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Chapter 6 -Audit planning and documentation, Audit plan, :star:AUDIT…
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Audit plan
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Convert the audit strategy into a more detailed plan include:
=nature -complex?
=timing -TOC, Risk assessment, substantive procedure
=extent of audit procedure (to obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level)
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Audit strategy
Sets overall:
:=scope of audit
=timing
=direction of audit (and guides the detailed development of the audit plan)
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AUDIT DOCUMENTATION/Working papers - is the record of audit procedures performed, relevant audit evidence obtained and conclusions the auditor reached
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OBJECTIVES
:star: to help auditor to devote appropriate attention to important areas of the audit
:star:to help auditor identify and resolve potential problems on a timely basis
:star:to help the auditor properly organise and manage the audit to perform audit in an effective manner
:star:to assist in selecting appropriate team members and assignment of work to them
:star:to facilitate the direction, supervision and review of work
:star:to assist in co-ordination of work done by auditors of components and experts
Matters to consider:
- characteristics of engagement
- Reporting objectives
- Significant factors
- Preliminary engagement activities
- Nature,timing and extent of resources
Audit plan shall include a description of :1. Nature, timing and extent of planned further Risk assessment
- nature,timing and extent of planned further audit procedures at assertion levels
- other planned audit procedures required to be carried out, to comply with ISA
Procedures:
-inherent risk assessment
-gaining understanding of an entity
-recording of the entity system of internal control
-evaluating the design of internal control
-carrying out TOC on internal control effectiveness
-identification of issues that may have an impact on work to take place at the final audit
Procedures:
-substantive procedures; verification of SOFP and P&L
-obtaining 3rd party confirmation
-analytical procedures
-subsequent events review
-agreeing the financial statements to the accounting records
-examining adjustment
-consideration of going concern
-obtain written representation
:star:OBJECTIVES
:star:provides evidence of auditor's basis for conclusion
:star:provides evidence that audit was planned and performed in accordance with ISAs
:star:assists engagement team to plan and perform audit
:star:assists in direction, supervision and review of audit work
:star:enable team to be accountable
:star:allow a record of matters of continuing significance to be retained
:star:enable conducts of quality control reviews and inspections
Factors affecting the form & content of documentation
--size & complexity of entity
--nature of audit procedures
--nature and extent of exceptions
--audit methodology and tools used
--need to document a conclusion
--significance of evidence obtained (no photocopy allowed as external source)
contain info of relevant year
Eg :check:financial statement
:check:accounts checklist
:check:summary of unadjusted errors
:check:note of board minutes
:check:audit plan
:check:management letter & written representation
:check:communications with 3rd party experts or other auditor
contain info of continuing importance
Eg :check:engagement letter
:check: the memorandum and articles
:check:legal documents such as prospectuses, leases, sales agreement
:check:board minutes
:check:previous year's accounts, control questionable