Documente Academic
Documente Profesional
Documente Cultură
AUDIT PLANNING
Planning in the audit context Importance of planning Steps in pre-planning Component of audit planning Role of analytical in audit planning
4 phases of an audit
Client acceptance and retention involve decisions to accept or decline the opportunity to become the auditor Planning the audit development of audit strategy for the conduct and scope of the audit Performing audit tests performing the audit tests (fieldwork) Reporting the findings communication of audit findings
Evaluate independence
CLIENT EVALUATION
Important element of quality control (ISA 220) Procedures to follow: 1) Obtain and review available financial information of the prospective client 2) Make inquiries of third parties such as bankers, regarding information that may influence the evaluation of the prospective client 3) Communicate with the existing auditors to evaluate the integrity of the clients management 4) identify circumstances that require special attention or that carry unusual risks 5) Evaluate the audit firms independence 6) Establish that acceptance of the client would not violate codes of professional ethics
ETHICAL CONSIDERATION
Evaluate independence (By Law) Assess competence to perform audit - the audit team will match the need staffing need of the engagement Determining the ability to use due care - estimate the time budget for the engagement
1)
2)
3)
Audit Engagement partner is required to: Take responsibility for the overall quality on each audit engagement Ethical requirements complied by members Independence requirement complied
Procedures relating acceptance & continuance of clients have been followed Team members assigned has appropriate capabilities, competence, perform tasks with professional standards Engagement performance direction, supervision and performance of the audit engagement
ENGAGEMENT
Final steps in engagement Importance as a confirmation the terms of each engagement in the engagement letter (eg: page 237, figure 6.2)
ISA 300 the plan should be to conduct the audit in an efficient and timely manner ISA 300.2 the auditor should plan the audit work so that the audit will be performed in an effective manner
Auditor need to know the economy and industry within the entity operates Major industry policies and practices Types of business, product and services Entity internal control structure Government regulations that effect the entity Nature of report to be filed with regulatory agencies
Determining the existence of related parties the duty of management to disclose to the auditor Considering the impact of applicable accounting standards Considering of laws and regulations Considering of fraud and errors Review prior year audit working paper Review industry and business data minutes of meetings Touring operating facilities and offices Making inquiries of management Making inquiries of audit committee
ISA 520 auditor should apply analytical procedures at the planning stage of the audit to obtain a more detailed understanding and to identify areas of potential risk. Analytical procedures involve a study and comparison of relationships among data to identify expected or unexpected fluctuations and other unusual items
Comparisons of the entitys financial information with: Comparable information for a previous period or periods Anticipated results such as budget and forecasts Industry averages
Review documents such as: - Memorandum and articles of associations - Minutes of meetings - Contracts legal agreement affecting financial disclosure
Determine what is the planning materiality and which area need to be emphasized. Could be done by looking at the financial statements of client as well as after an understanding the control system is obtained.
Audit program is a proper instruction to carry out the audit work. Audit program divided into 2 types: