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Hoda Vasi

Chowdhury & Co
McDonald Steel Building Products Limited

Audit Program
McDonald Steel Building Products Limited

General
Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Y/N/NA

W/P
Ref.

Initial &
Date

Assess the general internal control structure by administering structured


questionnaires (ICQ)
Identifying weaknesses in internal control and related procedures
Assessing maintenance of required books of account and adequate
records
Review of process of evaluation of accounting estimate and justification
Identifying non-compliance specially with respect to tax, agreement,
IFRS/BFRS, local laws and regulations
Recording of commitments and contingencies after ascertaining the
value involved
Generally Accepted Accounting Practices (GAAP);
International Accounting Standards (IAS) as adopted by ICAB;
Any other document that seems to be relevant.
Other related works to achieve the objectives of the assignment
Obtain all books and records underlying the financial statements
with sufficiency and appropriateness;
Obtain written representations from management concerning the
financial statements and particular matters;
Prepare the draft audit report;
Prepare a list of comments on important audit findings for discussion
with management and prepare a draft of management letter; and
Test whether applicable BAS/BFRS are duly complied with.

Books and Records


Particulars
Obtain draft copy of financial statements for the year ended
31December 2011, 2012, 2013 and 2014;
Obtain general ledgers as well as subsidiary ledgers;
Confirm that the prior year's final balances of general ledgers/trial
balance have been correctly brought forward to the current year's
general ledgers;
Scrutinize the general journal for the year and investigate any
unusual entries. Pay particular attention to entries near the cut-off
date;
Observe that the current years general ledgers / trial balance at the
end of the year, after all adjustments, are in balance and are in
agreement with the financial statements;
Go through the minutes books of McDonald Steel Products Limited
(MSPL) and summarize the facts relating to the financial statements
of the relevant years;
Obtain list of Directors, notice of meetings, Agenda, Minutes books,
registers of Directors & Mangers etc.;
Audit Program
Prepared by: Audit Team

Page 1 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Check the following books:
a) Shareholders Register;
b) Register of Directors, Managers; and
c) Directors attendances register.

Confirmation of Opening and Closing balances


Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Y/N/NA

W/P
Ref.

Initial &
Date

Y/N/NA

W/P
Ref.

Initial &
Date

Confirm all opening balances of General Ledger whether derived


from the audited financial statements finally adopted by the previous
auditors as per Bangladesh Standard on Auditing (BSA)-510; and
Confirm Closing balances of General Ledger with financial
statements.

Analysis of Financial Statements


Particulars
Analyze trend of all income as well as all assets;
Analyze trend of all expenses as well as all liabilities;
Analyze variances of all income as well as assets between current
year and prior year;
Analyze variances of all expenses as well as liabilities between
current year and prior year;
Analyze industry profitability; and
Take sample to verify based on the above analysis, i.e. those
balances take maximum part of the total assets, liabilities, income
and expenses need more meticulous attention.

Accounting & internal control systems


Particulars
Review the internal control systems of the Company;
Find out major internal control weaknesses;
Check whether remedial actions have been taken against internal
control weaknesses, if any;
Verify the reliability of computer-processed accounts (Tally) by
means of:
a) Review of internal control
b) Test runs
c) System check
d) Others
Confirm whether any material accounting changes have been made
during the year.

Audit Program
Prepared by: Audit Team

Page 2 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited

Summarization and Reporting


Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Prepare reporting requirements as per engagements with MSBPL;


Comply with reporting deadlines and requirements and
communication protocols mentioned in the audit Engagement
Letter;
Summarize report/observations including their instances;
Prepare draft auditors report including draft financial statements
and submit for discussion with MSPLs management;
Send initialled report and financial statements for approval by the
Board of Directors of the Company;
Draft management report and send the same for management
responses;
Obtain approved financial statements and submit the report for
signature;
Obtain management report with management responses;
Send signed report with financial statements ; and
Send signed management report with management responses.

Property, Plant and Equipment (PPE)


Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Perform the procedures mentioned in the BSA 510 Initial


Audit Engagements Opening Balances for opening balances
of PPE;
For subsequent years, confirm the opening balances with last
years audited financial statements;
Obtain PPE register and item-wise fixed assets schedule;
Obtain approved budget for capital expenditure;
Check the purchase invoices of PPE and other relevant documents
to ensure that all relevant costs have been included in the cost of
PPE at the time of recognition;
Review the payment procedures including deduction of Tax and
VAT if applicable and whether supporting documents are adequate
or not;
Review the basis of valuation at cost or revaluation
(Accounting policy);
Understand the mode of acquisition and disposal procedures;
Check whether depreciation method is followed consistently;
Check depreciation policy on newly acquired assets;
Check depreciation policy on assets disposed off;
Check whether insurance policies taken on assets;
Confirm whether the repairs and maintenance costs have been
treated as revenue expenses;
Review the allocation of depreciation between administration
and production;
Audit Program
Prepared by: Audit Team

Page 3 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Verify the ownership of assets;
Verify the documents like registered deeds up to date rent
receipts and other related documents (if any);
Check whether any disputes/ Claims against the ownership (if
any);
Confirm the physical possession of the assets (through physical
verification);
Obtain the list of purchaser and mode of disposal of fixed
assets;
Understand the process of recognition of property, plant &
equipment from CWIP;
Check whether the transfer being made are accounted for under
the appropriate head;
Check whether any assets being fully depreciated but still in
use;
Enquire whether any physical verification being made during
the year;
Obtain the physical verification report and review it to identify
any matter for which further audit procedures are required;
Check the commitment for any capital expenditures;
Confirm the carrying amount of assets where more than one
basis is used;
Confirm gross carrying amount and accumulated depreciation at
the beginning and at the end of the years;
Test the existence and amount of restrictions on title of assets or
any assets have been pledged as security;
For revaluation of assets (if being made during the year):
- Read BAS-16 meticulously
- Check the basis used for revaluation;
- Confirm whether independent valuer was involved
Identify the condition of asset and there usage in case of
impairment

For impairment of assets(if being made during the year):


(discuss with manager and note down the prescribed procedures
to go ahead)
- Read IAS-36 meticulously
- Confirm whether expert was involved
Intangible Assets
Particulars

Y/N/N
A

W/P
Ref.

Initial &
Date

Confirm the opening balance with last years audited financial


statements;
Check the basis of valuation at cost or revaluation (Accounting
policy);
Check amortization procedures in case of definite useful life
(Accounting policy);
Audit Program
Prepared by: Audit Team

Page 4 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Test impairment in case of unlimited useful life;
Test de-recognition of assets (Accounting policy);
Check amortization rates applied category wise;
Obtain item-wise intangible assets schedule;
Check allocation, if any, of amortization between administration
and production;
Verify the ownership of assets;
Verify the documents like registered deeds up to date rent
receipts and other related documents;
Matching of subsidiary balance with that of general ledger
Disputes/ Claims against the ownership if any
Carrying value of assets where more than one basis is used
Gross carrying amount and accumulated amortization at the
beginning and at the end of the year
Reconciliation of gross carrying amount at the beginning and at
the end of the year
Commitment relating to intangible assets if any
For re-valued assets (if applicable):
- Basis used for revaluation;
- Whether independent valuer was involved
The carrying amount of each class of assets (re-valued) that
would have been included in the financial statements had the
assets been carried at cost less amortization
The existence and amount of assets whose title is restricted
The gross carrying amount of any fully amortized assets that is
still in use
The carrying amount of assets retired from active use and held
for disposal
Fair value of assets, when it is materially different from carrying
amount
Review of disclosure (as per ISA 38)
Confirm the closing balance with GL & TB
Inventories

Particulars

Y/N/NA

W/P
Ref.

Perform the procedures mentioned in the BSA 510 Initial Audit


Engagements Opening Balances for opening balances of
inventories;
For subsequent years, confirm the opening balance with last years
audited financial statements;
Review the overall inventory process and identify for any lapses
therein;
Observe physical security of inventories and environment in which
they are held and whether they are properly insured;
Test procedures for recording of inventory movements;
Obtain a list of inventories and review the documents which are
maintained for inventories;
Test authorisation for adjustments of inventories and written off
scrapping of inventories
Audit Program
Prepared by: Audit Team

Page 5 of 21

Initial &
Date

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Test whether materials are categorized on the basis of ABC analysis;
Test whether goods are properly received at the gate and their records
are properly maintained;
Check whether GRN are prepared on the receipt of goods itself and
by the authorized person at stores;
Test whether goods received are inspected by the inspection
department and have duly approved the GRN;
Test whether GRN are timely entered in store ledger immediately
after the approval of GRN;
Check whether proper discrepancies memo are being prepared for
any rejection / short receipt of the material;
Check the procedures for the issue of materials (store to production
dept., users, buyer, etc.);
Test whether the same are properly documented regarding date,
timing, qty and department receiving the material;
Also test whether inventories are physically verified periodically;
Check whether the issue of materials are properly entered in the store
ledger;
Review the policy regarding slow moving, non-moving, obsolete
inventories;
Test whether sufficient provision for such material are created in
accounts;
Obtain aging analysis of materials stored;
Check the reconciliation of raw materials, Finished goods and Work
in progress
Inspect reconciliation of inventory counts to inventory records (this
gives overall comfort on the adequacy of controls over the recording
of inventories);
Perform comparative analysis between standard production and
actual production and
Other related works to achieve the objectives of the assignment.

Check whether any creation of charge/lien on investment (Notes to


financial statements)
Comply with BAS 2 Inventories for valuation of inventories;
Check and consider the disclosure requirements; and
Confirm the closing balance with GL & TB
Stores (Goods) in Transit

Particulars

Y/N/NA

W/P
Ref.

Obtain detail list of goods in transit;


Review the recording systems of goods in transit;
Check transit items with related supporting;
Inquire the concerned person (s) for each items of goods in transit to
confirm the present condition of those items;
Also confirm subsequent position of transit goods.

Audit Program
Prepared by: Audit Team

Page 6 of 21

Initial &
Date

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Advances and Deposits

Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Y/N/NA

W/P
Ref.

Initial &
Date

Perform the procedures mentioned in the BSA 510 Initial Audit


Engagements Opening Balances for opening balances of
advances and deposits;
Review the advance policy/process;
Test whether up to date lists are available regarding advance against
salary, purchase, tax and others for regular monitoring;
Check advance register, recording and adjustment;
Obtain aging report for advances and prepayments and comment on
long outstanding items
Review the agreements in case of advance to any parties for
procurement of any kinds of inventories and fixed assets as well as
movement (adjustment) thereof and identify any lapses therein;
Identify the reasons for non-recovery and non-adjustments of long
pending advances;
Inquire the concerned persons for non-recovery;
Review periodical confirmation of balances;
Pay special attention on approval of deposits and internal control
procedures thereof; and
Consider whether provisions are required for long outstanding and
doubtful balances.
Cash and Cash Equivalents

Particulars
Cash receives
Conduct independent verification of cash receipts;
Test the evidence of a sequence check on any pre-numbered cheques;
Test authorisation of cash receipts;
Test the evidence of arithmetical check on cash received records; and
Test all physical money receipts (from customers and cash withdrawn
from bank) duly included in cashbook.
Cash payments
Inspect current cheque books for:
Sequential use of cheques
Controlled custody of unused cheques
Signatures on blank cheques
Test (to avoid double payment) to ensure that paid invoices are marked
with the paid symbol sign; and
Test the evidence of arithmetical checks on cash payment records,
including cashbook.
Cash at bank
Inspect the evidence of authority for current standing orders and direct
Audit Program
Prepared by: Audit Team

Page 7 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
debits;
Inspect the evidence of regular bank reconciliations, at least once per
month;
Examine evidence of impendent checks of bank reconciliation (e.g. a
signature);
Identify the stale cheques (above six months);
Examine evidence of the follow up of outstanding items on the bank
reconciliation. Pay particular attention to old outstanding reconciling
items that should be written back such as old and un-presented
cheques;
Review timely deposit of collections (bank draft and pay order, if any)
are regularly deposited to bank with the usage of deposit slips;
Check the recording of bank draft and pay order procedures ;
Check the reporting procedures from commercial department to the
accounts department;
Aging of cheque issued not presented for payment;
Check the FCR accounts and exchange rates;
Send confirmation letters directly to banks for bank balances and
check those balances with bank books;
Review the post dated cheque issued against bank loan and subsequent
adjustment, recording, etc. thereof; and
Obtain Board Resolution for closing any bank account along with
bank statement.
Petty cash
Test petty cash vouchers for appropriate authorisation.
Test cancellation of paid petty cash vouchers.
Test for evidence of arithmetical checks on petty cash records
Test for evidence of independent checks on the petty cash
Perform a surprise petty cash count and reconcile to petty cash
records.
Spoiled currency notes (if any).
Comparing system cash book with manual/computerized cash book
balances
Insurance cover of cash in safe, fidelity guarantee and also cash in
transit.
Petty cash limit fixed and strictly followed
Sales and Accounts receivable

Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Sales invoices and sales register, recording and documentation


system of each selling place
Cycle of moving the goods from storehouse to sales
centre/distributors and vice versa for return.
Major local, inter company transfer and issue for gift to anybody (if
any) and processing system as well as authorization and
documentation therein
Procedure of receipt of order, cross check and comparison of prices
in the invoices with that of approved price of the company
Audit Program
Prepared by: Audit Team

Page 8 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Check whether formal records of receipt of orders are maintained.
Negations with customers by the concerned person of the Company
in case of direct sales, and preparation of sales invoice as well as
recording system of inventory in the storehouse.
Whether unprocessed sales orders are reviewed on regular basis
Pending process of sales orders and its aging with reason
identification thereof.
Plan & procedure laid down for the execution of the order.
Whether commission rates charged to agents independently checked
and approved before the invoices are despatched
Whether separate serial number for sales invoices as well as money
receipts are maintained
Whether there were proper procedures to ensure that all sales returns
are physically received and restored to stocks
Identify reasons for sales returns
Review the marketing strategy (if responsible for marketing)
Check the transportation system and identification lapse therein
Perform the procedures mentioned in the BSA 510 Initial Audit
Engagements Opening Balances for opening balances of
advances and deposits;
Go through the sales policy including credit sales;
Obtain the list of the customers;
Confirm whether the Company is reliant on few major
customers;
Review bank guarantee and other security of credit sales (if any);
Obtain and review pricing policy and pricing list;
Test sales procedures from sales order to goods despatch;
Test customers recognition policy and its compliance;
Review authorisation procedures
Check transactions on test basis;
Check bank statements to confirm whether sales proceeds are
duly deposited into the Companys bank accounts;
Identify stale cheques and reason thereof;
Review the movement of debtors balance
Send direct confirmation letter to major customers;
Consider whether provisions are required for bad and doubtful
debts;
Accounting of sales & debtors and recognition of sales
Whether credit notes only issued on an appropriate authority
Collection against sales and deposit to bank with deposit slip and
its time interval
Whether reconciliation differences promptly resolved
Reporting procedures of sales and collection against sales to the
head office by sales centre
Obtain the list of the customers
Go through the sales policy
Ageing analysis of debtors and checking with ledger
Bank guarantee and other security of credit sales (if any)
Pricing policy and pricing list
Audit Program
Prepared by: Audit Team

Page 9 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Y/N/NA

W/P
Ref.

Initial &
Date

Sales procedures from sales order to goods despatch


Customers recognition policy and its compliance
Authorisation procedures
Check transactions on test basis (both live test and dead test)
Check with bank account
Identification of steal cheques and reason thereof
Movement of debtors balance
Identification of debtors outstanding for more than six months.
And extension received if any for the same from concerned
authority
Bad debts write offs authorised by someone with suitable degree
of authority
Marching of subsidiary balance with that of general ledger
balances
Direct balance confirmation
Accounting of sales & debtors and recognition of sales
Collection against sales and deposit to bank with deposit slip and
its time interval
Reporting procedures of sales and collection against sales to the
head office by sales centre
Other related works to achieve the objectives of the assignment

Inter-company Payables /Receivables


Particulars
Check the movement of balances during the period;
Test origin of transactions and scrutinize the supporting documents;
Obtain confirmation of balances from inter-companies;
Check reconciliation of balances and clearance of outstanding items
within a prescribed time limit;
Review management decisions on long outstanding items;
Confirmation of counter checking
Confirm opening balances with last year's audited
accounts/working paper.
Obtain summary list of inter-company transactions.
Check the entries in the payable/receivable book with
correspondence and any other documents and evidence available.
See that the proceeds of the invoices are properly accounted for
and the account of the relevant party with the amount.
Check newly payable/receivables created during the year.
Check payment made during the period against accounts payable.
Check significant items and new items included in accounts
during the period.
Find out the reasons for such transactions of the company.
Audit Program
Prepared by: Audit Team

Page 10 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Check whether any set guideline for making transactions.
Check the procedure of payments to parties.
Check the balance at the end of the period agrees with General
Ledger.
Check whether transactions made in cash or on credit.
Check whether policy strictly maintained for inter-company
transactions

Share Capital
Particulars

Y/N/N
A

W/P
Ref.

Initial &
Date

Y/N/NA

W/P
Ref.

Initial &
Date

Confirm the opening balance with last year Auditors report


Authorised, issued, subscribed and paid-up capital by
reference to MA & AA
Understand the composition of share capital
Obtain the share capital position as of reporting period from the
legal department which is supplied by McDonald Steel
Building Products Ltd.
Check the amount with the share register and addition with
reference to minute books of the Board of Directors.
Check whether any movement has made among the positions
Extend the audit procedures if there is any movement among
the position of shareholders other than in the head Others
Observe any increase or decrease of share capital and if so then
discuss with our manager for further audit procedures
Confirm the closing balance with GL & TB

Bank Overdraft
Particulars
Review of bank loans, related securities and agreements with
banks
Checking of limit of bank overdraft and use of limit
Review the calculation of interest on loans or borrowing ensuring
correct charge to the accounts
Follow up of adjustments of over-charge of interest, penalty and
other charges
Review of authorization and preservation of bank documents
Review of bank loans, related securities and agreements with
banks
Balance confirmation and reconciliation of difference, if any
Checking of post dated cheques against loan
Check and confirm of any mortgage redemption at the end of lease
period and renamed of title of respective assets
Confirm the opening balance with last year Auditors report
Audit Program
Prepared by: Audit Team

Page 11 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Check whether the repayment has been made in accordance
with the pre-defined mode and date
Obtain the bank overdraft facility for the current year
Obtain the list of banks from which overdraft facility is availed
Obtain the agreement or other correspondences for drawing
bank overdraft
Understand the purpose for which bank O/D is taken
Check whether overdraft amount exceed the approved limit
Check whether the transaction is authorized by the appropriate
level of authority
Understand the nature of security arrangement and confirm
whether sufficiently disclosed in the FS
Understand the nature of interest fixed or floating
Compare the interest rate among other OD and short term
borrowing rate (if any)
Understand the mode of repayment
Check whether the repayment has been made in accordance
with the pre-defined mode and date
Review whether the repayment is being made through
arranging another bank OD
Check the calculation of interest and its accounting
Confirm the closing balance with GL and TB
Obtain bank confirmation and reconcile the balance
Purchases/ Procurement and creditors

Particulars

Y/N/N
A

W/P
Ref.

Initial &
Date

Review the overall procurement process and identifying lapses


therein
Review of process of product specification and supplier selection
Check whether purchase requirement is properly indented by the
user dept. mentioning qty & date and description and it is
properly approved
List of pending indent and check whether pending indent is
periodically reviewed.
Test whether purchase department invites Quotation from parties
Comparatives are prepared if any
Purchase order is properly approved by the concerned authority
Check LC opening, Margin, retirement of LC
Check of LC charges, interest charge for credit against LC and
verify with agreement
Recording, verifying and checking of bills received against
supplies of goods
List of pending purchase orders and reason therein
Lead-time / Minimum level / maximum level / Reorder level
defined (if any) and whether maintained is strictly
Check whether Imported goods were properly insured
Payment procedures (with suppliers, approval) including
deductions of tax and VAT in applicable cases
List of creditors along with ageing and checking with ledger
Audit Program
Prepared by: Audit Team

Page 12 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
balance
Movement of creditors balances
Accounting and reconciliation of party balances on bills payable
Evidence of authorisation of adjustments to payables ledger
control account
Whether all payment made to creditors are acknowledged by
directors
Reporting of payable accounts and periodic review thereof
Confirm the opening balances with last years audited
financial statements.

Other Liabilities
Particulars

Y/N/N
A

W/P
Ref.

Initial &
Date

Y/N/N
A

W/P
Ref.

Initial &
Date

Y/N/N
A

W/P
Ref.

Initial &
Date

Confirm the opening balances with last years audited


financial statements.
Obtain the individual different schedules under this head
Observe the movement of balances therein if available
Obtain the agreement and note down salient features
Whether secured or unsecured and against what
Check whether the payment has been made in accordance with
the agreement
Obtain aging analysis and identify the long outstanding
balances
Also identify the long outstanding balances and no longer
payable and note the reasons behind them
Confirm the closing balances with GL & TB
Current Income Tax Liabilities
Particulars
Confirm the opening balance with last years audited financial
statements.
Check the provision being made during the year in the FS
Check the computation of deferred tax
Check whether the calculation has been made in accordance
with Bangladesh Income Tax Ordinance,1984 and IAS-12
Confirm the closing balance with GL and TB
Short term bank loan
Particulars
Confirm the opening balance with last years audited financial
statements.
Check the provision being made during the year in the FS
Audit Program
Prepared by: Audit Team

Page 13 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Check the computation of accrued interest
Check the purpose of the short term loan
Collect loan repayment schedule
Checked whether the repayment made accordingly to the
repayment schedule.
Collect the update bank facility offer latter and complied
therein
Check whether the loan transactions are properly accounted for
in the book of accounts
Confirm the closing balance with GL and TB

Non operating income/ Other Income


Particulars

Y/N/N
A

W/P
Ref.

Initial &
Date

Compare the figure with corresponding period of last year


Obtain the details list of other income
Understand the nature of income and justification of
regarding as non-operating income
Consider whether it is recurring or incidental
Confirm the closing balance with GL & TB
Recognition of other income
Cash collection against other income and its deposits
Accounting entries etc.
Cost of Sales

Particulars

Y/N/NA

W/P
Ref.

Initial &
Date

Check the calculation procedures


Valuation of inventory and the adjustment of change in inventory
with purchases to determine the cost of sales
Verify the cost of sales with the help of back calculation of selling
unit and per unit inventory cost
Check the other direct cost relating with cost of sales
Test whether the cost of sales are properly matched with sales
Check whether proper cut off procedures are maintained
Reconcile the quantity base information of store house and
accounts department
Any other related work if required

Administrative, Selling and Distribution Expenses


Audit Program
Prepared by: Audit Team

Page 14 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Particulars

Audit Program
Prepared by: Audit Team

Y/N/NA

W/P
Ref.

Initial & Date

Page 15 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Salaries and Wages
Review service policy, if any including leave and employees tax
Check whether payments of salary and benefits are in
accordance with terms of the appointment letters or employment
contract
Review of procedure of payroll processing, disbursements and
recording
Adjustments of advances and loans against salary
Review the final settlement practices and liability accounting
systems
Verify attendance and leave with payroll sheet
Gratuity accounting and procedure & final settlement of
outgoing employees
Compliance (legal and constructive obligation) regarding
gratuity and investment of funds
Test whether attendance cards are punched by the employees on
a regular basis and correctly.
Approval of late arrival of the employees.
Monthly attendance reports to be crossed with the salary sheets.
List of new joiners & left employees
Appointment letter to be reviewed and cross their actual salary
paid with their contracts on a test check basis.
Policy regarding appraisal of the employees, basis of such
appraisal, effectiveness of such appraisal procedure,
authorization/ approval for the same.
Salary registers whether updated, procedure of updating of such
register.
Check whether policies framed by the company relating to
leave, medical is properly adhered.

Check payroll system


Check the service agreement with the employee.
Check the salary structure of the company.
Check overtime calculation system and payment procedure
Verify the signature in payroll sheet with the specimen
signature in appointment letter
Check the worker leave register
Verify the attendance register of the worker with payment
register
Check any kind of increment.
Check tax deduction at sources.
Check payment procedure of payroll and comply with
service agreement
Check the total expenditure against this account head with
the trial balance
Check casting, posting and referencing.
Travelling and Conveyance
Obtain the policy and review it
Compare the figure with corresponding period of last year
Review the percentage of change or variance
Audit Program
Prepared by: Audit Team

Page 16 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited

Consider the materiality


Check whether the employees are entitled to this facility
and on what terms and conditions
Check all supporting documents to identify any
discrepancy
Check whether applicable VAT & TDS are deducted and
accounted for
Check whether the transaction as well as payment is
properly authorized by the appropriate level of authority
Check whether approval from Bangladesh bank is attached
with the voucher in case of foreign payment (if applicable)
Check whether adequate provision has been made to
conform with accrual concept
Confirm the closing balance with GL & TB
Rent and Rates
Check agreement with the landlord
Obtain summary list rent & utilities
Check correspondence with the third parties, (if any)
Check the adjustment procedure
Obtain the schedule of rent advance
Check the utilities provisions made procedure
Check casting, posting & referencing
Legal and Professional Charges
Read the agreement and note the salient features (terms
and condition) including, validity, parties concerned,
value, payment conditions, nature of services etc.
Check payments and verify with correspondences.
Check whether Tax and VAT has been deducted at source.
Check whether services has been received and classified.
Ascertain unpaid obligation, if any.
Insurance
Compare the figure with corresponding period of last year
Review the percentage of change or variance
Understand the nature and purpose and mode of renewal
Cross check with the prepayment insurance whether
appropriate amount of adjustments have been made (if
any)
Check whether adequate provision has been made to
conform with accrual concept
Confirm the closing balance with GL & TB
Other Expenses
Compare the figures with corresponding period of last year
Obtain the agreements (if any) and summarize it
Cross check the amounts which originates from the
adjustment of prepayment or reclassification
Check whether the transactions are properly authorized by
the appropriate level of authority
Audit Program
Prepared by: Audit Team

Page 17 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited

Consider TDS & VAT implication while making payment


in light with agreement and in accordance with ITO, 1984
Check all supporting documents rigorously and note down
any irregularities
Check whether all utility bills are duly paid
Review the correspondences regarding any bills which
remained as unpaid for long time
Check whether adequate provision has been made to
confirm with accrual concept
Confirm the closing balance with GL & TB
Directors Current Account:

Particulars

Y/N/NA

W/P Ref.

Initial &
Date

Y/N/NA

W/P Ref.

Initial &
Date

Y/N/NA

W/P Ref.

Initial &
Date

Review the purpose of taking loans from the company by the


Managing Director and Directors
Obtain the balance confirmation direct from the Managing
Director and Directors
Review the calculation of interest on loans taking by
Managing Director and Directors
Review the reconciliation statement, if any
Vouch the transaction on a sample basis
Review the general ledger and subsidiary ledger whether
the transaction regarding loans and its interest dully accounted
for or not
Tally the subsidiary ledger with general ledger

Provision for Expenses:

Particulars
Acquiring policy for provision for expenses
Estimation of provision for expenses and financial chargesaccurately and adequately
Accounting treatment
Subsequent adjustment (if necessary)
Tax and VAT:

Particulars
Review the process of tax and VAT planning, if any
Review of procedures of tax and VAT deduction at source on
applicable items
Check of VAT register, current account, Mushak (VAT), mode
of payment and reconciliation between input tax and output tax

Audit Program
Prepared by: Audit Team

Page 18 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Check of calculation tax liability, advance tax and tax return
Accounting of tax and VAT
Advance tax calculation and compliance thereof as per tax
laws
Ascertaining the contingent liabilities for income tax and VAT
Whether tax provision are dually accounted for in the financial
statements
TA and DA:

Particulars

Y/N/NA

W/P Ref.

Initial &
Date

Y/N/NA

W/P Ref.

Initial &
Date

Y/N/NA

W/P Ref.

Initial &
Date

Review of policy (rate, entitlement, purpose, budget, bill


checking, approval authority, etc.)
Register, recording, adjustments
Accounting of TA, DA
Reasons for non-adjustments of long pending items
Expenses (Overall)

Particulars
Vouching of payments and confirm whether all relevant
supporting of documents are available
Justification of expenses and to ascertain whether any
questioned costs are included
Provisions are made adequately in periodical accounts
Comparative and matching analysis
Cost benefit analysis
Verification of purchases, C&F expenses, freight charges,
conveyance, utilities expenses, transport, LC expenses, repairs
& maintenance, financial charges, bank charges &
commissions and extraordinary items
Approval procedures of expenses
Accounting treatment and classification
Analysis of prior budget for expenses and comparison with
actual expenses
Trend analysis of expenses with corresponding revenue trend
and identification any mismatch of trend and reason therein
Corporate Affairs and rules:

Particulars
Holding of Board meetings, AGM, issue of notice, minutes and
preservation of such records as per Corporate Law
Submission of annual returns with RJSC and certified copies
Compliance of all rules, regulations, circulars and directives
Audit Program
Prepared by: Audit Team

Page 19 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
Ascertaining the level of penal actions and risk exposure for
non-compliances, if any
Insurance Policies:

Particulars

Y/N/NA

W/P Ref.

Initial &
Date

Y/N/NA

W/P Ref.

Initial &
Date

Identify all policies of insurance (General liability, Fire, theft,


and other casualty, life insurance/group, product liability, etc.)
Review of policy taken up, premium, payment of premium,
unpaid premium
Review of insurance coverage
Accounting treatment
Documents and certificates:

Particulars
Existing Groups Organogram and Key Management Set up
Fund management
Cash and Bank Operating System
Financial reporting systems (MIS) of Head Office;
Accounting and Internal Audit Manuals, if any.
Administrative & Operational Manual. If any
Financial policies and procedure guidelines
Procurement policies & procedures at Head Office;
HR related policy and practices in Head office
Land title deed and up to date rent paid receipts
Up to date municipal tax, holding tax and rates paid documents
Copies of Memorandum and Articles of Association
Review and copies of board meetings and general meetings
minutes books
Check share register and share transfer ledgers
Change in ownership agreements, voting agreements, and
other agreements tied to direct and indirect ownership of
securities of any other companies
Review corporate management
List of directors and officers
Identify and review all material agreements/contracts along
with related documents
Review and copies of all contracts and agreements executed by
the Company which are present in force
Review and copies of all expired contracts and agreements
executed by the Company, which were implemented, or not.
Confirm company has all necessary consents, licenses,
Permits and registrations necessary for doing business
Trade license
TIN certificate
Audit Program
Prepared by: Audit Team

Page 20 of 21

Hoda Vasi
Chowdhury & Co
McDonald Steel Building Products Limited
VAT registration certificate
Import registration certificate
Export registration certificate
Details of any patents, trademarks held/applied for.
Chambers membership and certificate.
BOI registration
Business Analysis:

Particulars

Y/N/NA

W/P Ref.

Initial &
Date

Review and analysis of performance & efficiency and compare


year to year, industry and investment growth
Analysis of financial projections, cash flow,
Capacity and market sharing
Market Potentiality of business
Break even analysis as well as target profit projection

Reporting and Deliverables:


Reports will, inter-alia, cover the followings

Weaknesses in the internal control systems

Identifying the questioned costs or major expenses not supported by relevant documents and not
authorized

Non-compliance of policies & guidelines

Fraud & irregularities in financial matters

Recommendations on the respective observations

Recommending an Action Plan for future course of actions.

During our audit we would complete the following tasks:


Review, study and document the existing operation systems;
Identify any problems in the existing operation systems;
Report any irregularities discovered; and
Make appropriate recommendations.

Audit Program
Prepared by: Audit Team

Page 21 of 21