Muhammad Shoaib bus17s090

Q: Audit programme may be revised if needed in accordance with the

prevailing circumstances. What could be the possible reasons? Explain with
the help of relevant example.
Analytical Procedures
Auditors use analytics to understand or test financial statement relationships or balances.
Significant fluctuations or relationships that are materially inconsistent with other relevant
information or that differ from expected values require additional investigation.

 Example of analytical procedure

 Trend analysis
 Ratio analysis
 Reasonableness testing
 Regression analysis

During fieldwork, auditors can use analytical procedures to obtain evidence, sometimes in
combination with other substantive testing procedures, to identify misstatements in
account balances. This can help reduce the risk that misstatements will remain undetected.
Analytical procedures are often more efficient than traditional, manual audit testing
procedures, which tend to require the company being audited to produce significant
paperwork. Traditional procedures also typically require substantial time to verify account
balances and transactions.

Observation:
Observation is one of the audit procedures that auditors use to obtain an
understanding and gather audit evidence mainly to the real process or the
ways how clients have done some specific business process.
This kind of audit procedure is mainly to confirm the process that the client
told, physical confirmation, or some time used to obtain audit evidence in
order to make their own projection which will be used for comparison with the
client figure.
For example, auditor joins client stock take at the year-end and observe
whether the way that they count are in the correct procedures or not.
In this procedure, the audit is not confirmed whether the client counts their
inventories correct or not, but it confirms whether clients counting procedure is
correct or not is one thing.
Another thing is the auditor tries to confirm whether the counting has really
existed. However in practice sometimes the auditor is not only observed how
the client counts but they also jointly perform counting inventories.

Inquiry
Auditors inquire accountant and related management to gather information
and obtain an explanation on the mater that found by auditors.
Sometimes auditors inquire about management about the business process
and the ways how financial transactions are recording as well as the major
control on business transactions.
The inquiry is also one of the most important audit procedures and it could be
used in different stages.
For example, the auditor might inquire management at the planning stage and
the auditor could also inquire management to confirm the consignment
liabilities at the end of the audit work.
Audit inquiry is sometimes used by the auditor to obtain the audit evidence
and sometimes is used to obtain an understanding of some nature of business
or accounting transactions in order to gain enough knowledge to design and
perform testing.

Q: State whether working papers are the property of client or auditor?

Audit working papers are the outcome of the documentation process.

Working papers are the record of various audit procedures performed,
audit evidence obtained, allocation of work between audit team
members etc. Audit working papers are the documents and evidence
that an auditor collects and retains with himself during the audit. Thus
the audit working papers are the property of auditor and not of the
client.