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Audit planning - Coggle Diagram
Audit planning
Importance of audit planning
helps auditor devote attention to important areas of audit
helps auditor identify and resolve problems on a timely basis
helps auditor manage and organize engagements so that it will be done efficiently
assists the selection of audit teams
facilitate direction and supervision of engagement team members
Assists coordination between experts
Scope, timing, direction
Scope
Locations/ branches
Financial reporting framework
Industry specific regulations
Reliance on internal auditor's work
Outsource
Use of CAATs by auditors
Timing
Reporting deadlines
Meeting with management / TCWG
Expected communication with management
Team meetings
Review of audit work by audit partner
Direction
Controls plus substantive
Planning stage of audit
Audit plan - detailed implementation of strategy
Description of risk assessment procedures
Description of further audit procedures
Audit strategy - Overall approach
Understand the client: Industry, regulatory and other external factors, nature of entity, accounting policy, etc.
Audit risk - risk that auditors may give an incorrect opinion when F/S is misstated
Materiality
Material by amount of F/S as a whole
Material by nature
Performance materiality: should be lower than overall materiality
Scope, timing, direction
Explanation of the term 'audit risk'
Risk of material misstatement in F/S (Risk that F/S may be misstated before the audit
Inherent risk - risk that a class of transaction / account/ disclosure is misstated before considering any control
Control risk - risk that material misstatement will not be discovered by internal control system
Detection risk - risk that auditor will not discover misstatements: Possible reasons for high detection risk
Inadequate planning
Audit team related issues
Lack of professional skepticism
Inadequate supervision and review of work
Incorrect audit procedures
Improper sample selection