audit risks.

  • Issue letter of engagement.

  • Perform the audit.

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Our audit is performed in accordance with the International Standards on Auditing. Those standards require that we comply ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor team’s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

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Our Audit Approach is Determined by Considering:
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  • The adequacy of the client’s accounting records and control systems that ensure their accuracy and reliability.

  • The use of professional judgment to assess audit risk and ensure that audit procedures reduce audit risk to an acceptably low level and materiality, both in the context of the financial statements as a whole and individual items included there in.

  • Audit risk has three components inherent risk, control risk and detection risk.

  • Degrees of control will be present in any organization, even where there is no formal division of duties. Inadequate segregation of duties, may, in some cases, be offset by other control procedures and the close involvement of an owner or manager in strong supervisory controls where they have direct personal knowledge of the entity and involvement in transactions.

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The Steps to be Taken are Detailed Below:
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  • In order to assist in achieving the aim of providing a cost-effective service to clients, whilst reducing the firm’s own professional risk to an acceptable degree, we operate a system of categorizing assignments into various levels. This categorization enables the completion of file dividers and certain other administrative procedures to be reduced in appropriate circumstances.

  • The criteria for categorization are not rigid and the partner/manager may require additional procedures for certain enterprises. The allocation to a particular ‘level’ will be noted by the partner/manager on the front summary sheet of the audit working file.

  • We consider whether there are adequate details available of the client’s accounting records and systems in order to comply with auditing standards and guidelines. Depending on the size and complexity of the system these details would range from simple lists of books and records to narrative notes.

  • We consider whether there are likely to be controls in force which prevent management override without necessarily recorded evidence.

  • If so, consider using compliance testing with reduced substantive testing. Where there are no such controls, use substantive testing only.

  • Substantive tests are defined as those tests of transactions and balances, and other procedures such as analytical review, which seek to provide audit evidence as to the completeness, accuracy and validity of the information contained in the accounting records or in the financial statements. Compliance tests are defined as those tests which seek to provide audit evidence that internal control procedures are being applied as prescribed. We review the accounting systems and controls operating in individual areas and adjust our assessment of the level of risk if necessary. For all clients we complete the review of supervisory controls and risk levels on the current working file.

  • For very large clients where a compliance-based audit approach is to be adopted we prepare a detailed evaluation of accounting systems and internal controls. The partner and manager concerned briefs the audit staff specifically if this is required.

  • We calculate the materiality factor to be used for sampling purposes and derive the initial sample sizes for substantive tests to be Performed.

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Pre Audit Commencement Procedure:
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  • We review permanent files, prior year’s audit files, correspondence files and other files as appropriate, and other available information.

  • If the client prepares periodic management accounts, arrangements are made to receive copies of these. A review of the files and any available accounts will enable us to familiarize ourselves with.

  • Background information regarding the client’s business and industry.

  • The client’s management structure and methods of operation.

  • The client’s accounting systems and internal control procedures.

  • Areas of particular significance to our audit.

  • Details of related parties.

  • Details of auditing procedures applied in the past, and the results obtained.

  • Current matters under discussion between the firm, the client and third parties (check e.g. that partner is not involved in major negotiations).

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In addition to enabling us to familiarize ourselves with our client’s affairs, such a review will assist us to carry out a more effective and efficient audit for the current period, enabling us to:

  • Pinpoint difficult audit areas and decide how to deal with them (e.g. how to ensure completeness of income).

  • Improve the organization, staff mix and ‘balance’ of our audit work.

  • Eliminate unnecessary working papers, bearing in mind our level of involvement in the preparation of the accounting records.

  • Make better use of the client’s assistance, for example by using some of his working papers if they are suitable for the purpose.

  • Improve the application of our audit procedures.

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Planning and Programming Sections
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This document is of prime importance in that it is evidence of our own planning and we therefore complete this section carefully for all audits and accounts preparation assignments.

The following points are relevant to the completion of the Planning and Control Record:

  • The extent of our involvement in the preparation and processing of the client’s accounting records will affect the level of audit work required. In these circumstances, staff should be directed towards the preparation of the accounts as quickly as possible, thus enabling a preliminary review of the draft figures to be carried out and highlighting any areas which require further investigation.

  • Consideration are given to the effects of new legislation and accounting standards as these can often extend time requirements in their year of implementation.

  • Last year’s points forward are studied in detail as they will contain most major points for discussion for the current year’s audit and could have a significant bearing on time requirements.

  • Many clients are willing to prepare audit schedules and control accounts if adequately briefed by us.

  • Even a request to ensure that standing orders, direct debits and returned cheques are entered in cash books can save valuable time.

  • Where clients have management/directors’ meetings, request copies of minutes for perusal before the commencement of the assignment are requested, as those may contain details of important matters which may affect our audit planning.

  • Preparation/review of fee budget is taken into consideration for the staff mix and audit team members’ availability and include a record of the previous year’s charge.

  • Staff planning request are submitted at the earliest opportunity to ensure that the audit plans can be fulfilled.

  • Audit timetables are agreed with the client to avoid last minute disruptions to the office staff plan.

  • Staff briefings are arranged face to face with audit staff, and evidence on the Planning and Programming Sections are noted that they have been adequately briefed.

  • Partners and managers records any ‘special knowledge’ of relevant information not evident from a review of the various files.

  • Schedules not required are identified.

  • Where appropriate, the manager briefly examines the accounting records and highlights any unusual transactions for further investigation.

  • A separate planning memorandum is attached to the Planning and Programming Sections. The memorandum might contain any relevant information or instructions, including specific audit problems encountered in previous years, history/development of the business, new activities etc. Cross reference to the permanent file is done as may be appropriate.

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Planning Meetings
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Internal planning meeting:

  • We consider it very important and necessary to hold an internal planning meeting between the manager/partner and some or all of the audit staff responsible for the assignment prior to commencement to discuss and approve, inter alia, the following matters.

  • Our general approach in conjunction with the Planning and Programming Sections, particularly if compliance testing is requested.

  • Problems considered likely to arise in the current audit, and areas for special attention.

    • Time table and fee budget.

    • Staff deployment and allocation of budget to individuals.

    • Levels and timing of detailed analytical review.

    • Preparation of an agenda for a client planning meeting, if appropriate. Proper and effective briefing to staff is of prime importance and staff does take the initiative to ensure that they are satisfactorily briefed and sign the Planning and Programming Sections as evidence of this briefing.

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Client Planning Meeting
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  • Where a client planning meeting is needed, it is arranged with one or more senior members of the client’s management team, such as the managing or financial director, company secretary, or chief accountant.​

    • Meetings preferably take place a few weeks before the start of the audit, and discussion are based on the agreed agenda

    • Opportunity to give advice to the client on ways in which he can reduce audit costs by preparation of supporting schedules, improved arrangements of records etc; other matters not specifically connected with the audit such as tax planning are given.

    • Full notes of the results of the discussion are made in the audit file, and a copy sent to the client for approval.

  • The meeting will, according to circumstances, be attended by the partner or manager and/or the staff member who will be in day-to-day charge of the audit. More than one client planning meeting may be necessary on a larger audit.

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Engagement Letters
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Engagement letters are needed for:

  • All clients.

  • Changes in assignments.

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The following procedures are to be followed in cases of difficulty in obtaining a client’s signature to a letter of engagement.

  • If a client’s signature is not obtained, for whatever reason, on the letter of engagement sent to him, the client partner will ascertain the reason for this.

  • Where the client fails to return the letter in good time a reminder should be sent and any verbal agreement for us to act noted on the permanent file.

  • Where the client will not sign any letter of engagement with amended terms the partner responsible will inform the client in writing that in the absence of any other terms the Firm will consider those terms as effective unless he hears to the contrary. Agreement with this course of action will be evidenced by a second signature from a partner on the copy letter in lieu of the client’s signature.

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Peer Reviews (“cold reviews”)
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Peer reviews are carried out on a comprehensive random sample of completed jobs plus jobs in progress for audit and accounts. Detailed reports on findings are made to the audit partner for remedial action and follow up as necessary.

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Hot Reviews
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‘Hot Reviews” Apply to:

  • qualified audit reports.

  • complex issues Second Partner review is needed on “large” or “high risk” assignments.

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Technical, Training and Continuous Education Programs
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We deal with a full agenda on legal/professional developments plus development of internal standards and procedures:

  • Inhouse.

  • External.

Briefing and debriefing meetings are held. Audit (and other assignments) are subject to planning/supervision and review procedures at all levels.

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Regular Partners’ Meeting
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These are held all year round as necessary.

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Systematic Approach
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We adopt  a  systematic  approach  to  materiality  and  sample  determination. Guidance  is  provided  on  audit  approach  based  on size/complexity criteria. Standard forms are in use for audit and accounting routines. Checklists are used for file review purposes.

There exists a system where the firm audit reports are checked for the quality and competence of its work. In appropriate circumstances the partners can recommend that the firm be disqualified from undertaking audit work. This is an additional reason for staff to maintain the high professional standards set down by the firm in the course of carrying out their duties.

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