Model Audit Practice Manual - Revised and Redrafted 2012 - THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN

Sep 30, 2026

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Model Audit Practice Manual (Revised and Redrafted 2012) provides structured guidance for performing an audit, organized from pre-engagement through planning, execution, and reporting. It covers prospective and existing client memoranda, terms of engagement, development of overall audit strategy and plan, understanding the client and control environment, materiality, and fraud risk assessment. It also includes procedures such as analytical risk assessments, internal audit function evaluation, group audits, sampling and selection methods, sample audit programs, lead schedules, enquiry and confirmation formats, and completion and final review checklists.

LanguageEnglish

CategoryExam

FormatPDF

Pages455

Reading Time19 h 7 min

AccessFree to download

Preface

Part I – Pre-Engagement

Chapter 1 Prospective Client Acceptance / Existing Client’s Continuation Memorandum

Chapter 2 Terms of Engagement

Part II – Planning

Chapter 3 The Planning Process

Chapter 4 Know your client (understanding business and its activities)

Chapter 5 Control Overview

Chapter 6 Audit Materiality

Chapter 7 Fraud Risk Assessment

Chapter 8 General Purpose CIS Checklist

Chapter 9 Analytical Performed as Risk Assessment Procedures

Chapter 10 Internal Audit Function Evaluation

Chapter 11 Group Audit and Using the Work of Component / Other Auditors

Chapter 12 Staff Planning and Time Allocation

Chapter 13 Points Forward From Previous Year

Part III – Execution

Chapter 14 Means of selecting items for testing

Chapter 15 Sample Audit Programs

Chapter 16 Lead Schedules

Chapter 17 Formats of Enquiry and Confirmation

Chapter 18 Inventory Count Attendance Program

Chapter 19 Going Concern Assessment

Chapter 20 Related Party Transactions Checklist

Chapter 21 Companies Ordinance Compliance Checklist

Chapter 22 Income Tax Provision Checklist

Chapter 23 Labour Laws Compliance Checklist

Chapter 24 Tax Position

Chapter 25 Summary of corrected misstatements

Part IV– Reporting

Chapter 26 Final Review of Financial Statement

Chapter 27 Working of Cash Flow Statement

Chapter 28 Overall Conclusion Analytical Procedures

Chapter 29 Summary Review Memorandum for Partner

Chapter 30 Significant Matters Documentation

Chapter 31 Points for Next Year

Chapter 32 Evaluate Team Performance, Assess Client Satisfaction and Team Debriefing

Chapter 33 Subsequent Events Review Checklist

Chapter 34 Audit Completion Checklist

Model Audit Practice Manual (Revised and Redrafted 2012) THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN CONTENTS Page PREFACE ……………………………………………………………………….…… 06 PART I – PRE-ENGAGEMENT ……………………………………………..………. 08 Chapter 1 Prospective Client Acceptance / Existing Client’s Continuation Memorandum ……………………………………………………… 09 I Prospective Client Acceptance Memorandum ……………… 09 II Existing Client Continuation/ Retention Memorandum …….. 14 Chapter 2 Terms of Engagement ……………………………………………… 17 I Agreeing Terms of Engagement on Acceptance of the Audit .. 17 II Change in Terms of Audit Engagement …………………… 18 PART II – PLANNING………………………………………………………………….. 20 Chapter 3 The Planning Process……………………………………………….… 20 I Developing an overall audit strategy ………………………….. 20 II Overall Audit Plan ……………………………………………….. 24 Chapter 4 Know your client (understanding business and its activities)…..…. 29 I Client Overview ………………………………………………… 29 II Business Control Environment …………………………..…… 35 III Computer Information Systems (CIS)……………..………… 36 IV Financial Reporting Environment …………………………… 37 V Critical Audit Areas / Significant Financial Statement Components ………………………………………………….… 38 VI Reasons for use of experts and other parties …………..…… 39 Chapter 5 Control Overview ……………………………………………….…… 40 I Control Overview and Risk Assessment Document ………… 41 (a) Control environment ………………………………………..…… 41 (b) Entity’s risk assessment process ……………..………..……… 43 (c) Information system, and related business processes relevant to financial reporting, and communication ……..…… 44 (d) Control activities relevant to audit ……………….……..……… 46 (e) Considerations Specific to Smaller Entities …….……..……… 47 (f) Monitoring of controls …………………………..……….……… 49 Chapter 6 Audit Materiality ……………………………………………………..…… 51 Chapter 7 Fraud Risk Assessment ………………………………………………… 55 I Responsibilities of the Auditor ……………..…………………… 55 II Fraud Risk Assessment Document ……………..……………… 57 III Discussion among the Engagement Team …..………………… 57 IV Discussions with Management ……………….………………… 58 (a) Results of enquiries of management ……..………………… 58 (b) Discussions with those charged with governance ………… 59 (i) Fraudulent financial reporting …….…..……………… 60 (ii) Misappropriation of assets …….……...……………… 61 V Evaluation of Audit Evidence ….………………..……………… 66 VI Written Representations ……….………………..……………… 67 Chapter 8 General Purpose CIS Checklist ……………………………………… 68 Chapter 9 Analytical Performed as Risk Assessment Procedures …………… 78 I Analytical Review – Ratio Analysis …………………………… 79 II Review of Financial Performance of the Client ………..……… 82 Chapter 10 Internal Audit Function Evaluation …………………………………… 85 Section I—Preliminary assessment of the internal audit function ……… 86 Section II—Evaluate and test the work of internal audit ………………… 86 Chapter 11 Group Audit and Using the Work of Component / Other Auditors…… 89 Section I – Obtaining an understanding of the Group …..……………..… 90 Section II – Understanding the Component Auditors …………………… 91 Section III – Communicating the group instructions to Component Auditors …………………………………..…..……………..… 93 Section IV – Other considerations …………………..…………………..… 97 Section V-Reporting Considerations …………………………………..… 99 Chapter 12 Staff Planning and Time Allocation ……………………………….… 101 Chapter 13 Points Forward From Previous Year …………………………….… 105 PART III – EXECUTION ……………………………………………………………… 106 Chapter 14 Means of selecting items for testing ……………………………..… 106 I Introduction ……………………………………………………..… 106 II Sampling Risk …………………………………………………..… 107 III Sampling Approaches ………………………………………..… 109 IV Selecting and testing the sample (Methods)………………..… 111 V Examples of some testing/sampling methods ……………..… 116 Chapter 15 Sample Audit Programs ………….………………………………….… 123 I Balance Sheet –Assets ……………………………………….… 124 II Balance Sheet-Liabilities

FAQs

What does the manual cover across the audit lifecycle?

It follows a structured flow from pre-engagement through planning, execution, and reporting, including key memoranda, audit planning activities, testing and documentation, and completion checklists.

How does the manual guide fraud risk assessment?

It includes responsibilities of the auditor, a fraud risk assessment document, engagement-team discussions, discussions with management and governance, evaluation of audit evidence, and written representations.

What audit execution topics are included regarding testing and sampling?

It covers methods of selecting items for testing, sampling risk and approaches, selecting and testing the sample, and provides sample audit programs and testing/sampling method examples.

Sep 30, 2026

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