Audit Program: Provision Against Long Term Deposits Against Utilities

Audit Program WP Ref.
:
Prepared by:
Date:
Reviewed by
Date
Reviewed by
Date
Client: Ahmad Hassan Textile Mills Limited
Period: June 30, 2019
Subject: Long term deposits and prepayments
Amount in
Rs.
Account balances:
Long term deposits and prepayments
Provision against long term deposits against utilities
Classes of transactions:
Impairment Loss
S. No. Audit Objectives Assertions Risk Assessment

IR CR CRA
1. Long term deposits and prepayments
are completely and accurately recorded CA
2. All recorded long term deposits and
prepayments actually exist. E
3. Long-term deposits and prepayments
are recorded at appropriate values and
all bad and doubtful balances have
been provided for/ written off. V
recorded are the right of the company. R
are presented and all disclosures have
been given in accordance with the
Fourth / Fifth Schedule of the
Companies Act, 2017 and relevant OCAL
IASs. RVU
S. No. Audit Procedures Objective Done by W. P. Ref.
Test of Controls
1. Assess the reasonableness of design of ALL
system of internal control by enquiring
relevant client personnel and
documenting the same (if not a
documented system manual has been
developed by the client). A walk through
test would be necessary to confirm the
understanding as documented. Identify
the preventive (exercised before
occurrence of transactions and event)
and detective (exercised after occurrence
of transactions and event) controls
established by management to support
its assertions.
2. Check on sample of selected ALL
transactions covering the whole period
that all preventive controls are exercised
on all transactions.
3. Check that proper subsidiary records ALL
have been maintained and entries are
made in the same on prompt and
consistent basis and the same is
reconciled with general ledger.
4. Check on a sample of transactions that CE
detective controls are appropriately been
exercised and in case of any detection of
error/ fraud, proper steps have been
taken to avoid recurrence of the same.
5. For sample of deposits and prepayments EV
made during the year:
(a) Ensure the commercial and logical

reason.
(b) Check approval of appropriate level
of management.
6. Ensure that management does not
override the designed controls by:
 Enquiring from the designated staff

person
 Remain skeptical during performing
test of design and test of effective
operation
7. Document the conclusion after N/A
performing test of controls and required
level of assurance from substantive
procedures.
Analytical Procedures
1. Compare current year balances and CEA
expense with last year balances and
ensure that any significant variation
should be properly and logically
reasoned.
Test of Details
1. Obtain a party-wise movement schedule CE
of deposits and prepayments and trace
the opening balances from the general
ledger, subsidiary records, and last year
working papers. Check casting and cross
casting of the schedule.
2. For deposits and prepayments made E
during the year check disbursements of
funds with disbursement voucher and
bank statement.
3. For a sample of refund of deposits during EVR
the year: -
(a) Ensure that amount and date of
refund was in accordance with
agreement.
(b) Check receipt of funds with receipt
records and bank statement.
4. Circularize confirmations to selected CER
parties. Match replies with the amounts
outstanding against each party.
5. Obtain age-analysis of long-term deposits VK
and perform the following:-
(a) Verify that deposits have been
classified in correct categories.
(b) Current maturity has been
appropriately identified and
separately disclosed.
6. Check subsequent recovery of deposits EV
and adjustment of prepayments etc.
7. Ensure that none of the deposits or V
prepayments are impaired or the
recoverable amount of same is not less
than its carrying amount. If the carrying
amount of a deposits or prepayments is
more than its recoverable amount, then
same should be reduced to recoverable
amount recognizing the reduction as
impairment loss
8. For items stuck-up for considerable V
period of time, inquire about its status
from the management. Compute
provisions if required and ask for
management representations.
9. Ensure that closing balances as per our CE
working paper file are in match with
general ledger.
10. Determine that disclosures have been OCAL
made in accordance with the RVU
requirements of Fourth / Fifth Schedule to
the Companies Act, 2017 and the
applicable IASs.

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Audit Program WP Ref.

S. No. Audit Objectives Assertions Risk Assessment

(a) Ensure the commercial and logical

 Enquiring from the designated staff

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