Audit Planning

Question 1

Audit Planning is not discrete (continuous and iterative process)

What is its objective?
- audit in effective manner
- audit in efficient manner

Answer 1

Audit in Effective Manner
- kaya ka nagpplan, para maging effective mga gagawin mo
- Efficient Manner → Internal Controls (kung mag TOC pa ba or diretso ST na)
- Screening → pre engagement activities

Question 2

This includes the planned audit procedures and their NTE.

Answer 2

Audit Plan / Program

Audit Strategy → scope, timing, and direction of audit

Question 3

Understanding of Entity and Environment
- do RAP

What are the procedures in RAP?

Answer 3

IOI Analytical
- Inquiry, Observation, Inspection
- Analytical Procedures

Analytical Procedures → required in planning and completion (X ST)

Question 4

In setting materiality, auditor should use professional judgement
- must be documented

If materiality is high, control risk is high. True or False?

Answer 4

Materiality relationship with Evidence - inverse
- high materiality = low evidence
- low evidence = high detection risk
- high detection risk = low control risk

FALSE

Question 5

Materiality Levels
1. Overall (Planning) Materiality
-FS level, smallest aggregate amount

2. Performance Materiality (Tolerable Misstatement)
   -line item level, (1) to know which transactions to test (2) to know if differences are material or not

Answer 5

Yes

Question 6

If I (auditor) use an expert, and I issue an unqualified opinion, I must refer to the work of the expert to justify the unqualified opinion. True or False?

Answer 6

if unqualified → do not refer to expert’s work

Question 7

Audit Risk
- risk of giving an incorrect opinion
- AR = IR x CR x DR

Answer 7

IR and CR = ROMM

Question 8

If the control risk is high, I should plan the timing of audit procedures to be at year-end. True or False?

Answer 8

Control Risk is high, Detection Risk is low
- nature = more procedures
- timing = year-end
- extent = larger sample size

TRUE