#8 Planning an engagement

Question 1

Overall engagement strategy

Answer 1

*Planning an effective audit, auditor must establish an audit strategy that will guide the planning process.
*Audit strategy forms the basis for a more detailed audit plan for the engagement.
*Audit procedures executed throughout the engagement will be based on the audit plan.

Question 2

Developing and audit plan/program

Answer 2

Objective of F/S audit is to express an opinion on the fairness of the entity’s F/S. Management makes assertions about the F/S, and the auditor must test the accuracy of those assertions before expressing the opinion.

An audit program, which is required for all audits, is a list of audit procedures to be performed to support the audit opinion. Even when audit risk is low, GAAS requires that the audit program include substantive procedures that test management’s F/S assertions related to material account balances, classes of transaction, and disclosures. The assertions to be tested will determine the nature, timing, and extent of procedures.

Question 3

Audit Plan flowchart

Answer 3

1. Client acceptance/continuance

2.Planning
*Plan Audit(initial strategy & plan)
*Obtain understanding of client, its environment, and internal control
*Assess risk of material misstatement and design further procedures

3. Perform tests of controls

4.Perform substantive procedures

5.Form an opinion

6.Issue a report