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    Audit Planning

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    bobo ka
    The document outlines the planning process for an audit of financial statements. It discusses establishing an overall audit strategy, developing an audit plan, and determining the nature, timing and extent of audit procedures. The planning aims to reduce audit risk to an acceptable level. Key steps include: 1) Preliminary activities like evaluating independence and understanding terms of engagement; 2) Establishing the overall scope, timing, direction and reporting objectives; 3) Developing a more detailed audit plan including risk assessment and further audit procedures. The plan is updated during the audit as necessary.

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    Audit Planning

    Uploaded by

    bobo ka
    65 views2 pages
    The document outlines the planning process for an audit of financial statements. It discusses establishing an overall audit strategy, developing an audit plan, and determining the nature, timing and extent of audit procedures. The planning aims to reduce audit risk to an acceptable level. Key steps include: 1) Preliminary activities like evaluating independence and understanding terms of engagement; 2) Establishing the overall scope, timing, direction and reporting objectives; 3) Developing a more detailed audit plan including risk assessment and further audit procedures. The plan is updated during the audit as necessary.

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    The document outlines the planning process for an audit of financial statements. It discusses establishing an overall audit strategy, developing an audit plan, and determining the nature, timing and extent of audit procedures. The planning aims to reduce audit risk to an acceptable level. Key steps include: 1) Preliminary activities like evaluating independence and understanding terms of engagement; 2) Establishing the overall scope, timing, direction and reporting objectives; 3) Developing a more detailed audit plan including risk assessment and further audit procedures. The plan is updated during the audit as necessary.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    65 views2 pages

    Audit Planning

    Uploaded by

    bobo ka
    The document outlines the planning process for an audit of financial statements. It discusses establishing an overall audit strategy, developing an audit plan, and determining the nature, timing and extent of audit procedures. The planning aims to reduce audit risk to an acceptable level. Key steps include: 1) Preliminary activities like evaluating independence and understanding terms of engagement; 2) Establishing the overall scope, timing, direction and reporting objectives; 3) Developing a more detailed audit plan including risk assessment and further audit procedures. The plan is updated during the audit as necessary.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PSA 300 (Rev.

    )
    PLANNING AN AUDIT OF FINANCIAL STATEMENTS

    1. Planning an audit involves:


     establishing the overall audit strategy for the engagement and
     developing an audit plan,
     in order to reduce audit risk to an acceptably low level.

    Preliminary Engagement Activities

    2. The auditor should perform the following activities at the beginning of the current audit
    engagement:
     Perform procedures regarding the continuance of the client relationship and the specific
    audit engagement.
     Evaluate compliance with ethical requirements, including independence.
     Establish an understanding of the terms of the engagement.

    Planning Activities

    3. The auditor should establish the overall audit strategy for the audit. The overall audit strategy sets
    the scope, timing and direction of the audit, and guides the development of the more detailed
    audit plan

    4. The establishment of the overall audit strategy involves:


    a.) Determining the characteristics of the engagement that define its scope;
    b.) Ascertaining the reporting objectives of the engagement to plan the timing of the audit and the
    nature of the communication required; and
    c.) Considering the important factors that will determine the focus of the engagement team’s
    efforts.

    5. The auditor should develop an audit plan for the audit in order to reduce audit risk to an
    acceptably low level.
    6. The audit plan is more detailed than the overall audit strategy and includes the nature, timing and
    extent of audit procedures to be performed by engagement team members in order to obtain
    sufficient appropriate audit evidence to reduce audit risk to an acceptably low level.

    7. The audit plan includes:


     A description of the nature, timing and extent of planned risk assessment procedures sufficient
    to assess the risks of material misstatement as determined under PSA 315, “Understanding the
    Entity and its Environment and Assessing the Risks of Material Misstatement.”;
     A description of the nature, timing and extent of planned further audit procedures at the
    assertion level for each material class of transactions, account balance, and disclosure, as
    determined under PSA 330, “The Auditor’s Procedures in Response to Assessed Risks,”; and
     Such other procedures required to be carried out for the engagement in order to comply with
    PSAs
    Changes to Planning Decisions during the Course of the Audit

    The overall audit strategy and the audit plan should be updated and changed as necessary during the
    course of the audit.

    Direction, Supervision and Review

    1. The auditor should plan the nature, timing and extent of direction and supervision of engagement
    team members and review their work.

    2. The nature, timing and extent of the direction and supervision of engagement team members and
    review of their work vary depending on many factors, including:

     The size and complexity of the entity;


     The area of audit;
     The risks of material misstatement; and
     The capabilities and competence of personnel performing the audit work.

    3. The auditor plans the nature, timing and extent of direction and supervision of engagement team
    members based on the assessed risk of material misstatement.

    Documentation

    The auditor should document the overall audit strategy and the audit plan, including any significant
    changes made during the audit engagement.

    Communications with Those Charged with Governance and Management

    1. The auditor may discuss elements of planning with those charged with governance and the entity’s
    management.

    2. Discussions with those charged with governance ordinarily include the overall audit strategy and
    timing of the audit, including any limitations thereon, or any additional requirements.

    3. When discussion of matters included in the overall audit strategy or audit plan occur, care is
    required in order not to compromise the effectiveness of the audit.

    Additional Considerations in Initial Audit Engagements

    The auditor should perform the following activities prior to starting an initial audit:

    1. Perform procedures regarding the acceptance of the client relationship and the specific audit
    engagement.

    2. Communicate with the previous auditor, where there has been a change of auditors, in compliance
    with relevant ethical requirements.
    SOURCE: CPAR

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