Page 96 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes with each of the Audit Committee Members to gain individual input prior to the
next Audit Committee Meeting, where his first report would be presented. These
meetings helped the CAE improve the audit plan.
3. The Risk Based Audit Planning process as currently implemented ( Refer article of
BCAJ IAS article in March/April, 2003) was generally found to be robust. The process
included the following:
(a) Identify the Audit Universe (comprehensive list of Audit Areas),
(b) Established weights and ranks for criteria which will form the basis of ranking
the audit areas and cut off score,
(c) Applying criteria to the various audit areas,
(d) Arrive at scores for each area, and

(e) Applying the Cut off criteria and shortlisting the areas of audit for the year.
This forms a part of the Annual Audit Plan.
4. The revised Annual Audit Plan was also reviewed along with the first report. In
order to ensure continuing relevance of the audit plan, a process of a half yearly
review of the audit plan with the Audit Committee was suggested and approved.
For the Audit Engagement or each specific Audit Project –

A brainstorming on the issues and difficulties faced by the Audit Team Members in Audit
Engagements was undertaken. A few of the difficulties that came up from all members
was:
1. the general appreciation of raising the right business issues in the audit reports.
2. the adequacy of time for performance of the audit – at times, key areas of audit were
left out given the demands of completing the report.
3. the team members voiced their concern that the response that the CAE gets from
officials was not the same as that received by them. They felt that the auditor’s
employees did not give the required efforts and seriousness, which resulted in
avoidable delays.

The team thought of the options that the Standard provided towards overcoming these
difficulties. The following were the guidelines that they felt could overcome the difficulties:
1. Preliminary Review: A visit by the CAE along with the audit team members of the
audit area was planned to be conducted 15 days prior to the actual start date. This
audit visit was to understand the business process area and operational realities
within which the team performs, the expectations of the auditee and the auditor are
discussed and firmed up, the data and time requirements from the auditees are
discussed and the JOINT objectives of the audit process are laid down. The auditee’s
person-in-charge is made aware of the audit objectives, methodology and the ways
that risk and control needs to be looked at within the Risk Management Framework
implemented. Apprehensions of the Auditee team are laid to rest in these interactions.
This meeting is also sought to be used as a means to improve auditee’s person-in-
charge responses.
2. Audit Engagement Planning: The Preliminary Review meeting was also to be used to
study past reports . The larger participation of all team members in identification of
potential risk and control focus in each area was scheduled for at least once a fortnight
in such a way that no area is taken up without the inputs received from all team members.
Contd...

90 LOVELY PROFESSIONAL UNIVERSITY