Audit Strategy, Audit

Planning & Audit Programme

Auditing & Ethics ONE SHOT
Ankit Mundra Sir
 Topic: Auditor's Responsibility
to Plan an Audit of FS
SA 360 “ Planning an Audit of FS”
Objective of the Auditor to plan an Audit

So that it can be performed Effectively

Timely Manner
 Topic: Benefits

(1) Auditor Devotes → Appropriate Attention → Imp. Areas

Identify
(2) Auditor Potential Problems → Timely Basis
Resolve
Organise
(3) Auditor Audit Engagement
Manage

Effective Efficient
(4) Assisting in Selecting → Engagement Term Members

Direction
(5) Facilitating Supervision
Review
 Topic: Benefits

(6) Assisting → Coordination of work (Eg. Experts)

Audit Risk is REDUCED

Planning ensures To an Acceptable Level
Reduces the Risk of INAPPROPRIATE OPINION
 Topic: Nature of Audit Planning

NOT A DECRETE PHASE

Continuous Interactive Shortly after
Begins PREVIOUS AUDIT
In connection with
 Topic: Nature of Audit Planning

→ Continues → Until Completion → Current Audit

→ EXTRA GYAAN → Audit Procedures
+
Stages of Audit

Risk Assessment Procedures Further Audit Procedures

(R.A.P) (F.A.P)
 
SA 315 SA 330
“Identification & Assessment of “Auditor’s Response to
RoMM through understanding the Assessed Risk”
Entity & its Environment”
Things to be done before R.A.P. → Consider
 Topic: Nature of Audit Planning
(1) Analytical Procedures → to be applied as → RAP
(2) General Understanding
Entity Complying LEGAL + REGULATORY Framework
(3) Determination of Materiality
(4) Involvement of Experts → Taking A/c. of Complexity of Business
(5) Performance of other RAP
Engagement Partner • Experience
Planning Involves • Insight
Other key Members • Enhance Eff. & EFF.
DISCUSSION OF ELEMENTS OF PLANNING → with Mgf.

Facilitate
Auditor May Discuss → To of Audit Engagement
Conduct

NOT TO COMPROMISE THE EFFECTIVENESS OF AUDIT
 Topic: Planning Process -Elements of Planning

Preliminary Engagement Activities Planning Activities

Procedure Compliance with Ethical Understanding Establishing Developing

regarding Requirements + Terms of O.A.S Audit Plan
continuance of Independence Engagement 
Relationship (1) Consider → 
 Threat to Send Audit S T D
3rd Element of Independence Engagement of Audit
Sys. Of Q.C. + (2) Evaluate → Letter +
Communication Identified Breaches Guides
with predecessor (3) Take → Appropriate Development
Auditor Action OR Withdraw of Audit Plan
 Topic: Planning Process -Elements of Planning
OAS → Assist Auditor → To Determine → AFTER R.A.P

Resources Amount of When to Deploy How to DEPLOY

to DEPLOY Resources (TIME) (HOW)
(TYPE) (QTY.)
D S R
* Factors to be considered → for establishing Audit Strategy
(A) Identify → Characteristic → of Engagement

App. F.R.F. Nature of Business Reporting A.E. of L.Y.

Requirement
 Topic: Planning Process -Elements of Planning
Nature (N)
(B) Ascertain → Reporting Objectives → To Plan
Timing (T)

Entity’s Meetings to Mgt’s Expectation Expected

Timetable for Discuss
Reporting Type Timing Communication N T
N E T of Status of of
of Report
of work Audit communication
among Audit
team member
 Topic: Planning Process -Elements of Planning

(C) Consider → Significant Factors → in directing → Team’s Efforts

Volume of Industry ∆ in FRF ∆ in Environment

Transactions Judgements

Preliminary Engagement Activities

(D) Consider → Result
Relevant Knowledge of Engagement Partner
(E) Ascertain → N.E.T. → of Resources Necessary
 Topic: Relation between
Audit Strategy & Audit Plan
Audit Strategy Audit Plan
Sets Brand Overall Approach • Addresses Various Matters Identified in OAS
S • Describes How Strategy is going to be
Determines T of Audit implemented
D
Less Detailed than Audit plan • More Detailed than OA’s
• Includes Net of Audit Procedures
OAS is established First • Audit plan can be developed After OAs
* Establishment of

RELATED
Discrete Sequential Audit

INTER
O.A.S
OAS Audit Plan Plan
Not Necessarily
 Topic: OAS & Audit Plan -
Responsibility of Auditor
Responsibility → Remains with Auditor

May Discuss

Elements of Planning

Without Compromising Effectiveness of Audit
 Topic: Changes to Planning Decision
During the Course of Audit
N
Update OAS
* Auditor + Planned E Of FAP
∆ Audit Plan
T
Unexpected ∆ in A.E.
Events Conditions Obtained
at the time off Planning DIFFERS
* This happens when → INFO In Auditor’s attention
 Topic: Planning Supervision & Review
of Work of Engagement Team Members
N D
* Auditor shall Plan E of S
 T R
Factors

(1) Size
of Entity
Complexity
(2) Area of Audit
(3) Assessed RoMM
(4) Capabilities
of the Engagement Team Members
Competence
 Topic: Documentation

OAS
OAS Audit Plan ∆ in Reason for
Audit Plan
∆
* Documentation = Record of :-
(i) RAP & FAP
(ii) Proper Planning of Audit Procedures

Reviewed Approved
Audit Program
* Auditor May Use → STANDARD
Audit Completion Check List
→ Tailored → as needed
 Topic: Audit Programme

Desirable → Particularly → Bigger Auditors

List of Examination Steps → to be Applied In Away

Verification Set out

OR Interrelationship

Detailed Plan of applying → Audit procedures

of one step to another
Instructions → Appropriate
Techniques Clearly Shown Designed

for accomplishing Audit Objectives Keeping in view the
Assertions
Topic: Evolving ONE audit Programme

NOT PRACTICABLE → or All Businesses

Vary in

Nature Size Composition I.C. Work

 Topic: Assistants to keep an Open Mind

* Auditor should frame → Audit Programme


Aim → Providing for → MINIMUM Essential Work

Standard Audit Programme

* ∆s in Programme → up on Gaining Experience

By actually carrying the work
Note
* Assistants Significant Matters
Report

Open Mind
 Topic: Periodic Review of Audit Programme

To Assess → Whether → Same continues to be ADEQUATE


for obtaining Requisite

Knowledge Evidence
* Auditor → may have to face legal consequences

NEGLIGENTLY CONDUCTED AUDIT

On the basis of an OBSOLETE Audit Programme
 Topic: Periodic Review of Audit Programme

* Audit Assistants → Unfailingly → Follow Instructions of Audit Programme

 
Until Changed by Principal
If periodic review is conducted → it removes RIGIDITY
 Topic: Constructing an audit programme

* Audit Planning
Commences → Conclusion → P.Y. Audit
Related Program

Reconsidered → for Modification
 Review of I.C.
Based on Preliminary Evaluation
Result of

Compliance Substantive

Procedures
 Topic: Constructing an audit programme

* While developing Audit Program →

(1) Auditor MAY

Rely on I.C. Not to Rely on I.C.

 
Eff. & Eff. Way to Other more efficient way to
conduct on Audit obtain Suff. + Appro. A.E.
 Topic: Constructing an audit programme

Timing of Procedure

Coordination with client

(2) Consider
Availability of Assistants
Auditor
Involvement of other
Expert
 Topic: Constructing an audit programme

(3) When to Perform Audit Procedure

Generally Some Cases → Not Flexible → Eg. Inventors Cash, etc.

Flexible

* Construction of Audit Programme:

Scope
(1) Stay within of the assignment
Limitation

(2) Prepare → Written Audit Programme

(3) Identify → Best Evidence
Topic: Constructing an audit programme

(4) Apply → Only useful steps

(5) Include → Audit Objectives → of each area
(6) Consider → Possibilities of Errors
(7) Co-Ordinate → Procedures
 Topic: Audit Programme -Designed to provide AE

* A.E. = INFO → used by Auditor → in Arriving @ Conclusion

 
Includes On which Auditor’s Opinion is based

A/c. Records
Info. In
Other Info.

* A.E. → basis for formulation → of opinion


Procedures
Audit Programme
Techniques
 Topic: Audit Programme -Designed to provide AE

Drawn
* Assertions → Evidence is Considered
 Weighted
to

Prove Disprove
 Topic: Advantages & Disadvantages
of Audit programme
Advantages
(1) Total + Clear → Set of Instructions
(2) Provide → Perspective → of work to be performed
(3) Selection of capable assistants
(4) Audit can proceed systematically
(5) Work may be tracked back to the assistant
(6) Principal can track progress
(7) Serves as a guide for future Auditors
(8) Serves as evidences
 Topic: Advantages & Disadvantages
of Audit programme
Disadvantages
(1) Work → may become → mechanical Rigid
(2) Programme → trends to become
(3) Inefficient assistants → may take shelter Inflexible
(4) Hard & Fast Audit Programme → may kill initiative
Disadvantages may be overcome by

Imaginative Receptive Observe Matters

Supervision Attitude Objectively