Purpose of audit firms in Pakistan

In our country, businesses used to often rely on accountants from the audit firms in Pakistan to assist in reconciling the business accounts, preparing and adjusting the journal entries and writing financial statements for the business.

Small and medium organizations, to be particular often lack the level of accounting sophistication which is needed to carry out these tasks. Relying on the audit firms in Pakistan often made sense from the perspective of efficiency and cost containment.

However, there is an increased focus towards standards and regulation, that must be followed by businesses. Moreover, it is a requirement for incorporated business which are traded publicly on the stock market. This is why businesses need to use audit firms for their purpose.

What audit firms in Pakistan do?

External audit firms in Pakistan play a critical role in validating an organization’s financial information. If a party discovers that an auditor failed to detect material misstatements, it reflects poorly on the firm and the profession in general. For that reason, accounting bodies in Pakistan release auditing standards and expectations to define the role of external audit firms in Pakistan.

The outside, independent audit firm is engaged to render an opinion on whether an organization’s financial statements are presented fairly, in all material respects, in accordance with financial reporting framework of Pakistan. The audit provides stakeholders, such as lenders and investors with an enhanced degree of confidence in the financial statements. An audit conducted in accordance with Institute of Chartered Accountants Pakistan relevant ethical requirements enables the auditor to form that opinion.

To form their opinion about the organization, the auditor gathers appropriate and sufficient evidence and observes the organization, tests are conducted, comparisons are made and confirmation is not made until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements of the organization audited, are free of material misstatements, whether due to fraud or error.

Sayub & co. is an audit frim in Karachi, which has been performing audits for various organization over the past. The following is the list of audit procedure:

• Gathering information from management and others to gain an understanding of the organization itself, and the operations, financial reporting standards, and find fraud or error
• Evaluation and understanding of internal control system of the organization
• Analyzing procedures on expected or unexpected variances in account of the organization, with balances or classes of transactions
• Test the documentation supporting account balances or classes of transactions
• Taking physical count
• Confirmation accounts receivable and other accounts from a third party

After the completion of the audit, the auditor may also offer objective advice for improving financial reporting and internal controls to maximize a company’s performance and efficiency.