NIRC of ICAI New Delhi 5 th February, 2011 CA SUDHIR VARMA FCA; CIA (USA)

1.Transaction based audit 2.System / Risk based audit 3.Project based audit 4.Donor based audit 5.Efficiency audit 6.Compliance / Statutory audit -Income Tax -FCRA -Registering authority

1.Appointment by appropriate authority 2.Engagement letter 3.Scope of audit 4.Reporting requirements 5.Fee

1.“Knowledge of business” objects; activities 2.Audit objectives 3.Audit plan 4.Audit process 5.Resources

1.Transaction based audit 2.System / Risk based audit 3.Compliance/Statutory audit

1.Understand activity under the project 2.Budget for the project 3.Separate bank account / books of accounts 4.Direct revenues from the project -grants -donations -revenue incomes 5.Direct project expenses – nature 6.Allocation of expenses to projects 7.Projects utilization certificates

1.Donor sanction letter 2.Terms & Conditions 3.Budget 4.Reporting requirements

1.Donors / Governing body / Trustees 2.Verification of expenses beyond accounting 3.External help of specialists 4.Common sense / matured judgment 5.Team leaders

1.Size of NGO / No. of transactions 2.Familiarity with software in use 3.Assess software controls 4.Use auditing software 5.Remain abreast with technology

1.Income Tax Act 2.FCRA / FEMA / RBI 3.Registration laws 4.Labour laws 5.VAT / Service Tax 6.Commercial laws 7.Protection laws 8.General laws

1.This is more holistic than financial audit 2.Social audit of program/organization 3.Covers social performance of an activity, it’s relevance & effectiveness 4.Evaluates input resources vs beneficiary spread 5.Audit process

1.Intent of organization 2.Social book keeping & accounting 3.Define measurable parameters 4.MIS reports on program implementation 5.Program ledgers 6.Procedures, formats with relevant information

1.Statutory formats 2.Additional report to management -scope -methodology -information verified -limitations/disclaimers -comments/observations -recommendations -actions taken/not taken on past recommendations

1.Report to donors -scope -methodology -information verified -limitations/disclaimers -comments/observations -variations from budgets/programs -approvals of variations

1.Transfer from project to general funds 2.Definition of program expenses vs administration expenses

SA200Basic Principles Governing an Audit SA200AObjectives and scope of the Audit of Financial Statements SA210Agreeing the terms of Audit Engagements SA220Quality Control for Audit Work SA230Audit Documentation SA240The Auditor’s Responsibility relating to Fraud in an audit of Financial Statements SA250Consideration of Laws and Regulations in an Audit of Financial Statements SA260Communication of Audit Matters with those Charged with Governance

SA299Responsibility of Joint Auditors SA300Planning an audit of Financial Statements SA320Materiality in planning & performing an audit SA402Audit Considerations Relating to Entities Using Service Organizations SA500Audit Evidence SA501Audit Evidence – Additional Consideration for Specific Items SA505External Confirmations SA510Initial Engagements – Opening Balances SA520Analytical Procedures SA530Audit Sampling

SA540Auditing Accounting Estimates, including fair value Accounting Estimates & related Disclosures SA550Related Parties SA560Subsequent Events SA570Going Concern SA580Written Representations SA600Using the work of another Auditor SA610Using the work of an Internal Auditor SA620Using the Work of an Expert SA700The Auditor’s report on Financial Statements SA710Comparatives

Q & A Thank you