Planning an audit
How to Do Audit strategy-Planning an audit
Preparing an
audit plan is that the first stage within the conduct of an audit engagement.
The plan sets.
Out responds
to three main queries (the “3Ws”)
1. Who will
perform the audit work? (Staffing)
2. When will
the work be done? (Timing)
3. What work
is to be done? (The scope of the audit)
Risk
assessment and the audit plan
To prepare
an appropriate audit plan, the auditor must have in-depth knowledge and
understanding
of:
· The entity
to be audited, and
· The atmosphere
in which the article operates.
· The
auditor needs this information and consideration in order to assess the danger
attached to the Audit.
. Risk
assessment may be a key feature of the audit planning process and therefore the
assessment of
· Risk in
the audit will affect.
· The quantity
of audit work present in general, and
· The regions
on which the auditor focal point his attention.
The planning
process is important to all or any audits, both internal and external. It is
equally important
To other
assurance engagements like a “review” assignment.
Planning
Activities
Audit strategy-Planning an audit
The auditor
shall organization an in general audit master plan that arranges the range,
timing, and track of the audit, which straight the event of the audit arrangement.
· In ascertain
the general audit ways, the auditor shall recognize the quality of the Engagement
that defines its scope.
· Ascertain
the coverage objectives of the appointment to arrange the occasion of the
audit and therefore the
· Nature of
the communications required.
· Ascertain
the issue that, within the auditor’s specialized judgment are important in straight.
· The
engagement team’s efforts.
· Think about
the results of preliminary engagement activities and, where applicable whether.
· Knowledge raise on other engagements implement by
the engagement partner for the Entity
is related.
· Ascertain
the character, timing, and extent of resources necessary to perform the Engagement.
Contents
of the general audit strategy and therefore the audit plan
The overall audit strategy
As began
above, the general audit strategy sets the scope, timing, and direction of the
audit
And conduct
the expansion of the more thorough audit arrangement. The organization of the
overall
audit
strategy involves the following:
Audit and Assurance
· Formative
the individuality of the engagement that outlines its scope such as:
· The
financial coverage structure used (for example, international financial coverage
standards).
Any industry-specific reporting
requirements
· The situation
of the components of the entity (for example, there could be overseas branches).
· The nature
of the control relationships between a parent and its components and the coverage
to which mechanisms are audited by other auditors.
· The environment
of the business sections to be audited, counting the need for specialized information.
· The
reporting currency to be used, including needing for currency translation for
the
financial
information audited.
· the
necessity for a statutory audit of standalone financial statements additionally
to an
audit for
consolidation purposes.
· Whether
the entity has an indoor audit function and, if so, whether, during which areas
And to what
extent, the work of the function is often used, or internal auditors are often
used to offer direct help, for the principle of the audit.
· The entity’s
use of service organizations and the way the auditor may obtain evidence concerning
the planning or operation of controls performed by them.
· The predictable
use of audit facts obtained in preceding audits, for illustration.
Audit confirmation is linked to risk appraisal procedures and tests of management.
· The result
of information skill on the audit events, counting the accessibility of data
and therefore the predictable use of computer-assisted audit techniques.
· The organization
of the predictable coverage and occasion of the audit work with any reviews of temporary
financial information.
And
therefore the effect on the audit of the knowledge obtained during such
reviews.
· The accessibility
of client employees and data.
·
Ascertaining the reporting objectives of the engagement, like reporting
deadlines
and the
nature of communications required.
· Allowing
for necessary facts will determine the focus of the audit team’s hard
work.
Such As:
·
materiality thresholds
· high-risk
areas of the audit
· the audit
approach (for example, whether the auditor is getting to believe the
· entity’s
internal controls)
· any recent
developments in reference to the entity, the industry, legal environment or
· financial
reporting requirements.
· Progression
used by management to recognize and prepare confession required.
· Applicable
financial reporting framework
· The above
will then allow the auditor to make a decision on the character, extent, and
timing of resources
· needed to
perform the engagement. In particular, the auditor should consider:
· where
experienced members of staff could also be needed (for example, in high risk
areas)
· the amount
of staff to be allocated to specific areas (for example, extra staff could also
be wanted for number present at the year-end record count).
· when the
resources are needed (for example, are more staff needed at the ultimate audit
than at the interim audit).
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