PRESENTATION on

AUDIT PLANNINGof

Beximco Pharmaceuticals Ltd.

Group Name: Corporate Warriors

• Salma Hakim Zinia (ID: 14092)• Arabinda Das (ID: 14100)• Nidal Adnan Kibria (ID: 14102)• Ayesha Siddiqa (14103)• Najmul Huda (ID: 14140)• Nishat Farjana Mushtary (ID: 14157)• A S M Ferdous Rahman (ID: 14173)• Abdullah Al Mahmud (ID: 14175)• Sandip Kumar Ghosh (ID: 14177)

Outline

IntroductionPlanning for the Audit: developing a general strategy and a

detailed approach for the expected nature, timing and extent of the audit.

Adequate planning of the audit work helps to ensure that appropriate attention is devoted to important areas of the audit.

Assists in proper assignment of the work to assistants and in coordination of the work done by others.

Introduction

Bangladesh Standards on Auditing

The auditor should plan the audit so that the engagement will be performed in an effective manner.

The auditor should perform procedures regarding the continuance of the client relationship and the specific audit engagement.

The auditor should establish the overall audit strategy for the audit. The auditor should develop an audit plan for the audit in order to reduce audit risk

to an acceptably low level. The overall audit strategy and the audit plan should be updated and changed as

necessary during the course of the audit. The auditor should document the overall audit strategy and the audit plan,

including any significant changes made during the audit engagement.

Bangladesh Standards on Auditing

The auditor should understand the entity, environment & its internal control to identify & assess the risk of material misstatement of the financial statement.

The auditor should perform the inquiries of management, analytical procedures & observation & inspection.

The auditor should determine whether the changes have occurred that may affect the relevance of the information in that current audit.

The auditor should obtain information about relevant industry & regulatory & other external factors.

The auditor should obtain the understanding about nature of the entity. The auditor should obtain the understanding of companies objective, strategies &

measurement & review of entity’s financial performance.

Bangladesh Standards on Auditing

The auditors determination about materiality is a matter of professional judgment, and is affected by the auditor’s perception of the financial information needs of users of the financial statements.

The auditor shall reverse materiality for the financial statements as a whole in the event of becoming aware of information during the audit that would have caused the auditor to have determined a different amount initially.

The auditor shall include in the audit documentation the following amounts and the factors considered in their determination:

• Materiality, for the financial statements as a whole.• The materiality levels for particular class of transactions, account balances or

disclosures.• Performance materiality.

Understanding of The Industry

• One of the most developed hi-tech sectors which is contributing in the country's economy.

• The sector was accelerated After the promulgation of Drug Control Ordinance – 1982.• Providing 97% of the total medicine requirement of the local market.• The national companies account for more than 65% of the pharmaceutical business in

Bangladesh.• Among the top 20 companies of Bangladesh 6 are multinationals following current good

manufacturing practices (cGMP) including rigorous quality control of their products. • The Drug Act of 1940 and its rules formed the basis of the country's drug legislation.• 210 licensed allopathic drug-manufacturing units in the country, out of which only 173

were on active production.• Manufactures about 5,600 brands of medicines in different dosage forms. • Turnover from pharmaceutical sector is encouraging which is about 14% of total industry

turnover is. This position also indicates the positive sign for investment in pharmaceutical sector.

Understanding of The Industry

Understanding of The Industry

Understanding of The Industry

Understanding of The Industry

Understanding of The Entity

• Year of Establishment: 1976• Country of Incorporation: Bangladesh• Commercial Production: 1980• Status : Public Limited Company• Business Line: Manufacturing and marketing of pharmaceutical Finished

Formulation Products, Large Volume Parenterals and Active Pharmaceutical Ingredients (APIs)

• Main Country of operation: Bangladesh• Corporate Headquarter & Registered Address 17 Dhanmondi R/A, Road No. 2,

Dhaka- 1205, Bangladesh

Understanding of The Entity

• Overseas Offices & Associates: Australia, Bhutan, Cambodia, Chile, Ghana, Hong Kong, Indonesia, Jordan, Kenya, Kuwait, Malaysia, Myanmar, Nepal, Pakistan, Philippines,Saudi Arabia, Singapore, Sri Lanka, Vietnam and Yemen

• Authorized Capital (Taka): 9,100 million• Paid-up Capital (Taka): 1,824 million• Number of Shareholders: Around 68,000• Stock Exchange Listings: Dhaka and Chittagong Stock Exchanges of Bangladesh and

AIM of London Stock Exchange• Number of Employees :2,511

Understanding of The Entity

Understanding of The Entity

Understanding of The Entity

• The magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of reasonable person relying on the information would have been changed or influenced by the omission or misstatement.

• Depends on the size of the error in the contexts of its omission or misstatement.

• Relative rather than absolute concept• Affected by qualitative factors• A threshold

Materiality and Risk Assessment

Materiality and Risk Assessment

Materiality and Risk Assessment

• The acceptance by auditors that there is some level of uncertainty in performing the audit function

• Close relationship with materiality

Materiality and Risk Assessment

Materiality and Risk Assessment

AAR = IR×CR× PDRAcceptable Audit Risk: A measure of how willing the auditor is to accept that the financial

statements may be materially misstated after the audit is completed and an unmodified audit opinion has been issued.

Inherent Risk: A measure of the auditors assessment of the likelihood that there are material misstatements in a segment before considering the effectiveness of internal control.

Control Risk: A measure of the auditor’s assessment of the likelihood that that misstatements exceeding a tolerable amount in a segment will not be prevented by the client’s internal controls.

Planned Detection Risk: A measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding a tolerable amount, should such misstatements exist;

PDR: AAR/(IR*CR)

Materiality and Risk Assessment

OPINION

• Financially sound company.• Ready to accept significant amount of

accepted audit risk.

Opinion

Q & A