Audit Planning for Audit & Assurance (AA) Presentation PPT


An audit plan is a comprehensive document that outlines the strategy and specific procedures an auditor will follow during an audit. It serves as a guide to ensure the audit is conducted efficiently, effectively, and in compliance with applicable standards.

1. Audit Plan

  • Purpose: The audit plan's main purpose is to detail the audit's scope, objectives, resources, and timeline. It helps ensure all aspects of the audit are covered and that the audit is conducted according to professional standards.
  • Components:
    • Objectives: What the audit aims to achieve.
    • Scope: The areas and activities to be audited.
    • Resources: Personnel, tools, and other resources needed.
    • Timeline: Key milestones and deadlines.
    • Risks: Potential challenges and how to address them.
    • Documentation: What documents or evidence will be reviewed.
    • Reporting: How findings will be communicated.

2. Procedures to be Performed

  • Risk Assessment: Identifying areas of high risk within the organization or process.
  • Internal Controls Review: Evaluating the effectiveness of the internal controls.
  • Substantive Procedures: Performing detailed testing of transactions, balances, and disclosures to verify their accuracy.
  • Analytical Procedures: Using financial ratios and trends to identify areas of concern.
  • Confirmation: Obtaining external confirmation of balances, such as bank confirmations.
  • Reperformance: Reperforming a sample of the work done by the client’s staff to verify its accuracy.
  • Observation: Observing physical inventory counts or other processes.
  • Inquiry: Asking management and staff about processes, controls, and specific transactions.

3. Team Members Assigned

  • Audit Partner: Oversees the audit and ensures compliance with standards.
  • Audit Manager: Manages the day-to-day operations of the audit.
  • Senior Auditor: Leads the fieldwork, reviews work performed by junior staff, and ensures that procedures are followed.
  • Staff Auditor: Performs detailed audit procedures, such as testing transactions, verifying balances, and documenting findings.
  • IT Auditor: Focuses on the audit of information systems and related controls, if applicable.
  • Quality Review Partner: (Optional) Reviews the audit work to ensure quality and compliance with standards.

4. Sample Sizes

  • Judgmental Sampling: Sample size based on auditor’s judgment, focusing on high-risk areas.
  • Statistical Sampling: Using statistical methods to determine sample size based on the population size and desired confidence level.
  • Fixed Sample Size: A predetermined number of items to test, often used for smaller audits or specific audit procedures.
  • Coverage-Based Sampling: Ensuring that the sample size is sufficient to cover a certain percentage of the population or transaction value.

5. Timing of the Work

  • Preliminary Audit Work: Conducted before the audit period to understand the client’s business, assess risks, and plan the audit.
  • Interim Audit Work: Testing controls and performing some substantive procedures before the year-end to spread the audit workload.
  • Year-End Audit Work: Detailed testing of transactions and balances as of the audit date.
  • Finalization: Completing the audit file, reviewing the work done, and issuing the audit report.
  • Reporting: Typically, the audit report is issued shortly after the year-end work is completed.

The timing of audit work can vary depending on the size and complexity of the audit. Generally, it is scheduled to ensure that the audit report is delivered by the agreed-upon deadline.

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