Q1 Q2

Question 1

Audit 5 step planning cycle - Step 1

Answer 1

Following ISA 315 guidelines, the first step entails gaining an understanding of the industry, its regulations, and internal control environment.
The audit team will analyse the company’s distribution methods, management structure, and important business operations to pinpoint areas of risk and areas of attention for the audit.

Question 2

Audit five step planning cycle - Step 2

Answer 2

The audit team will assess significant errors in financial statements.
Recognising the natural risks inherent in the business and the effectiveness of internal controls, focusing on how revenue is recorded, inventory valuation, and and other significant accounts, as outlined in ISA 315.

Question 3

Audit five step planning cycle - 3rd Step

Answer 3

The Audit team will create steps to address the identified risks.
Includes thorough checks, such as observing in person checks, examining revenue timing, and testing the efficiency of internal controls.
ISA 300 states that the auditor should plan the audit so that it is performed in an efficient way.

Question 4

Audit five step planning cycle - Step 4

Answer 4

The audit team will gather enough relevant evidence to back up their view on the company’s financial statements.
ISA 500 states that this could be done by looking at documents, observing processes, asking questions, and getting confirmation from external sources.

Question 5

Audit five step planning cycle - 5th Step

Answer 5

Going over the audit results, drawing conclusions, and preparing audit report.
Report includes auditors judgement on whether the financial statements present a true and fair review, as required by ISA 500.