AUDIT PLANNING
AUDIT PLANNING
Audit planning procedures are the first and perhaps the most important step in carrying out a successful audit. Without adequate planning, the likelihood of missing a significant risk area or encountering engagement-related problems increases considerably. As baseball great and noted philosopher, Yogi Berra puts it, “If you don’t plan on where you are going, you could end up someplace different!” All too often the auditor does not give adequate attention to audit planning for a vast array of excuses. This leads the auditor down the path of using the “same as last year” approach to planning, often referred to as “SALY.” Using the SALY approach to planning causes the auditor to end up someplace different, as so eloquently stated by Mr. Berra. A meaningful audit plan considers 10 basic steps. If these basic steps are routinely followed, the audit goes much better, resulting in a higher quality audit in the minimal possible time.
STEP-1
TALK TO THE CLIENT
The auditor discusses the nature of the engagement and the client’s business and industry trends at the onset of planning. Insights gained from this discussion help the au ditor navigate through the remainder of the audit planning procedures. These insights set the stage for an active 2-way communication process that results in a fully engaged audi tor AND client throughout the entire process, leading to the completion of a successful audit.
STEP 2
GAIN A CLEAR PICTURE OF WHAT HAPPENED DURING THE YEAR
Clarity includes the risks that may have changed as a result of what happened during the year. The auditor asks about recent developments in the company that may cause the audit to differ from prior years. Developments such as mergers, new locations or new product lines may have a significant impact on the audit plan for the current year.
Ideally, these discussions take place at the client lo cation. Going on site provides the auditor the opportunity to meet with key employees or new
Audit planning procedures are the first and perhaps the most important step in carrying out a successful audit. Without adequate planning, the likelihood of missing a significant risk area or encountering engagement-related problems increases considerably. As baseball great and noted philosopher, Yogi Berra puts it, “If you don’t plan on where you are going, you could end up someplace different!” All too often the auditor does not give adequate attention to audit planning for a vast array of excuses. This leads the auditor down the path of using the “same as last year” approach to planning, often referred to as “SALY.” Using the SALY approach to planning causes the auditor to end up someplace different, as so eloquently stated by Mr. Berra. A meaningful audit plan considers 10 basic steps. If these basic steps are routinely followed, the audit goes much better, resulting in a higher quality audit in the minimal possible time.
STEP-1
TALK TO THE CLIENT
The auditor discusses the nature of the engagement and the client’s business and industry trends at the onset of planning. Insights gained from this discussion help the au ditor navigate through the remainder of the audit planning procedures. These insights set the stage for an active 2-way communication process that results in a fully engaged audi tor AND client throughout the entire process, leading to the completion of a successful audit.
STEP 2
GAIN A CLEAR PICTURE OF WHAT HAPPENED DURING THE YEAR
Clarity includes the risks that may have changed as a result of what happened during the year. The auditor asks about recent developments in the company that may cause the audit to differ from prior years. Developments such as mergers, new locations or new product lines may have a significant impact on the audit plan for the current year.
Ideally, these discussions take place at the client lo cation. Going on site provides the auditor the opportunity to meet with key employees or new