1.

0 INTRODUCTION

The word “audit comes from the Latin word audire, which means “to hear”. The acient “audit-
checking” activities can be traced back to ancient civilizations, such as China, Egypt, and Greece. The
ancient checking activities found in Greece (around 350 B.C.) appear to be closest to the present day.
(Lee Teck-Heang & Azham Md.Ali, 2008)

Based on American Accounting Association Committee on Basic Auditing Concepts (1973),

auditing is a systematic process of objectively obtaining and evaluating the evidence regarding a
confident and forceful statement of fact about economic actions and events to ascertain the degree of
correspondence between the assertion and established criteria and communicating the result to interested
users.

There are four types of audit services which are operating audit, compliance audit, financial
statement audit, and forensic audit. Operational Audit is a systematic review of effectiveness, efficiency,
and economy of operation. It is a future future-oriented, systematic, and independent evaluation of
organizational activities. The process is very similar to the processes for other forms of audits, such as the
financial audit, but the operational audit process is a much more in-depth review of the business. It
usually does not focus on a single department or project, because each department plays a role in the
overall operational process and is interconnected. It aims to determine whether the internal controls of the
business (i.e., policies and procedures) are sufficient to produce an optimum level of efficiency and
effectiveness. Operational audit is often praised as a process which provides a company with objective
opinions enabling it to generate quicker production or sales turnaround, better allocation of costs,
improved control systems, the location of areas of delay and an overall streamlined workflow. However,
like any audit process, operational audit can be time-consuming and costly.
A compliance audit is a comprehensive review of an organization’s adherence to regulatory
guidelines. Independent accounting, security, or IT consultants evaluate the strength and thoroughness of
compliance preparations. A compliance audit is based on the premise that management is responsible for
the entity’s compliance with compliance requirements. Management’s responsibility for the entity’s
compliance with compliance requirements includes the following:

a. Identifying the entity’s government programs and understanding and complying with the
compliance requirements

b. Establishing and maintaining effective controls that provide reasonable assurance that the
entity administers government programs in compliance with the compliance requirements

c. Evaluating and monitoring the entity’s compliance with the compliance requirements

d. Taking corrective action when instances of noncompliance are identified, including corrective
action on audit findings of the compliance audit.

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 The objectives of compliance audit are to; (1) Obtain sufficient appropriate audit evidence to
form an opinion and report at the level specified in the governmental audit requirement on whether the
entity complied in all material respects with the applicable compliance requirements; and (2) Identify
audit and reporting requirements specified in the Government Auditing Standards, if any, and perform
procedures to address those requirements. The auditor should determine which of those government
programs and compliance requirements to test in accordance with the governmental audit requirement.
The auditor should assess the risks of material noncompliance whether due to fraud or error for each
applicable compliance requirement and should consider whether any of those risks are pervasive to the
entity’s compliance because they may affect the entity’s compliance with many compliance requirements.
The auditor should report noncompliance as well as other matters that are required to be reported by the
governmental audit requirement in the manner specified by the governmental audit requirement.
Thirdly, financial statement audit is the examination of an entity’s financial statements and
accompanying disclosures by an independent auditor. The result of this examination is a report by the
auditor, attesting to the fairness of presentation of the financial statements and related disclosures. It aims
to add credibility to the reported financial position and performance of a business, and is required for all
publicly traded entities. The audit process is based upon management assertions. The auditor may base his
or her work on financial statement assertions that differ from those in this standard if the assertions are
sufficient for the auditor to identify the types of potential misstatements and to respond appropriately to
the risks of material misstatement in each significant account and disclosure that has a reasonable
possibility of containing misstatements that would cause the financial statements to be materially
misstated, individually or in combination with other misstatements. Those assertions can be classified
into the following categories:

1. Existence or occurrence—Assets or liabilities of the company exist at a given date, and

recorded transactions have occurred during a given period.

2. Completeness—All transactions and accounts that should be presented in the financial

statements are so included.

3. Valuation or allocation—Asset, liability, equity, revenue, and expense components have been
included in the financial statements at appropriate amounts.

4. Rights and obligations—The company holds or controls rights to the assets, and liabilities are
obligations of the company at a given date.

5. Presentation and disclosure—The components of the financial statements are properly

classified, described, and disclosed.

Last but not least, forensic audit is often conducted to obtain or develop information as legal
evidence or for use by expert witnesses in the courts of laws. Forensic auditing requires the use of critical

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analysis and investigative skills, integrated with accounting knowledge and business experience. The use
of auditors to conduct forensic audits is most relevant when the assignment involves complex accounting
or financial issues. Some example where a forensic audit might be conducted such as business economic
losses.

The auditor is an individual who is trained to review and verify that the accounting data provided
by an audited company accurately corresponds to the activities that have been partaken by the company.
To comprehend more on role of an auditor, an agency relationship arise when one or more principals (e.g.
an owner) engage another person as their agent to perform on their behalf. Performance of this service
results in the delegation of some decisions making authority to the agent. This delegation of responsibility
by the principal and resulting division of labour are helpful in promoting an efficient and productive
economy. However, such delegation also means that the principal needs to place trust in an agent to act in
the principal’s best interests. A simple agency model suggested that, as a result of information
asymmetries and self-interest, principals lack reasons to trust their agents and will seek to resolve these
concerns by putting in place mechanisms to align the interest of agents with principals and to reduce the
scope for information asymmetries and opportunistic behavior. (Walker, 2003)

Auditor’s objective are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatements, whether due to fraud or error, and to issue an auditor’s report
that includes the auditor’s opinion. Reasonable assurance is a high level of assurance but is not guarantee
that an audit conducted in accordance with auditing standards will always detect a material misstatement
when it exist. Misstatement can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
basis of these financial statements.

The auditor’s opinion on the financial statements address whether the financial statements are
presented fairly, in all material respects, is accordance with the applicable financial reporting framework.
The auditor’s opinion, therefore, does not assure, for example the future viability of the entity nor the
efficiency or effectiveness with which management has conducted the affairs of the entity. In some
circumstances, however, applicable law or regulation may require auditors to provide opinions on other
specific matters, such as the effectiveness of internal control (Lessambo, 2017). Despite the fact that
General Accepted Auditing Standards (GAAS) include requirement and regarding auditor’s opinion to the
extent that they are relevant to forming an opinion on the financial statements, the auditor would be
required to undertake further work if the auditor had additional responsibilities to provide such opinions.

The audit process may consist of several steps to make sure the audit is properly conducted. In
general, audits are normally performed in six phase which are include preliminary planning, pre-survey,
survey, data collection and analysis, reporting and post audit evaluation.

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 The preliminary planning phase is the initial step of the audit process. In this phase, the audit
team is formed and the team gains an understanding of the reason for the audit and identifies the
objectives. The audit team then begins planning the audit. The breakdown of preliminary phase may
include the activities such as identify the issue or concern and make a work plan, identify the staff to form
an audit team, team meeting to explain the role and delegate task to team members, identify audit
requirements, identify audit objectives, identify type of audit, and contact auditee or client by issuing the
engagement letter.

In the pre-survey phase, the audit team determines the laws, regulations or guidelines relevant to
the objectives of the audit. The audit team meets with program officials to gain and understanding how
the program or activity is supposed to function. Program officials can provide information on the program
and potential problem areas. Information obtained at this meeting can be used to establish audit
materiality, assess audit risk and clarify audit objectives.

Audit survey phase includes steps necessary to assemble information that will enable the audit
team to make decisions concerning the nature, timing and extent of detail audit work. The survey includes
a timely gathering and analysis of information so that potential audit arears can be identified and plans
made to review and test management controls over these areas. Survey work may be more extensive for
first time reviews than for previously performed audits.

The data collection and analysis phase focuses on analysing the evidence to determine cause and
quantifying the effect of the condition identified in the survey. Recommendations are also developed to
address the identified cause. At this time the Objective Attributes Recap Sheet (OARS) should be updated
to include cause, effect and recommendation. In data collection and analysis phase, the audit team focuses
on collecting and analysing the evidence needed to develop and support the findings, conclusions and
recommendations. Working paper prepared and analysed during this phase may include excerpts of client
policies, procedures and documents such as writes-up of meetings, inquiries and interviews, spreadsheets
and schedules and computers printouts. In according to the matter, such working papers should be used
by the audits team to support the condition, determine the effect, identify the cause and develop the
recommendation. The OARS provide structure to the working papers which assists the audit team in
assessing on day to say basis the completeness, accuracy, clarity, relevance and overall quality of the
evidence.

Next phase is reporting which are the activities that corporate together with auditing. Auditing
and report writing are not separate activities but represent a single integrated process. The audit team
should begin anticipating and visualizing the report as early as the preliminary planning phase. Sections
of the report should be written as the attributes are developed. Normally the report is assembled and
crafted into a cohesive and comprehensive document after the data collection and analysis phase is
completed.

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 Last but not least, after the final report is issued, the audit team should perform a postaudit
evaluation to discuss the strengths and weakness of the audit and to suggest ways to improve the quality
of the audit and to suggest ways to improve the quality of future audit efforts. Ideally, the team will meet
promptly after the final report is issued. The team reviews and discusses the audit from the preliminary
planning stage through the issuance of the final report. It is important that each member of the audit team
be given an opportunity not only to identify problem arears but to recognize audit techniques or
approaches that were successful.

2.0 MAIN BODY

While undergo industrial training, I have exposed with different of nature of business. There are
various types of business which are services, merchandising, and corporation. Basically, for the first
month of my industrial training, I just assist the staffs and the seniors in the team to do vouching, casting,
and test of control. I did a lot of test of control for each cycle in the company that had been assigned to
me such as payment, sales, inventory, purchase, payroll, bank, account payable, account receivable, and
journal voucher.

Within the first month, I found that it is hard to understand in brief what is the audit really means.
During my study in university, it seems that the audit profession is a great job with a lot of flexibility and
travelling without even knowing how the auditors actually work. The time management and efficiency are
very crucial being an auditor since we are dealing with a lot of companies.

Since this is the first time I get accessed to real business documents, I have encountered some
problems to understand how to read them. For example, some clients were documented all their
documents according to the months. Thus, there will be all types of documents such as journal vouchers,
payments vouchers, tax invoices, and delivery orders in one file. I have taken some time to check each
piece of the document in the file to understand how the client documented them. Finally, after several
times of audit and by asking the seniors, I managed to overcome the problem. However, the filing system
for each company are different. The experience and knowledge of understanding the financial documents
is needed to make sure that we ask the right file from clients.

Based on my weekly task, I had been assigned to cover some of the audit procedure. The audit
procedures that I had to cover such as agreed audit working paper with audit current, pluck in figure into
audit working paper, prepare statutory checklist, director, debtors and credit confirmation, vouching,
prepared draft account, review cash and bank balance and review journal voucher.

In verifying last year figure in audit working paper agreed to audit current (prior year statutory
financial statement), I need to check on the accuracy of all the last year’s figure which was stated in audit
working paper based on the audit current to ensure the audit working paper follows the audit current. The
audit current is the final account that already verified by partner and directors of the company. Sometimes

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the audit working paper is not up to date, thus it must be adjusted accordingly if there is any difference
noted. The last year’s figure will be compared with the current year’s figure to investigate any significant
variance (variance above the scope) which must be explained in the audit working paper.

Next procedure is pluck in figure into audit working paper. There are many sections in the audit
working paper such as Cash and Bank Balance, Review Cash and Bank Balance, Property Plant and
Equipment, Other Payables, Detailed Income Statement, Balance Sheet, and etc. I had to pluck or key in
in every item in the client’s Trail Balance according to their section in the audit working paper, include
audit tick mark accordingly beside the figure which means it is agreed to the Trail Balance, agreed and
cross-reference the amount to General Ledger. I must make sure all the items and amount written in the
Trail Balance are the same with the ending balance recorded in the General Ledger to show that the
clients have properly written up their accounts. After I finish pluck in all the figures, I need to make sure
the Balance Sheet section is balance before I proceed with next procedure.

Prepare statutory checklist, director confirmation, and debtors and creditors confirmation
is compulsory for all auditors to prepare audit checklist for statutory books, minutes and other matters;
and director, debtors, and creditors confirmation (if any) for each client. It is prepared as a checklist to
make sure all the statutory books such as register of members, register of substantial shareholders,
register of directors, register of secretaries, register of managers, minutes book of members meeting, and
minutes book of directors meeting have been properly kept by client during the period under audit. I need
to ask for the company’s annual return and minutes of directors’ and members’ meeting in order to
complete the checklist. If the company has receivable and payable balance at the end of the year, I need to
prepare the debtors and creditors confirmation to be sent to the company’s debtors and creditors for their
confirmation on the amount recorded by client in their books.

Next procedures are vouching and prepare draft account. As for vouching process, I have to
vouch the amount for all items in income statement which are above scope to their supporting documents.
Then, I cross-reference the amount and put audit tick mark to where they are vouched. The entire
significant amount must be vouched to their supporting documents. While Preparing draft account, I have
to prepare the draft account for every company which I have audited based on the audit working paper
and give it to the typist for further action. The draft account will then be reviewed by the senior in charge
before the final account are made and approved by the Partner. The approved final account which
contains the audit opinion will be given to the client as the result of the audit work.
Last but not least, next procedures are review cash and bank balance and journal voucher. As for
reviewing of cash and bank balance is aiming to detect any unusual and significant transactions in the
general ledger of cash and bank account. I need to go through the general ledger of cash and bank account
and list all the transactions with the amount above the scope as the findings for this process. I need to
investigate the reason for the existence for such items if noted. While the objective of journal voucher
review is to make sure that there are no unusual items or non-standard items being noted for the account
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under review. I need to review all journal vouchers with the amount above scope and search for their
supporting documents to check for their occurrences and completeness. I have to confirm that all the
journal vouchers were properly authorised by checking on the signature of the people who have the
authority to sign the journal voucher. Then, I need to check on the journal vouchers description to make
sure they were correctly described and supported. The supporting documents attached with the journal
voucher must contain the same amount with the amount stated in the journal voucher to verify the
amount. Lastly, I need to ensure that all the items in the journal voucher were allocated in the proper
account.

3.0 LEARNING FROM INTERNSHIP

What I have learn from the industrial training was the need for audit report for the business. It is
required by the laws in our country. The best quality of the audit is compulsory to ensure companies
operate accordingly to the law. It is also to lead a better economy for the country with zero defect and
fraud. The responsibility of an external auditor firm is to provide assurance to both company and
shareholder. Regarding to that matter, the important part before performing an audit is to understand the
nature of business. It is because, different company will use different system in their company. By
understanding how the business operate, we can proceed with the audit procedure much easier.

Besides that, during industrial training, I can improve my communication skills. Some people
may said that the communication skill must be develop during the university level or secondary school.
However, based on my opinion, this skill need to be improve every time since the level of communication
will change depending on who you interacting to. In university level, this skills had been implemented in
the assessment which required students to do presentations. This will be as a training for a student to
improve their skills if they really appreciate and know the objective of each assessment given. If not, they
will only perform the task to get the best grade for that particular subject and those skills won’t be
develop. As for most audit job, auditor really dependent on client’s documents to gather reliable audit
evidence. Thus, fail to have a good communication will lead to incomplete information gather. Most of
my client located just around the city and it did not take a very long time for me to get the necessary
document. It is crucial to gather all documents and information needed during the time frame of the field
work at client’s place.

On the other hand, during my internship, I also learn about the important of time management. As
a student who had been trained to always meet the due date of their assessment, time management will be
efficient. In any audit firm, time efficiency is compulsory. It is because, firms not only bound to the
company or clients, but they also had to consider the need for shareholder and stakeholder. There is no
leisure time in audit firm. The environment at the firm thought me on how it looks like to be an auditor. It
gave a brief view for me to set up my objective on who I want to be, what professions and which area in

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accounting that I need to focus on developing my career in future. Simply said that, I obtain a clear view
for my future career path during my internship.

In addition, computer skills such as Microsoft Excel is commonly used in audit and accounting
firm. All the seniors and auditors at EY are really expert in using it. Since I was rarely using it, self-
learning to understand how to use Microsoft excel really help me to do work much faster. EY Kuala
Terengganu branch only have one department which is Assurance, so there is no accounting software
such as MYOB Accounting and UBS Sage Accounting being used. All audit working paper done in
Microsoft Excel. There are a lot of new feature and formulas of Microsoft Excel I learned during my
industrial training. As for EY, EY Random software is used to select the samples for Test of Control and
Walkthrough.

4.0 SUGGESTION / IMPROVEMENT

As for my recommendation, I think it is important for students to prepare themselves with

computer skills especially in excel to make sure the tasks given could be completed smoothly and able to
meet the dateline. Furthermore, Microsoft Excel is not only for accounting purposes. There are a lot of
work can be accomplished by using Microsoft Excel. During my study in University, I found it is a great
opportunity if there are a course offered by university or organisation to learn Microsoft Excel which I
would like to join. On the other hand, time management is also important when we work as an auditor
because we will experience tight schedule during peak period as we had to complete many audit
engagements in the same time. Time management comes together with self-organisation and self-
discipline which are important to be a better person. I do suggest that, if there are students who want to be
a professional accountant, they need to concern about this matter. Grab an opportunity to join and commit
into any external circulars to prepared yourself for future. It is because, as a student, I do experienced and
observed my other fellows who have a lot of leisure time and they do nothing about it. It is better if that
leisure time can be filled with completing the assessment given by lecture, gain new knowledge and
improve some skills as an investment for future.

In addition, relating to my industrial training, students should do some research about the
company that they will join. They may want to ask about the task which will be given to them during the
practical training from the previous trainee or lecturers to get an overview before the training begin. I
think this is important to students because it will help them to set their objective and goals from the very
beginning on what they want to achieve at the end of the practical training. It is a great opportunity if
there are a lot of sharing experience session done by the seniors who had finished their industrial training.
Better if those seniors who want to share their experience comes from many organisations such as from
big, medium and small organization. It is because, the working environment between this organisation is
different.

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5.0 CONCLUSION

In conclusion, these 6 months of practical training has given me a very beneficial experience and
knowledge as an accounting student for the preparation of real working life. I really need to prepare
myself with knowledge and important skills, especially, computer skills, communication skills,
interpersonal skills and intrapersonal skills. I realize that working in professional industries is really
different with those working in education or technical sectors. I need to communicate with different
people during the audit engagement to get their explanation for all inquiries regarding their business.

Besides that, working as an auditor requires me to really understand nature of various businesses
and risks that they face to help them overcome those risks and maintain their existence in marketplace.
Even though I were not involved directly with the decision making process, I am really sure that all that I
have done such as casting, vouching, and test of control are really vital in order to reach the right decision
and ensure the accuracy of the information in the auditor’s report. Thus, I should make sure everything I
do follow the procedures and steps which already set by EY.

Everything we do in this life is accountable during the Day of Judgment. Thus, we have to make
sure that we are not involved in things which are prohibited by Allah. I personally see accounting and
audit field as one of the careers which is vulnerable to fraud and dishonesty. Since accounting and audit
are directly involve with the preparation of financial statement presentation and disclosure, the accountant
or auditor will have the opportunity to change the information in the financial statement which could give
them benefit while harm others in the other side. As a Muslim, I strongly believe that Allah prohibit us to
involve in fraud and dishonesty because those things will cause injustice to the societies. Thus, have to
prepare myself with strong foundation and practice good ethics to avoid any immoral activity that will
harm my family, societies, and myself.

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REFERENCES

American Accounting Association Committee on Basic Auditing. (1973). A Statement of Basic Auditing
Concepts, American Accounting Association .

Lee Teck heang, A. M. (2008). The evolution of Auditing: An analysis of the historical Development,
Journal of Modern Auditing and Accounting, Volume 4, No 12, p. 2.

Lessambo, F. I. (2017). Auditing, Assurance Services, and Forensics .

Walker, M. (2003). Principal/agency theory when some agents are trustworthy, Accounting and Finance
Working Paper.

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APPENDICES

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