Procedure before Commencement of New Audit

Before the commencement of a new audit, the auditor should go through the minutes of the directors and note down the important decisions. The auditor should prepare himself before the commencement of a new audit; he should consider the following points:

1.Appointment

First of all, the auditor should confirm his appointment letter that it is in order from every respect and fulfilling all its legal requirements.

2.List of Books of Account

The auditor should obtain a list of all the books of account and should see that all books have been kept in accordance with the company ordinance.

3.Legal Documents

The auditor should take a copy of the legal documents of the company and should study them carefully before the commencement of the audit. Such documents may be memorandum and articles of association, prospectus and contract with vendors etc.

4.Nature of Audit

The auditor should know the nature of the audit so that he may prepare himself accordingly.

5.System of internal Audit

The auditor should also study the internal control system in the business concern. He should make detailed inquiries, inspect records and wherever possible, observe the actual procedure in operation.

6.Accounting System

Before the commencement of a new audit, the auditor must know the system of accounting adopted by the business concern. He should thoroughly investigate the whole system of bookkeeping and accounting.

7.Name of Principal Officers

The auditor should obtain the list of the principal officers with their financial and other powers.

8.Minute Book

Before the commencement of a new audit, the auditor should go through the minutes of the directors and shareholders and note down the important decisions.

9.Audit Programme

Keeping in view the nature of the audit, nature of business and extent of work, he should chalk out an audit programme for the commencement of the new audit.

10.Technical Operation

He should acquaint himself as for as possible with the technical operation of the company. It is suitable that he should visit works before starting the audit.

11.Previous Year’s Audited Accounts and Reports

With the exemption of a new company, the auditor should observe the last balance sheet for the purpose of checking the opening entries for the period under audit. The previous auditor report should also be inspected.

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