Question

Identify three specific planning activities detailed in AS 2101 and explain how those activities will support the auditor’s evaluation of management’s assessment of internal controls over financial reporting.

Answer 1

Answer:

Planning activities: When audit is developing audit plan and strategies, these are the following points to be taken into consideration-

1. Information about the internal control of the company over its financial reporting.
2. Industry analysis in which, factors affecting the industry under which company is operating (whose audit is being done).
3. Company analysis that includes financial statements, financial reporting, capital structure, product/service and business operations etc.

Supporting the auditor’s evaluation of management’s assessment of internal controls over financial reporting-

• Auditor should develop the plan that includes nature, scope, timing and extent of risk assessment and test of control procedures.
• While auditing a company's financial statement, that operate in different locations, auditor should determine the extent to which audit procedures should be performed at different locations to obtain reasonable assurance about the financial statements that they are free from material misstatement.