Audit Planning and Risk Assessment
ACCA Paper F 8
AUDIT AND ASSURANCE SERVICES (INTERNATIONAL STREAM)
Lecture 2
Audit Planning and Risk Assessment
DATE: December 2012
TUTOR: Feroza Cooper
ISA 300 AUDIT PLANNING
Auditors should plan the audit so that the engagement is conducted in an effective manner.
The objectives of planning include:-
• Directing appropriate attention to the different areas of the audit such as assessing materiality, so that when the detailed audit plan is prepared, audit procedures can be directed towards the material amounts. • Identify potential problems or risks so that they can be resolved at an early stage. • Facilitate review and control of the audit. • Assigning and briefing staff with appropriate skills, knowledge, training, proficiency. • Coordinating the work of others such as that of experts. • Obtaining knowledge and understanding of the client’s business. • Providing an economic and effective service within appropriate timescales
Planning an audit will permit development of:-
• An audit strategy based on risk analysis • An audit plan that addressing the risks identified.
Planning procedures:
• Review the previous years working papers • Identify problem areas encountered • Determine staffing requirements • Obtain an indication of time required • If the client is new, review the previous auditors’ working papers to obtain closing balances which will affect this year’s financial statements. • Determine the trading pattern and problems faced by the client company. • Establish timetable, important dates and deadlines • Assess the effect of changes from previous year:
1. Systems
2. Law and regulation
3. Accounting policies
4. Management
5. Other relevant matters
• Perform analytical review or procedures on the latest accounts. • Request preparation of cash
AUDIT AND ASSURANCE SERVICES (INTERNATIONAL STREAM)
Lecture 2
Audit Planning and Risk Assessment
DATE: December 2012
TUTOR: Feroza Cooper
ISA 300 AUDIT PLANNING
Auditors should plan the audit so that the engagement is conducted in an effective manner.
The objectives of planning include:-
• Directing appropriate attention to the different areas of the audit such as assessing materiality, so that when the detailed audit plan is prepared, audit procedures can be directed towards the material amounts. • Identify potential problems or risks so that they can be resolved at an early stage. • Facilitate review and control of the audit. • Assigning and briefing staff with appropriate skills, knowledge, training, proficiency. • Coordinating the work of others such as that of experts. • Obtaining knowledge and understanding of the client’s business. • Providing an economic and effective service within appropriate timescales
Planning an audit will permit development of:-
• An audit strategy based on risk analysis • An audit plan that addressing the risks identified.
Planning procedures:
• Review the previous years working papers • Identify problem areas encountered • Determine staffing requirements • Obtain an indication of time required • If the client is new, review the previous auditors’ working papers to obtain closing balances which will affect this year’s financial statements. • Determine the trading pattern and problems faced by the client company. • Establish timetable, important dates and deadlines • Assess the effect of changes from previous year:
1. Systems
2. Law and regulation
3. Accounting policies
4. Management
5. Other relevant matters
• Perform analytical review or procedures on the latest accounts. • Request preparation of cash