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					              Standard
              Operating
             Procedures
                    Audit Department
                     AFS Preparation
                     (Bloemfontein)
SOP name:          AUD - AFS   Date last reviewed:   21 July 2011
Revision number:   1           Date issued:          31 July 2011
SOP Owner:         JB          Page number:          1 of 6
                                                          Contents
Standard Operating Procedure at Nolands SA level .......................................................... 3
Bloemfontein – SOP : Audit department AFS Preparation ................................................ 3
  1. Purpose ................................................................................................................................ 3
  2. Scope ................................................................................................................................... 3
  3. Prerequisites........................................................................................................................ 3
  4. Responsibilities ................................................................................................................... 3
  5. Processes and procedures ................................................................................................. 5
       Audit financial statement preparation and auditing .................................................................................. 5
       CC Financial statement preparation ........................................................................................................ 5
  6. References ........................................................................................................................... 5
  7. Definitions ............................................................................................................................ 6




SOP name:                 AUD - AFS                                          Date last reviewed:       21 July 2011
Revision number:          1                                                  Date issued:              31 July 2011
SOP Owner:                JB                                                 Page number:              2 of 6
Standard Operating Procedure at Nolands SA level
It is the policy of Nolands SA to document all standard operating procedures within each network firm. Each
network firm must appoint a person who is regarded as the owner of standard operating procedures per
department and per function.


Bloemfontein – SOP : Audit department AFS Preparation

1.     Purpose
The firm has an audit department which provides a full range of auditing services to its clients. All necessary
items required by staff to perform their jobs are located and contained in the auditing office. The services
offered by the auditing department include the preparation of the financial statements, various business reports,
audit of financial statements in accordance with International Auditing Standards, pension fund financials, VAT
and tax calculations, agreed upon procedure and other special purpose engagements. Due to the number of
services offered, defined standard procedures are in place to ensure a smooth operational flow as well as
integration within other departments and processes of the business. The standard operating procedures for this
department are set out below.


2.     Scope
The standard operating procedures for the processes of the auditing department must be followed for all
services rendered by the department and by all employees of the company employed in the auditing
department.
The standard operating procedures also specifies individuals and their responsibilities. It can therefore be used
by other employees of the company to identify how the auditing department is integrated with the rest of the
company and identify in an efficient manner, who is responsible for which services offered by the department.


3.     Prerequisites
The staff of the auditing department must have laptops which are installed with standard as well as specific
software. One specific software requirement is Draftworks. CaseWare will soon be implemented at our office.
The staff must also have access to the company common network driver as well as to the intranet. There is no
internet access during working hours; however there is one computer desktop which must be used by trainees
(should any be employed in future) if they need internet access for the any of the work tasks.


4.     Responsibilities
The total staff complement of the auditing department is 0 trainee accountants, 2 managers and 3 partners.

The individuals each have their own tasks within the department and are responsible for the provision of
different services.

4.1.   Audit partners – There are two different categories of responsibility at the partner level:

       4.1.1. Category one:

          a) Set the proper tone for an effective audit with the audit team, management and those charged with
             governance;



SOP name:            AUD - AFS                             Date last reviewed:   21 July 2011
Revision number:     1                                     Date issued:          31 July 2011
SOP Owner:           JB                                    Page number:          3 of 6
          b) Lead engagement fee discussions, including any modification necessary or scope changes; agree
             deliverable timeframe with the client;
          c) Determine the allocation of the resources for the audit team by liaising with the audit planner
          d) Manage the engagement budget, track the actual time versus the budget and identify the overruns.
             Communicate revised fee arrangements to the client;
          e) Review of audit file prepared by trainees;
          f) Participate in and communicate among audit team members the resolution of significant findings
             and issues, particularly matters requiring consultation;
          g) Sign off the review notes;
          h) Sign off the financial statements; and
          i) All higher level decision making of the firm;

       4.1.2. Category two:

          a) Set the proper tone for an effective audit with the audit team, management and those charged with
             governance;
          b) Lead engagement fee discussions, including any modification necessary or scope changes;
             deliverable timeframe with the client;
          c) Delegate to the audit manager OR determine the allocation of the resources for the audit team by
             liaising with the audit planner
          d) Delegate to manager OR manage the engagement budget, track the actual time versus the budget
             and identify the overruns. Communicate revised fee arrangements to the client;
          e) Participate in and communicate among audit team members the resolution of significant findings
             and issues, particularly matters requiring consultation;
          f) Final file reviews and sign off of financial statements; and
          g) All higher level decision making of the firm.

4.2.   Audit managers –

          a) Participate with the partner in setting the proper tone for an effective audit with the audit team
             management and those charged with governance: provide supervision, continuous assistance and
             feedback on performance to the team – (only for the clients which been allocated to them by the
             partner from the planning stage);
          b) Preparation of audit budgets; Manage the engagement budget, track the actual time versus the
             budget and identify overruns. Communicate revised fee arrangements to the partner / client (only
             for the clients which been allocated to them by the partner from the planning stage);
          c) Setting of pre-planning; Assist the partner in determining that the assigned resources to the audit
             team have the capabilities, competence and time to perform an effective audit. Determine and
             agree with the audit team the timing of audit activities and team assignments as appropriate based
             on skill level - (only for the clients which been allocated to them by the partner from the planning
             stage);
          d) Participate in the risk assessment and planning discussion to determine that the planned audit
             approach and strategy is effective - (only for the clients which been allocated to them by the partner
             from the planning stage);
          e) Organizing of audit team (only for the clients which been allocated to them by the partner from the
             planning stage);
          f) Participate with the engagement partner in the resolution of significant findings and issues,
             particularly matters requiring consultation - (only for the clients which been allocated to them by the
             partner from the planning stage);
          g) Review of audit file prepared by clerks;
          h) Sign off the review notes; and
          i) Liaise with the partner for the final review (where applicable).




SOP name:            AUD - AFS                             Date last reviewed:   21 July 2011
Revision number:     1                                     Date issued:          31 July 2011
SOP Owner:           JB                                    Page number:          4 of 6
5.       Processes and procedures
Audit financial statement preparation and auditing

        Audit manager prepares quotes (if requested by the partners) for audit and sends through to the
         partner, who then approves it and sends it to the client for confirmation together with the timeframe of
         the deliverable.
        Once confirmation of the audit budget and timeframe has been received back from the client, the
         partner OR the audit manager (if in-charge) OR the audit planner makes sure the job is booked on the
         audit planning schedule and sends a meeting request to the relevant persons on the audit team
         (including audit partner) for a pre-planning meeting (for big clients only).
        The pre-planning meeting is normally set for one or two days (or the week) before the audit.
        Manager or the partner co-ordinates pre-planning.
        Audit team contacts the client beforehand to confirm the start of the job. The team arrives at client on
         the first day of audit per the planner and commence audit according to pre-planning minutes (if any) and
         to the planning document and audit programs.
        As long as they are at the client, the audit team adheres to the clients working hours.
        The review of the audit file is generally completed at the office by the manager or partner otherwise
         review is done during fieldwork depending on the duration of the audit.
        All queries raised by the audit manager OR partner are to be cleared by staff members that were on the
         audit.
        Finalisation of the file is then completed.
        If applicable, after review, audit manager liaises with the partner in order to plan his review.
        When the audit partner accepts the meeting, the audit file is then given to him for review.
        Once the audit queries raised by the audit partner are cleared, partners re-review final product.
        Draft financials are sent to the client for review.
        Once the client has reviewed the drafted financials, they give the go ahead for the final financials to be
         printed.
        The printed financial statements are sent to the partners’ assistant who makes as many copies the
         client requires, as well as the auditor’s copies.
        The Partner signs the final financials before they are sent to the client. The Partners’ assistant is also
         responsible to draft the representation letters for the clients to sign. The representation letter is sent to
         the client together with the copies of AFS.
        A checklist is completed by the partners’ assistant for all documents that are required to be sent to the
         client. The partners’ assistant keeps a register with information regarding the day they printed, sent and
         received the financials from the client.
        The final financials are sent to the client who sign and return the copies owned by Nolands (audit copy
         and working copy).
        A charge sheet is drawn up by the audit partner and given to the debtors department (Ref #1).
        The debtors department invoices the client.
        Audit working paper file is filed by the filing clerk (Ref #2).

CC Financial statement preparation

        The same procedures are followed as per the “Audit financial statement preparation” above.


6.       References
Ref #1    -   Refer to Debtors department
Ref #2    -   Refer to Filing and archiving




SOP name:            AUD - AFS                              Date last reviewed:   21 July 2011
Revision number:     1                                      Date issued:          31 July 2011
SOP Owner:           JB                                     Page number:          5 of 6
7.     Definitions
CC        -   Close Corporation
VAT       -   Value added tax
SARS      -   South African Revenue Service
AFS       -   Audited Financial Statements




SOP name:            AUD - AFS                Date last reviewed:   21 July 2011
Revision number:     1                        Date issued:          31 July 2011
SOP Owner:           JB                       Page number:          6 of 6

				
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