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Explain the matters that an auditor should take into account at the planning stage of an audit exercise

      

Explain the matters that an auditor should take into account at the planning stage of an audit exercise

  

Answers


Wilfred
1. Knowledge of business
- General economic factors and including conditions affecting the entity‘s business
- Important characteristics of entity, its business, its financial performance and its reporting requirements including changes since date of prior audit
- General level of competence of management
2. Understanding accounting and internal control systems
- Accounting policies adopted by the entity and changes in those policies
- Effect on new accounting and auditing pronouncements
- Auditing cumulative knowledge of accounting and internal control systems is the relative emphasis expected to be placed on tests of control and substantive procedures
3. Risk and materiality
- The expected assessment of inherent and control risks and the identification of significant audit areas
- The setting of materiality levels for audit purposes
- Possibility of material misstatement, including experience of past periods or fraud
- Identification of complex accounting areas including those involving accounting estimates
4. Nature, timing and extent of procedures
- Possible change of emphasis on specific audit areas
- Effect of information technology on the audit
- Work of internal auditing and its expected effect on external audit procedures
5. Co-ordination, Direction, Supervision and Preview
- Involvement of other auditors in audit of components e.g subsidiaries, branches and divisions
- Involvement of experts
- Number of locations
- Staffing requirements
Wilfykil answered the question on February 23, 2019 at 06:12


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