Question

Identify and describe at least three aspects of proper audit planning and why they are important.

Answer 1

The audit planning is necessary to conduct a effective audit in an efficient and timely manner. Aspects to be covered for proper audit planning are:-

1. Knowledge of Client’s business: acquiring knowledge of clients business, accounting system, policies and internal control procedures.
2. Reliance on Internal control: establishing expected degree of reliance on internal controls
3. Nature, Timings and Extent of audit Procedure: Determining and programming the nature, timings and extent of the audit procedures to be performed.
4. Cordination of Work: Cordinating the work to be perfomed during audit.

Importance of above aspects in planning are :-

• To Devote appropriate attention to important areas
• Identify and resolve the potential problems on timely basis
• Properly organised and managed audit
• Assist selection of engagement team members with requisite capabilities and competence
• Facilitating direction and supervision of engagement team