Audit Planning And Documentation

Question 1

The need for audit planning

Answer 1

An effective and efficient audit relies on proper planning procedures

The auditor shall plan the work so that the assurance engagement will be performed in an effective manner

Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan

Question 2

Objectives of planning

Answer 2

Ensuring that appropriate attention is devoted to important area of the audit

Ensuring that the auditor indentifoes problems

Ensuring the audit properly organises and manages the audit

Proper assignment of work to assistants

Coordination of work done by other auditors and experts

Question 3

Audit strategy

Answer 3

The overall audit strategy sets the scope, timing and direction of the audit and gives the development of the more detailed audit plan

There are quite a few matters to consider when setting the overall audit strategy

Question 4

The audit plan

Answer 4

The audit plan converts the audit strategy into a more detailed plan and includes the nature, timing and extent of audit procedures to be performed by the engagement team in order to reduce audit risk to an acceptably low level

Question 5

The main 2 audit procedures; interim and final audit

Answer 5

The main audit procedures are likely to be carried out in two phases: the interim and final audit.

The purpose of the Interim audit is to carry out procedures that would be difficult to perform at the year end because of the time constraints

Procedures are likely to include:
Inherent risk assessment
Gaining an understanding of the entity
Evaluating the design of internal controls
Review of relevant internal audit reports
Tests of controls
Substantive analaytical procedures- limited at This stage

Question 6

Tests of controls

Answer 6

Tests of controls are designed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level

Question 7

Substantive procedures

Answer 7

Substantive procedures are designed to detect material misstatements at the assertion level. Substantive procedures comprise:
Tests of details (of classes of transactions, account balances and disclosures)
Substantive analytical procedures

Question 8

Final audit

Answer 8

At this stage a set of draft financial statements or at least a trial balance will be available

Procedures are likely to include:
Completion of tests of control and substantive tests started at interim
Analytical procedures on financial statements
Detailed substantive testing of financial
Statement

Question 9

Audit documentation

Answer 9

Audit documentation is the record of audit procedures performed, relevant audit evidence obtained and conclusions the auditor reached.(also known as working paper)

Types of audit documentation:
Permenant file - information of continuing importance
Current file - information of relevance to current years audit