Planning and Supervision

Question 1

In planning for an audit, what factors come into play?

Answer 1

The size and complexity of the entity

The experience with the entity

Changes in circumstances occurring during the engagement

Question 2

Who should be involved in planning?

Answer 2

Engagement partner and team members

Level of supervision over the planning depends on the size and complexity of the entity and experience

Question 3

T/F: Planning is on ongoing process throughout the audit?

Answer 3

True, it is not a one time thing

Question 4

What goes into planning? What is discussed?

Answer 4

• Risk assessment procedures
• Understanding of applicable legal framework and regulatory framework
• Materiality
• Involvement of specialists

Question 5

T/F: The engagement partner may delegate portions of the planning and supervision to other personnel?

Answer 5

True

Question 6

What discussions need to be had among the parter, key members, and the audit team during planning? (i.e. what is absolutely required)

Answer 6

Risk of material misstatement (including fraud risks)

Question 7

In establishing an audit strategy, the audit should:

Answer 7

• Identify relevant characteristics of the engagement affecting its scope
• Identify reporting objectives and required communications
• Consider factors for utilizing the audit team
• Consider the results of preliminary engagement
• Determine the nature, timing, and extend of necessary resources for the engagement
• Communicate with those in charge of governance

Question 8

T/F: The auditor is required to communicate with those in charge of governance about an OVERVIEW of the planned scope and timing of the engagement.

Answer 8

True- but they 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.

Question 9

What does the audit plan encompass?

Answer 9

• Nature and extent of risk assessment procedures
• The nature, timing, and extent of planned further audit procedures
• other planned audit procedures necessary to comply with GAAS.

Question 10

The auditor should address the following matters in the audit documentation:

Answer 10

1) The overall audit strategy
2) The audit plan
3) Significant changes to the audit strategy or audit plan during the audit engagement, along with reasons for any such changes