This training builds skills to audit trading companies effectively, ensuring accuracy, compliance, transparency, and reliable financial reporting.
Best practice on Trading company’s Financial audit (Upcoming)
🕒Duration: 2-3-Days (12-24 Hours)
(Can be extended to 1 days with practical case studies and exercises)
📘 Training Modules (May be modified)
Module 1: Overview of Trading Company Operations
1 Nature of trading business (import, distribution, wholesale, retail).
2 Accounting cycle and documentation flow.
3 Common audit challenges in trading vs manufacturing.
4 Key legal frameworks:
- i) Companies Act, 1994
- ii) Income Tax Ordinance, 1984
iii) VAT Act, 2012
- iv) Foreign Exchange Regulation Act (FERA)
Module 2: Audit Planning and Risk Assessment
Understanding business model, client profile & control environment.
Identifying audit risks:
1 Revenue recognition (fake or premature sales).
2 Inventory valuation & cut-off errors.
3 Supplier rebates, discounts, or consignment stock.
4 Risk-based audit approach under ISA 315 & ISA 330.
5 Materiality determination and audit sampling.
Module 3: Internal Control Review
1 Cash handling and petty cash management.
2 Sales and collection process (Credit terms, aging, bad debt).
3 Purchase and payment authorization matrix.
4 Inventory custody, movement, and reconciliation.
5 Documentation control (Invoices, LC, import bills, delivery challans).
Module 4: Detailed Audit Procedures
1.Inventory Audit
1 Physical stock count vs ledger reconciliation.
2 Valuation under FIFO / Weighted Average.
3 Identifying obsolete or slow-moving stock.
4 Stock in transit and goods under LC.
2.Sales & Revenue Audit
1 Sample testing of invoices, delivery notes, receipts.
2 Review of trade discounts, returns, and rebates.
3 Cross-check with VAT Mushak-6.2 and bank deposits.
3.Purchase & Payables Audit
1 Verification of import LC, bank documents, and supplier invoices.
2 VDS (VAT deducted at source) and AIT (Advance Income Tax) checks.
3 Confirmation from major suppliers.
4.Cash & Bank Audit
1 Bank reconciliation and cash verification.
2 Testing of large or unusual transactions.
3 Review of foreign currency transactions (if import/export).
Module 5: Tax and VAT Compliance
1 Monthly VAT return verification (Mushak 9.1).
2 TDS deduction and deposit verification.
3 Tax computation, depreciation, allowable expenses.
4 Common NBR audit queries and how to prepare for them.
Module 6: Audit Findings & Reporting with Recommendations
1 Preparation of Audit Working Papers (AJP, audit evidence).
2 Adopt a standard audit checklist for trading companies.
3 Drafting Management Letter – highlighting control weaknesses.
4 Reporting under ISA 700 (Audit Opinion Formation).
5 Align internal policies with Tax, VAT, and Banking compliance.
6 Use automated accounting & inventory systems (ERP/Tally/SAP).