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:
First of all auditor should confirm his appointment letter that it is in order from every respect and fulfilling all its legal requirements.
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 company ordinance.
The auditor should take the copy of the legal documents of the company and should study them carefully before the commencement of audit. Such documents may be memorandum and articles of association, prospectus and contract with vendors etc.
Nature of Audit
Auditor should know regarding the nature of audit so that he may prepare himself accordingly.
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.
Before the commencement of new audit the auditor must know the system of accounting adopted by the business concern. He should thoroughly investigate the whole system of book keeping and accounting.
Name of Principal Officers
The auditor should obtain the list of the principal officers with their financial and other powers.
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.
Keeping in view the nature of audit, nature of business and extent of work, he should chalk out an audit programme for the commencement of new audit.
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.
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.