WELCOME TO OUR PRESENTATION
• Group-10:
Current Issue in
Auditing
Course Title: Audit, Risk and Control
Course Code: AIS-5204
Submitted To:
Abdul Alim Baser,phD
Associate professor
Department of accounting and information Systems
University of Barishal
Submitted By:
Group-10
Group 10
Name ID
Anika Jahan 23 AIS 049
MD. Sajibur Rahaman 23 AIS 047
Md. Monirul Islam 23 AIS 026
Tanzila Akther Eva 23 AIS 045
Imtiaz Hasan 23 AIS 030
ANIKA JAHAN
23 AIS 049
AUDITING IN THE
FINANCIAL SERVICES
SECTOR
1. INTRODUCTION
• Auditing ensures organizations present an accurate and fair picture of
their financial position.
• Auditing is especially important in the financial services sector due to
high-value and high-risk transactions.
• Includes banks, insurance companies, microfinance, fintech, etc.
• Protects the economy, builds investor confidence, and prevents
financial fraud.
2. KEY COMPONENTS (BANGLADESH)
• Main financial service providers in Bangladesh include:
• Commercial Banks: Sonali Bank, IBBL, BRAC Bank
• Insurance Companies: Green Delta, Jiban Bima
• Investment Firms: LankaBangla Finance, IDLC
• MFIs: Grameen Bank, BRAC, ASA
• Credit Unions: Community savings and loans
• Fintech: bKash, Nagad, Upay
3. AUDITING PROCESS OVERVIEW
• Auditors follow these steps in the financial sector:
• Step 1: Understand business operations and income sources
• Step 2: Identify risk areas and plan audit focus
• Step 3: Test internal controls (e.g., approvals, KYC, cybersecurity)
• Step 4: Substantive testing (loans, investments, claims)
• Step 5: Check regulatory compliance (IFRS, Basel III, AML)
• Step 6: Use tools like ACL, Python, ML for analysis
• Step 7: Report findings and issue audit opinion
4. AUDIT REPORT & OPINIONS
• Types of audit opinions:
• Unqualified: Everything is fairly presented
• Qualified: Minor issues found
• Adverse: Major issues or misstatements
• Disclaimer: Not enough data to form an opinion
• Recommendations are also included in the final report
CHALLENGES IN AUDITING FINANCIAL
SERVICES
MD. SAJIBUR
RAHAMAN 23 AIS 047
SMALL COMPANY AUDIT
SMALL COMPANY AUDIT
An audit of a small company refers to the
examination and verification of a small
business’s financial statements by an
independent auditor to ensure accuracy,
compliance, and fairness in financial reporting.
Though small companies may not always be
legally required to undergo audits, many still do
so voluntarily for credibility, loan approvals, or
investor confidence.
AUDIT OBJECTIVES IN A SMALL COMPANY
• To verify accuracy of financial records
• To ensure compliance with accounting standards and local laws
• To detect errors and fraud
• To build trust with banks, investors, and stakeholders
AUDIT PROCESS FOR A SMALL COMPANY:
1. Planning: Understanding the business, setting audit scope
2. Risk Assessment: Identifying high-risk areas like cash or inventory
3. Internal Control Review: Even if informal, evaluate the company’s
procedures
4. Testing: Perform substantive testing on balances and transactions
5. Conclusion and Report: Issue audit opinion (Unqualified, Qualified,
etc.)
COMMON AREAS OF FOCUS:
• Cash transactions
• Receivables & Payables
• Inventory (if applicable)
• Revenue recognition
• Tax compliance
BENEFITS OF AUDITING A SMALL COMPANY:
• Improves financial transparency
• Builds investor and lender confidence
• Supports better management decisions
• Enhances internal control systems
• Helps in fraud prevention
Challenges in Auditing Small Companies:
Lack of documentation
Informal internal controls
Owner-manager dominance (risk of bias)
Limited accounting knowledge among staff
Example: Audit of “ABC Mini Mart”Let’s consider “ABC Mini Mart”, a grocery shop
with:
Annual turnover: BDT 80 lakh
Employees: 8
Assets: BDT 30 lakh
Though not legally required to be audited, the owner opts for a voluntary audit
to get a loan from a local bank.
The auditor:
Reviews cash sales records and inventory.
Verifies bank deposits against sales.
Checks purchase invoices from suppliers.
Issues a clean report — helping ABC get a loan of BDT 10 lakh.
Conclusion:
Auditing a small company may be less technical than auditing a large corporation,
but it comes with its own set of unique challenges and opportunities. A well-
conducted audit can significantly improve the financial discipline, trustworthiness,
and growth prospects of a small business.
MD. MONIRUL ISLAM
23 AIS 026
MODERN INTERNAL AUDIT
MODERN INTERNAL AUDIT:
• we generally know that internal auditing is an independent, objective assurance, and
consulting activity designed to add value and improve organization's operation. On
the other hand, modern auditing refers to the evolved role of internal auditing in
today’s complex, technology-driven, and risk-focused business environment.
Key Feature of Modern Internal Audit:
• Risk-Based Approach.
• Use of Technology.
• Plays Advisory Role.
• Focus on ESG (Environmental Social Governance) and Cybersecurity.
• Use Agile Methodology.
• Stakeholder’s Communication.
TECHNOLOGY USED IN MODERN
• AUDITING:
1.RPA (Robotic Process Automation):
• Main Use in Audit: Automatic routine tasks and increase speed as well as
accuracy.
• 2. AI (Artificial Intelligence):
• Main Use in Audit: Detect fraud, Predict risks.
• 3. Blockchain:
• Main Use in Audit: Immutable, time-stamped and verified across a
distributed network.
• 4. Dashboards:
• Main Use in Audit: Visual display of audit results and easy to understand
the complex findings.
• 5. ERP Integration:
• Main Use in Audit: Real time data access to across transactions across all
departments and full population testing possible.
EXAMPLES:
• Brac Bank is one of the leading private commercial banks in
Bangladesh. This bank decided to modernize its internal audit
functions to make it more effective profitable. Previously, their internal
audit system was paper-based and had limited data analysis
capabilities.
•
• Brac Bank’s Traditional Internal Auditing Problems:
• Manual audit procedures were time consuming.
• Delay in identification fraud and risk.
• Inability to analyze large volumes of data.
• Audit results were not effectively contributing to strategical decision.
Action Taken by Brac Bank:
Implementation of Data Analytics.
Risk-Based Audit Planning.
Automation through RPA (Robotic Process Automation).
Adaption of Agile Audit Team.
Indicators 2022 2023 Change
Net profit 614 Crore 827 Crore 213 Crore
(Consolidated)
EPS 3.75 4.73 0.98
Brac Banks more 213 crore profit is not accidental, it is a direct outcome of its
improved internal audit systems. Because it enhances efficiency, reduced risks
supported smarter business strategies.
Challenges in Modern Internal Audit:
Shortage of skilled internal auditors.
Lack of access to real time data.
Resistance to change
High cost of audit software tools.
Cybersecurity and data privacy concern.
TANZILA AKTER EVA
ROLL: 23 AIS 045
EMPIRICAL RESEARCH IN AUDITING
EMPIRICAL RESEARCH IN AUDITING
Empirical research is the process of testing a hypothesis using experimentation,
direct or indirect observation and experience.
Empirical research in auditing involves the systematic study and analysis of
observed phenomena and experiences to derive conclusions about auditing
practices, effectiveness, and various influencing factors, using data and evidence
gathered through various methods
• Steps in Conducting Empirical Research
1. SELECTING A RESEARCHABLE PROBLEM
Finding a problem that merits study and that can be investigated by the methods of science.
2. REVIEWING THE LITERATURE
Surveying the existing theory and research on the subject.
3. FORMULATING A HYPOTHESIS
Arriving at a statement that specifies the relationship between the variables and developing an operational definition that states
the variables in a form that permits their measurement.
4. CHOOSING A RESEARCH DESIGN
Determining whether to test the hypothesis by designing an experiment, conducting interviews, observing the way people
behave in particular situations, examining existing records and historical evidence, or combining these procedures.
5. COLLECTING THE DATA
Gathering the data and recording it in accordance with the specifications of the research design.
6. ANALYZING THE RESULTS
Searching for meaningful links between the facts that emerged in the course of the research .
7. STATING CONCLUSIONS
Indicating the outcome of the study, extracting the broader meaning of the work for other knowledge and research, and
suggesting future directions for future research.
Key Aspects of Empirical Research in Auditing:
Empirical Evidence: It relies on observable and measurable data collected through
various means, such as financial records, interview data, or observations of audit
procedures.
Methodologies: Empirical research in auditing can employ both quantitative and
qualitative methods to analyze data, including statistical analysis, logistic regression,
and various audit approaches.
Areas of Investigation: It explores diverse topics, including the influence of auditor
characteristics on audit quality, the relationship between audit fees and fraud risk, and
the effectiveness of different audit methodologies.
Objectives: Empirical research aims to test hypotheses, refine theories, understand
complex relationships within auditing, and provide insights for improving audit practices
and decision-making.
Frameworks: Researchers may develop frameworks to guide empirical audit research,
integrating findings and promoting comprehensive interpretations to address
inconsistencies or gaps in existing knowledge.
ADVANTAGES OF EMPIRICAL RESEARCH
• Used for authentication
• Used for understanding dynamic
changes
• Provides a level of control
• Increases internal validity
DISADVANTAGES OF EMPIRICAL
RESEARCH
• Time consuming
• Expensive
• Difficult to acquire consent/permission
• Collection of data can be a problem
Importance of Empirical Research
1. It is used to validate various hypotheses or refute them in the face of evidence.
2. It increases human knowledge and continue doing it to keep advancing in various fields.
IMTIAZ HASAN
23 AIS 030
DIRECTION OF FUTURE RESEARCH IN
AUDITING
INTRODUCTION & PURPOSE
• Auditing is evolving with changing risks, technologies, and regulations.
• Future research is essential to strengthen audit reliability and efficiency.
• Key areas of focus: Tech, ESG, Regulation, Ethics, and Integration.
KEY RESEARCH AREA
• Technology in Auditing:
AI, Blockchain, Big Data improve audit automation and accuracy.
• ESG & Sustainability:
Research on auditing CSR and non-financial data.
• Ethics & Behavior:
Auditor judgment, fraud detection, and independence..
OTHER EMERGING FOCUS
Regulatory Changes
Adapting audit practices to updated laws and standards.
Integrated Reporting
Combining financial + non-financial assurance.
Academic-Practice Collaboration
Bridging gap between theory and field audit work.
CONCLUSION
• Audit research is moving toward innovation and integration.
• Future audits must address both financial and social responsibilities.
• Continued research will enhance trust, transparency, and governance.
THANK YOU
