Chapter 7 Audit Plan And Documentatio

Question 1

Objectives of planning

Answer 1

1. Ensure appropriate attention to impoareas of audit
2. Identify and resolve problems on a timely manner
3. Organise and perform audit in a timely manner
4. Ensure appropriate audit staff selected and work assigned to them
5. Directn, supervision and review of audit work
6. Coordinate work dine by different audit staff

Question 2

Form and nature of planning depends on

Answer 2

1. Size
2. Complexity
3. Business env
4. Auditor knowledge and understanding of the firm
5. Reporting req

Question 3

Audit startegy

Answer 3

Sets the scope, timing and direction of audit so that you can develop a more detailed audit plan

Question 4

Matters to consider to prepare audit startegy

Answer 4

1. Characteristics of engagement
2. Nature, timing and extent of resources
3. Reporting obj, timing and nature of communication
4. Significant factors, knowledge from prev engagements, preliminary eng activities

Question 5

Characterestics of engagement

Answer 5

*Fr frmaework
*industry specific reporting req
*expected audit coverage
*available client staff and data
* availability of IA work

Question 6

Reporting obj, timing and nature of communication

Answer 6

*expected communication with third parties
* organisation meeting eith mngmt and TCWG
* timetable fir reporting

Question 7

Significant factors, preliminary eng activity, prev engagement

Answer 7

*determination of materiality
*identify areas have extra risk
*result of previous audit
* significant changes in fr reporting framework
* significant change in industry
* volume transactions

Question 8

Nature ,timing , extent of resources

Answer 8

*selection of eng team
* eng budegeting
*assigning work to team members

Question 9

Audit plan

Answer 9

Converts strategy into a more detailed plan inculding scope, nature and timing of audit to be performed by audit members to obtain sufficient appropriate evidence to reduce risk to an acceptably low level

Question 10

Purpose of interim audit

Answer 10

*carry out procedures that would be difficult to carry out in the year end due to time constraints
* procedures that could be performed are risk assessment, understand entity, testing IC and limited substantive procedures

Question 11

Purpose of final audit

Answer 11

*auditor focus on audit of financial statement and issuing opinion
* opinion is based on all audit visits

Question 12

Interim audit procedures

Answer 12

• inherent risk assessment
  *understanding entity
  *record entity IC system
  *evaluate IC
  *carry out toc
  *identify issues that may affect final audit

Question 13

Final audit procedures

Answer 13

*written representation
*3rd party confirmation
*substantive procedures on financial statemtn
*AP on financial statements
* going concern status

Question 14

Audit documentation

Answer 14

Record of audit procedures performed, audit evidence obtained and conclusions reached
They are also called working papers
Must be prepared in timely manner

Question 15

Need for audit documentation

Answer 15

1. Evidence of auditors basis for reaching opinion
2. Accountability
   3.to assist mngmt
3. Enable quality review
4. Next audit
5. Assist team member responsible for supervision

Question 16

Types of working papers

Answer 16

1. Permanent audit files: matters of continuing significance
   Eng letters, prev fs signed, legal doc, questionnaires
2. Current audit files: matters of current importance
   Current year fs, audit strategy, written representation, review notes

Question 17

Safe custody of working papers

Answer 17

1. Password restricted
2. Regular backups
3. Confidential storage of hardcopy documentation
4. 7 years min retention
5. Cannot disclose to 3rd party without permission of entity