Audit Program
(c)
Investments (subsidiaries, associates, and others)
Client:
Period:
Subject:
WP Ref.:
Prepared by:
Date:
Reviewed by
Date
Investments (subsidiaries, associates, and others)
Amount in Rs.
Account balances:
Investments

In subsidiaries and associates

Held to maturity

Available for sale

Held for trading
Classes of transactions:
Dividend
Interest
Gain/ loss on revaluation
Gain/ loss on disposal
S. No.
1.
Audit Objectives
Investments are completely and accurately
recorded.
Assertions
CA
2.
All recorded investments actually exist.
E
3.
All investments are appropriately valued.
V
4.
All investments are owned by the client and
title is also in the name of client.
R
Dividend and interest income, gain/ loss on
revaluation and gain/ loss on disposal has
been accurately calculated, completely
recorded and appropriately disclosed.
OCATL
5.
6.
Investments are presented and all disclosures
have been given in accordance with the
Fourth Schedule of the Companies
Ordinance, 1984 and relevant IASs.
OCAL
RVU
Risk Assessment
IR
CR
ROSM
S. No.
Audit Procedures
Objective
1.
Assess the reasonableness of design of
system of internal control by enquiring
relevant client personnel and documenting
the same (if not a documented system manual
has been developed by the client). A walk
through test would be necessary to confirm
the understanding as documented. Identify
the preventive (exercised before incurrence of
transactions and event) and detective
(exercised after incurrence of transactions and
event) controls established by management to
support its assertions.
ALL
2.
Check on sample of selected transactions
covering the whole period that all preventive
controls are exercised on all transactions.
ALL
3.
Check that proper subsidiary records have
been maintained and entries are made in the
same on prompt and consistent basis after
proper approval and appropriate
authorisation.
ALL
4.
Check on a sample of transactions that
detective controls have appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been taken to
avoid recurrence of the same.
CE
5.
All investments in subsidiaries and associates
should with the board's specific approval and
in accordance with requirements of section
208 of the Companies Ordinance, 1984.
Laws and
Rgulation
Test of Controls
Done by
W. P. Ref.
S. No.
6.
7.
Audit Procedures
Objective
Ensure that management does not override
the designed controls by

Enquiring from the designated staff
person

Remain skeptical during performing
test of design and test of effective
operation
Document the conclusion after performing
test of controls and required level of
assurance from substantive procedures.
N/A
Analytical Procedures
1.
Document logical commercial reasons for
major additions and disposal made during the
year
AU
2.
Compare current year balances and income
with last year amounts and ensure that any
significant variation should be properly and
logically reasoned.
CEA
Test of Details
1.
Obtain a movement schedule of investments
(shares, TFCs and PIBs) both for numbers and
amounts.
2.
Trace the opening balances from the general
ledger, subsidiary records, and last year
working papers.
CE
C
Done by
W. P. Ref.
S. No.
3.
Audit Procedures
Trace the carrying value of selected
investments to supporting documents e.g.
(a)
Broker's notes for investments
purchased in the current year, to confirm
date of purchase description and number
of shares.
(b)
Carrying costs in our prior year’s
working papers
Objective
E
4.
Check the computation of valuation of
investments in subsidiaries, joint ventures and
associates is made as per the accounting
policies of the company.
V
5.
Obtain and recompute amortisation schedule
and check its accuracy for fixed interest
securities whether purchased at premium or
discount.
OCAL
6.
Re-perform the marked to market valuation of
PIBs and TFCs at year-end to check the
valuation of these securities.
V
7.
Where any lien marked on the investments,
check the disclosure thereof.
U
8.
Perform cut-off at year-end.
T
9.
Check redemptions of principal during the
year and obtain supports to ascertain the
overdue instalments. Check if such payments
were as per the terms of the redemption
agreement.
EV
10.
Check that brokerage expenses are accurately
recorded.
AO
Done by
W. P. Ref.
S. No.
11.
Audit Procedures
For selected shares disposed of during the
year:
(a)
Examine supporting documents of
investments sold e.g. brokers notes and
cash receipts records.
(b)
Confirm the date of disposal,
description, and number of shares.
(c)
Calculate the gain or loss on sale of
investment and trace the amount
transferred to the profit and loss
account.
Objective
COA
12.
Test the casting and cross casting of the
schedule.
CE
13.
Obtain the schedule of capital gain earned /
interest income received during the year and
vouch few transactions on test basis.
O
14.
Check the accrual of interest and amortization
of premium / discount on fixed income
securities with the one calculated on IRR
basis.
CVT
15.
Ensure that closing balances of investments in
working papers agree with the general ledger.
N/A
16.
For investments held by client at period end,
perform the following:
RE
(a)
Physically inspect selected securities
held by the client.
(b)
For selected securities not held by the
client, circularize confirmation requests
to the custodian. Compare replies to
recorded investments.
Done by
W. P. Ref.
S. No.
17.
18.
Audit Procedures
For selected investments, compute market
value as under:
(a)
For quoted investments, trace market
value from independent published
quotations.
(b)
For unquoted investments, calculate
breakup value of shares from respective
company's financial statements.
Ensure that investments are presented and all
disclosures have been given in accordance
with the Fourth Schedule of the Companies
Ordinance, 1984 and relevant IASs. As per
IAS 39 all investments should be properly
classified in Held for trading, available for
sale and held to maturity.
Objective
V
OCAL
RVU
Investment Income
19.
Obtain a schedule showing opening and
closing balances of accrued income and
income earned and received during the year
CE
20.
Trace opening balance of accrued income
from general ledger/ trial balance.
21
Ensure that accrual of dividend income is
made only where AGM is held before yearyen.
RA
22.
Ensure proper accounting treatment of bonus
share received and right shares subscribed.
V
23.
Make a selection of accruals and examine
documents supporting the amounts of
investment income (e.g. rates from published
quotations, dividend warrants).
E
24.
Examine subsequent receipts of income
accrued at period-end.
EV
25.
Ensure that closing balances of accrued
income in working papers agree with general
ledger.
N/A
C
Done by
W. P. Ref.