Planning and supervision

Question 1

The auditor should develop an overall_____ that deals with the scope and timing, which affects the development of the overall

Answer 1

audit strategy

audit plan

Question 2

an audit plan is more ____________, and deals with ______________ of audit procedures to be performed

Answer 2

detailed than and audit strategy

nature timing and extent

Question 3

in developing an overall audit strategy the auditor should

Answer 3

Identify relevant characteristics of the engagement affecting its scope;

b. Identify the reporting objectives of the engagement and required communications;
c. Consider the factors that are significant in utilizing the audit team;
d. Consider the results of preliminary engagement activities, and
e. Determine the nature, timing, and extent of necessary resources for the engagement.
f. The overall strategy affects the auditor’s decisions regarding the allocation of audit resources to specific audit areas and how those resources are managed and supervised.
g. Communication with those charged with governance – The auditor is required to communicate with those charged with governance about an overview of the planned scope and timing of the engagement. The auditor may discuss planning issues with management, but should be careful to avoid divulging details that might reduce the effectiveness of the audit by making the auditor’s procedures and scope too predictable.

audit strategy- involves general decisions affecting resource allocation (including the number of team members assigned, the level of experienced assigned, the timing of the work, and extent of supervision.

Question 4

audit plan (program) encompasses

Answer 4

The audit plan encompasses

(a) the nature and extent of planned risk assessment procedures;
(b) the nature, timing, and extent of planned “further audit procedures” at the relevant assertion level; and
(c) other planned audit procedures necessary to comply with GAAS.

audit plan-more specific than audit strategy. nature timing and extent of planned audit procedures.

Question 5

the involvement of key engagement team members

Answer 5

the nature and extent of planning varies with size and complexity

planning is a ongoing iterative process

may delegate portions to other team members

Question 6

auditor’s basic responsibility

Answer 6

must plan the audit to be responsive to the assessment of the risk of material misstatement based off of the auditors understanding of the environment, including internal control.

Question 7

the three types of audit procedures

Answer 7

risk assessment procedures

further audit procedures

• substantive
• test of controls

Question 8

documentation requirements

Answer 8

overall audit strategy
audit plan(nature timing extent)
document any significant changes to audit plan or strategy
if initial audit (first year audit) then need to document communication with predecessor auditor