Audit of Financial Statements

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Audit of Financial Statements

The statutory audit of an entity’s financial statements is by far the most common type of audit engagement yet the importance attached to an external audit rests above all. The external auditor has the responsibility towards not only the management of the organization but also the external and internal users of the financial statements. It is this fiduciary responsibility which requires the auditor to be diligent in performance of his duties as external auditor. The recent national and international advancements in the field of auditing requires the auditor to be careful in assessing which procedures and to what extent he has to perform in order to achieve the desired level of assurance and how he derives assurance from the work he has performed and whether the opinion he is to give is supported by the work he has performed.

NJMI performs statutory audits in accordance with the International Standards on Auditing and the guidelines set by the Institute of Chartered Accountants of Pakistan.

As a part of the standard practice

  • the audit client’s systems are studied, and compliance checked in order to ascertain the risk areas and plan the type of tests to be carried out;
  • initial risk assessments of the client are carried out and nature timing and extent of audit steps are determined to keep audit risk at an acceptably low level;
  • the audit procedures are documented in the shape of audit programs, which are modified for each audit;
  • the audit plan is communicated to the selected audit team, which is thoroughly briefed about the nature of client’s business and the audit procedures to be performed;
  • it is ensured that the audit team is supervised by persons having the relevant experience and expertise;
  • the audit fieldwork is supervised and reviewed at every stage as it progresses;
  • the audit manager ensures completeness of audit fieldwork in accordance with planned procedures;
  • the audit working paper file is finally reviewed by the Partner before forming any opinion on the financial statements;
  • the client’s management is also provided with a letter of weaknesses and management letter to highlight any weaknesses in the systems noted during the course of audit;
  • during the whole course of audit, the manager and partner keep close liaison with the client and the audit team; and
  • It is ensured that at no stage the firm’s principles of integrity, objectivity, independence and confidentiality are compromised.