CLIENT:
AUDIT PROGRAM
__________________________________________________________
PERIOD:
__________________________________________________________
SUBJECT:
SHORT-TERM DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Est.
Hrs.
Phase/
Level
Procedures
AUDIT OBJECTIVES
To determine whether:
A.
B.
C.
D.
The balances represent all amounts owed to the entity
at the balance sheet date and have been properly
recorded.
The allowances for doubtful accounts are adequate but
not excessive.
Prepayments represent all proper charges or amounts
that can reasonably be expected to be realized through
future operations or otherwise and are properly
recorded.
The balances are properly described and classified and
adequate disclosures with respect to these amounts
(including disclosures of amounts that have been
pledged, discounted or sold with recourse or are with
related parties) have been made.
SUBSTANTIVE PROCEDURES
1. Overall Analytical Review
1.1
1.2
1.3
1.4
1.5
Have the client prepare a listing of deposits,
prepayments and other receivables. Compare balances
with previous year and investigate significant
differences.
Test the clerical accuracy of the footings
of the listing and trace the totals to the general ledger
control accounts.
Perform analytical review of the balances on the lead
schedule.
Obtain the PBC analysis of miscellaneous receivables.
Perform analytical review of the balances, comparing
with the prior year. Vouch individual amounts to
subsequent cash receipt as appropriate.
Determine whether the amounts are of a short-term
nature and are properly classified in the financial
statements.
W/P
Ref.
E/AP/1
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
__________________________________________________________
PERIOD:
__________________________________________________________
SUBJECT:
SHORT-TERM DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Est.
Hrs.
Phase/
Level
Procedures
2. Circularization for deposits and other receivables
2.1
2.2
2.3
Select a sample of balances to circularize
confirmations
(Scope/Sample
Rs._______).
Particularly include any related party without
exemption. Prepare confirmation control sheet.
Update when necessary and have the client reconcile
any differences identified in the confirmations
received.
Follow-up confirmation requests and send reminder, if
necessary.
Consider covering in covering letter as a condition, if
material balances are not confirmed.
3. Alternate Procedures
3.1
3.2
For non-replies, examine supporting documentation.
Verify subsequent receipts based on the details
provided with client. Ensure that the subsequent
receipts are against the balances as at the balance
sheet date.
4. Other Receivables
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Obtain details of balance receivable and movement
during the period and verify significant
balances/transactions, if considered necessary
For any other significant receivables vouch as
appropriate. Review the collectibility of each balance
and consider the necessity for additional financial
statement disclosure.
Have the client prepare an age analysis, review and
scrutinize the age analysis for outstanding balances
and investigate reasons for overdue receivables.
Consider need for provisioning against doubtful
receivables.
Obtain independent confirmations (for significant
items) from employees in respect of outstanding
figures.
Check subsequent clearance of outstanding amounts
on test basis.
See forward contracts obtained from State Bank of
Pakistan and ensure accuracy of amortization of
forward cover fee.
Obtain the schedule of forward cover fees for
premature withdrawal as on December 31, (or interim
date).
W/P
Ref.
E/AP/1
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
__________________________________________________________
PERIOD:
__________________________________________________________
SUBJECT:
SHORT-TERM DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Est.
Hrs.
Phase/
Level
Procedures
4.8
4.9
4.10
Select randomly few transactions and examine:
 the contract
 rate of forward cover fee
 booking date and maturity date
Agree the schedule balances with relevant ledger
accounts.
Ensure that amount of refund has subsequently been
received.
5. Related Party Balances
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
Identify receivables from officers, directors and
principal shareholders and determine whether they
arise from routine transactions, such as regularly
settled travel advances, or are related-party
transactions.
Ensure appropriate workings for maximum aggregate
balance due at the end of each month and other
statutory disclosures.
If related-party transactions, cross-reference to the
listing of such transactions obtained in the Related
Party section of the Financial Reporting work.
Ensure that requirements of SRO 66 dated January 22,
2003 issued by SECP have been complied with.
Review transactions in the accounts carefully to
determine they have been properly authorized and are
actually what they purport to be. Check credit
postings to the accounts for propriety.
Consider the need to consult legal counsel to
determine the legality of receivables.
Consider the collectibility of receivables from
officers, directors, principal shareholders and other
related parties during the review of the adequacy of
the allowance for doubtful accounts.
Consider the need to disclose the transactions and
balances. Propose disclosure points, as appropriate.
Obtain an understanding of the nature of the intercompany receivables, including the following:
 How they arose;
 How they are being or are to be liquidated;
 What security exists;
 What the funds were used for; and
 What the tax implications are.
If the transactions are other than routine transfers of
goods and services, inspect supporting critical forms
and documents (
). Scope/Sample:(
)
W/P
Ref.
E/AP/1
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
__________________________________________________________
PERIOD:
__________________________________________________________
SUBJECT:
SHORT-TERM DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Est.
Hrs.
Phase/
Level
Procedures
5.11
Tie amounts to the inter-company payables reflected
in the audit working papers for the affiliates. If the
inter-company accounts are not in balance, have client
personnel prepare reconciliations. Examine support
for significant or unusual reconciling items. Propose
adjustments for unrecorded transactions, if
appropriate.
6. Trade Deposits
6.1
6.2
6.3
Obtain detail for significant account balances. Foot
schedule and review for reasonableness.
As a test of trade deposits for events occurring after
year-end, vouch payments to counterfoils of cheques
and trace to bank statements.
Obtain and review aging analysis and consider
realisability of old outstanding deposits.
7. Prepayments
7.1
7.2
7.3
7.4
7.5
Obtain workings for all significant prepayments.
As a test of prepayments, trace to invoices noting
payment is for a subsequent period and vouch.
Obtain a detailed description of insurance coverage in
force. Review for deficiencies in the coverage crossrefer with insurance schedule (Firm’s Standard Form).
Review profit and loss captions to ensure that no
prepayments have been omitted.
Consider whether the prepayments are adequately
classified.
8. Foreign currency balances
8.1
8.2
8.3
Ensure that all receivables in foreign currencies are
re-translated at the exchange rate prevailing on the
balance sheet date.
Ensure that hedge accounting practices in accordance
with IAS-39 have been followed with regard to any
balances covered under forward exchange contracts.
Have the client prepare a schedule of re-translation,
from rate at initial recognition and at balance sheet
date, of all receivables. Cross-refer exchange
differences with financial charges/other income.
W/P
Ref.
E/AP/1
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
__________________________________________________________
PERIOD:
__________________________________________________________
SUBJECT:
SHORT-TERM DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Est.
Hrs.
Phase/
Level
Procedures
8.4
W/P
Ref.
E/AP/1
By
Comments/Explanations
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).
Other tests as deemed necessary
Management Letter
Prepare management letter points including:





Internal control weaknesses;
Business improvement opportunities;
Legal non-compliance;
Accounting system deficiencies; and
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.
2.
3.
4.
Perform Senior review and supervision.
Resolve Senior review points.
Resolve Partner and Manager review points.
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:
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
CLIENT:
AUDIT PROGRAM
__________________________________________________________
PERIOD:
__________________________________________________________
SUBJECT:
SHORT-TERM DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Est.
Hrs.
Phase/
Level
Date:____________
W/P
Ref.
Procedures
______________
Work Performer
___________
Job Incharge
E/AP/1
By
________
Manager
Comments/Explanations
_______
Partner