Planning an Audit Flashcards
Purpose
Establish the overall audit strategy and develop an audit plan
List the 3 preliminary engagement activities
- perform procedures regarding continuance or the client relationship and the specific audit engagement (related to Quality Control)
- Evaluate compliance with relevant ethical requirements (Quality Control)
- the auditor maintains independence requirements
- the auditor has no issues regarding management integrity - Establish an understanding of the terms of the engagement
What does the overall strategy do in regards to the audit plan
sets the scope, timing, and direction of the audit and that guides the development of the audit plan
The audit strategy consist of:
o Involves general decisions affecting resource allocation
o Identify relevant characteristics of the engagement affecting its scope
o Identify the reporting objectives of the engagement and required communications
o Consider the factors that are significant in utilizing the audit team
o Consider the results of preliminary engagement activities
o Determine the nature, timing, and extent of necessary resources for the engagement
o Communication with those charged with governance regarding the scope and timing of the engagement
Audit plan includes 3 main items and 1 optional items
- the nature and extent of planned risk assessment procedures
- the nature, timing, and extent of planned further audit procedures at the relevant assertion level
- other planned audit procedures that are required to comply with GAAS
Optional - determine if specialist is needed
Considerations of planning (5)
- consideration of the analytical procedures to be performed as risk assessment procedures,
- a general understanding of the applicable legal and regulatory framework
- The determination of materiality
- the involvement of specialists,
- the performance of other risk assessment procedures
