DEPARTMENT OF THE AUDITOR-GENERAL OF PAKISTAN GUIDELINES FOR THE AUDIT OF THE DIRECTORATE GENERAL OF COMMERCIAL AUDIT AND EVALUATION Table of Contents PREFACE TO REVISED EDITION ................................................................................................ I PREFACE TO FIRST EDITION ................................................................................................... II 1. INTRODUCTION TO AUDIT GUIDELINES ...............................................................................1 1.1 Purpose of the Guidelines ..................................................................................................... 1 1.2 Guiding Principles .................................................................................................................. 1 1.3 Auditors’ Responsibility ......................................................................................................... 1 1.4 Practical Tools ........................................................................................................................ 2 1.5 Continuous Improvement ...................................................................................................... 2 1.6 Using the Standard Audit Working Paper .............................................................................. 2 1.7 The Accountability Cycle ........................................................................................................ 3 2. OVERVIEW OF THE DIRECTORATE GENERAL OF COMMERCIAL AUDIT AND EVALUATION ......5 2.1 Overview of Office ................................................................................................................. 5 2.2 Jurisdiction ........................................................................................................................... 5 2.3 Organogram of DG, Commercial Audit and Evaluation ....................................................... 13 3. SCOPE OF AUDIT .............................................................................................................. 15 3.1 Types of Audits .................................................................................................................... 15 3.2 Definition of Government Audit .......................................................................................... 15 3.3 Certification Audit ................................................................................................................ 16 3.4 Compliance with Authority Audit ........................................................................................ 17 3.5 Important Audit Components of Commercial Audit ........................................................... 18 4. PERMANENT FILE OF AUDITEE DEPARTMENTS ................................................................. 21 4.1 Introduction ......................................................................................................................... 21 4.2 The Audit Team’s Responsibility .......................................................................................... 22 4.3 Documentation in Permanent File ...................................................................................... 22 4.4 Update Control Sheet - PF ................................................................................................... 22 4.5 Status of Entity – Form PF-I. ................................................................................................ 23 4.6 Background Information – Form PF-II. ................................................................................ 23 4.7 List of Auditable Locations – Form PF-III. ............................................................................ 23 4.8 List of Bank Accounts – Form PF-IV. .................................................................................... 23 4.9 List of Authorized Signatories – Form PF-V. ........................................................................ 24 4.10 External Factors – Form PF-VI............................................................................................ 24 4.11 Accounting Records and Accounting System - Form PF-VII. .............................................. 24 4.12 Key Contacts – Form PF-VIII. .............................................................................................. 25 4.13 Significant Audit Areas – Form PF IX. ................................................................................. 26 4.14 Significant Accounting Policies – Form PF-X. ..................................................................... 27 5. AUDIT PLANNING PHASE ................................................................................................. 29 5.1 Introduction ......................................................................................................................... 29 5.2 The Audit Team’s Responsibility in Planning Phase ............................................................ 29 5.3 Documentation in Planning Phase ....................................................................................... 30 5.4 Audit objectives and scope .................................................................................................. 31 5.5 Points for attention at next audit (from last year) .............................................................. 31 5.6 Entity communication letter ................................................................................................ 31 5.7 Audit planning memorandum ............................................................................................. 32 5.8 Memorandum on post-planning changes ........................................................................... 32 5.9 Important dates ................................................................................................................... 32 5.10 Tour programme ................................................................................................................ 32 5.11 Information requested from entity officials ...................................................................... 32 5.12 Materiality assessment form ............................................................................................. 33 5.13 Expected aggregate error and planned precision form..................................................... 33 5.14 Audit risk assessment form ............................................................................................... 33 5.15 Inherent risk assessment form .......................................................................................... 33 5.16 Internal control questionnaire - controls for overall environment ................................... 34 5.17 Internal control questionnaire – general computer controls ............................................ 34 5.18 Internal control questionnaire – application controls ....................................................... 34 5.19 Control risk assessment forms........................................................................................... 35 5.20 Analytical procedures assurance form .............................................................................. 35 5.21 Source of audit assurance form ......................................................................................... 35 5.22 List of applicable laws and regulations .............................................................................. 35 5.23 Sample selection checklist ................................................................................................. 36 5.24 High value item selection form .......................................................................................... 38 5.25 Key item selection form ..................................................................................................... 38 5.26 Sample sizing for tests of internal control ......................................................................... 38 5.27 Sample sizing for substantive tests of details .................................................................... 38 5.28 Checklist of accounting estimates to be reviewed ............................................................ 39 5.29 Points for attention at next audit ...................................................................................... 39 5.30 Audit planning checklist ..................................................................................................... 39 5.31 Centrally Led Audit ............................................................................................................ 39 6. AUDIT EXECUTION PHASE ................................................................................................. 41 6.1 Introduction ......................................................................................................................... 41 6.2 The Audit Team’s Responsibility in Execution Phase .......................................................... 41 6.3 Forms and Schedules for Audit Execution Phase ................................................................ 42 6.4 Summary of Analytical Review Procedures Performed ....................................................... 42 6.5 Details of Analytical Review Procedures Performed ........................................................... 42 6.6 Completed Internal Control Questionnaires ....................................................................... 43 6.7 Internal Control Deviations Form .......................................................................................