Audit Planning

[Acid]

Hi

In this thread I will write about Audit Planning which is a vital part before carrying out any audit. In the meantime , If you have any knowledge about the following aspect of Audit Planning then let us know:

"What consititutes a good and proper Audit planning? "

The question is simple but nonetheless you may find it one of the toughest one If you dont have knowledge about activities that takes place in Planning phase.


Regards.

[Hamdy Hafez]

excuse me Acid can I participated with you in this topic (I expected it for June 2008)
firstly , we need to know the Importance of the audit planning (according to the F8 examiner view)
Dec 2005 Q 3 3 (a) International Standard on Auditing 300 (revised) Planning an Audit of Financial Statements, states that an auditor must plan the audit.
Explain why it is important to plan an audit. (5 marks)

3 (a) Importance of audit planning
According to International Standard on Auditing 300 (Revised), the auditor should plan the audit work so that the engagement will be performed in an effective manner. Specifically, planning is required for the following reasons:

– To develop a general strategy and detailed approach for the specific nature, timing and extent of the audit work. This will help to ensure that the audit is carried out in an efficient and timely manner.

– So that attention is devoted to the important areas of the audit. Planning will also help to identify problem areas so they can be addressed in a timely fashion.

– To determine the amount of work to be carried out and therefore assist in determining the number of staff required to perform the audit work.

– To provide a document as a reference for an initial discussion of the approach to the audit with the company’s audit committee. The plan will also help ensure that audit work is co-ordinated with client staff: e.g. for production of specific documentation to assist the auditor.
– To act as a basis for the production of the audit program.

So now we can summurize the main points as follow;
3 (a) IAS 300 – Planning
1 mark per point
Audit work performed in an effective manner
General approach and strategy for audit
Attention to critical areas
Amount of work
Discussion with audit committee
Basis to produce audit program
New audit – identify risks past auditor
Other relevant points
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Maximum marks 5
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[Acid]

Hi Hafez,

You are ofcourse in for F8 BIT. Thanks for this info.
I will get back on this one later today.

Regards

[Hamdy Hafez]

once again, we need to link this topic with another related area (without any introductions let us go through)
Dec 2004 Q 2

(b) You are now nearing the completion of the audit of Rock for the year ending 31 December 2004. Draft financial statements have been produced. You have been given the responsibility of performing a review of the audit files before they are passed to the audit manager and the audit partner for their review. You have been asked to concentrate on the proper completion of the audit working papers. Some of the audit working papers have been produced electronically but all of them have been printed out for you.
Describe the types of audit working papers you should expect to see in the audit files and the features of those working papers that show that they have been properly completed. (10 marks)

(b) Types and features of audit working papers

(i) Types of audit working papers include:
1. Systems documentation (flowcharts, systems manuals, narrative notes, checklists and questionnaires, etc.);
2. Constitutional documents;
3. Agreements with banks and other providers of finance;
4. Details of other advisors used by the entity such as lawyers;
5. Regulatory documentation relating to the stock exchange listing;
6. Audit planning documentation;
7. Audit work programs;
8. Working papers showing the work performed;
9. Lead schedules showing summaries of work performed and conclusions on individual account areas and the amounts to be included in the financial statements;
10. trial balances, management accounts and financial statements;
11. Standard working papers relating to the calculation of sample sizes, for example;
12. schedules of unadjusted differences;
13. schedules of review points;
14. Letters of weakness and management representation letters.

(ii) Features of audit working papers:
1. All working papers (without exception) should show by whom they were prepared and when, and when they were reviewed and/or updated, and by whom, by means of signatures and dates – these may be electronic in the case of electronic working papers;
2. Audit planning documentation should include the risk assessment which should be cross referenced to the audit program, and the audit program should be cross referenced to the audit working papers and vice versa;

3. Working papers showing the work performed should be cross referenced to the audit program and the lead schedule on that particular section of the audit file, and should describe the nature of the work performed, the evidence obtained, and the conclusions reached;

4. Each section of the audit file should have a lead schedule which should be cross referenced back to the relevant working papers;

5. Trial balances should be cross referenced back to the relevant section of the audit file, and cross referenced forward to the financial statements;

6. The financial statements should be cross referenced to the trial balance;
7. Schedules of unadjusted differences should be cross referenced to the sections of the file to which they relate;
8. Schedules of review points should all be ‘cleared’ to show that all outstanding matters have been dealt with.

[Hamdy Hafez]

see you soon with the second important area which is audit risk:confused::confused:

[vetrivel]

see you soon with the second important area which is audit risk:confused::confused:
thank you so much