1. ACHIEVING EFFICIENCY WITH SMALLER CLIENT AGARWAL & ITALIA CHARTERED ACCOUNTANTS SECUNDRABAD

2. PRESENTATION OUTLINE Introduction Preliminary Approach Audit Approach Concluding the Audit Conclusion

3. INTRODUCTION QUALITATIVE CHARACTERSTICS OF A SMALL ENTITY Concentration of Ownership & Management Few Sources of Income and Operations Unsophisticated Record keeping Limited Internal controls – Management Override

4. PRELIMINARY APPROACH Knowledge of Clients Business Engagement Letter Quality Control Planning Assessment of Risk Materiality

5. KNOWLEDGE OF CLIENTS BUSINESS Understand the transactions that: Significantly effect the financial statements Enable the auditor in assessing inherent and control risks

6. PRELIMINARY APPROACH Knowledge of Clients Business ENGAGEMENT LETTER Quality Control Planning Assessment of Risk Materiality

7. QUALITY CONTROL PLANNING FIELD WORK TESTING Assignment of the team Informing the team Supervision Consultation Review

8. PLANNING THE AUDIT Consider clients expectations and requests Review the available information or obtain information through discussion with the client Designing Audit Procedures Review of Planning document Timing of Audit and Job Scheduling

9. RISK ASSESSMENT Control Risk Inherent Risk Attitude of the owner manager Going Concern Status of the entity Significant third party reliance Risk of less sophisticated internal controls Risk of fraud

10. ASSESSING MATERIALITY At planning stage When Evaluating the results of Audit Procedures

11. AUDIT APPROACH Test Checking Analytical Procedures Audit Sampling Audit Evidence Documentation Related Party Transactions

12. AUDIT APPROACH TEST CHECKING 100% of the population 100% of the part of the population applying analytical procedures to the other part Sampling OBTAINING OTHER AUDIT EVIDENCE External Confirmation Review of Post Balance Sheet Events

13. DOCUMENTATION Audit Plan Audit Programme Results of Audit Procedures Conclusions drawn from Audit Evidence Working Papers Update Permanent file Partner’s Review points

14. CONCLUDING THE AUDIT SUBSEQUENT EVENTS Test of Going Concern Forming an Audit Opinion Management Representation Letter

15. SUBSEQUENT EVENTS Are Accounting Records updated NO Review Bank Statements/ other evidence Is the Amount Material YES Seek Explanation and document the same YES

16. CONCLUDING THE AUDIT Subsequent Events TEST OF GOING CONCERN Forming an Audit Opinion Management Representation Letter

17. CONCLUDING THE AUDIT Subsequent Events Test of going concern FORMING AN AUDIT OPINION Management Representation Letter

18. CONCLUDING THE AUDIT Subsequent Events Test of going concern Forming an Audit Opinion MANAGEMENT REPRESENTATION LETTER

19. CONCLUSION

20. THANK YOU

21. AGARWAL & ITALIA Chartered Accountants Surya towers, V floor, Sardar Patel Road Secunderabad – 500 003 INDIA Contact : Percy Italia Mobile : +91 98480 31086 Telephone : +91 40 2781 8165, 2784 8700 Fax : +91 40 2781 8165. e-mail : percy@agarwalanditalia.com