Audit Plan
The audit plan depicts the ways and strategies that are adopted to conduct an audit report. It is said to be the first stage of an audit. The audit plan points out the procedures that are utilized to prepare the report and secure enough audit evidence. It involves elements like members of the business brand, timings, and nature, allotment of work, etc. Regarding the question of what is audit planning, the Auditor plans the audit, to efficiently create the audit report taking into account all the material aspects. The primary objective of the auditors is to generate the audits. They also consider certain factors before they proceed with the audit planning. This article is a complete brief of “what is an audit planning process”.
Factors Considered by Auditor Before Planning
The audit planning steps are very crucial to be taken note of. The auditors look into certain factors before they plan audit work.
Engagement Terms and Statutory Responsibilities
When the Auditor starts to prepare the plan, he should check the appointment terms, including his roles and responsibilities. He should implement the election, laws to interpret the same. Audit preparation and planning have lots of steps to involve, this being one of them.
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Report, Nature, and Timing
Among the critical audit planning steps are the interpretation of timing, nature, and extent of the audit. One of the main things the Auditor does is estimating the audit time and form. It eases his task to perfectly allot the job among the members. Hence, the work can strictly adhere to the deadline.
Detection of Vital Audit Areas
Another vital thing to consider for audit preparation and planning is by checking out the critical audit areas. The Auditor always needs to detect the substantial, risky areas involved in the audit. Upon detection of the same, he can choose to conduct the audit accordingly. He should carry out the task in a manner that decreases the potentially risky areas in the inspection. It is based on the professional opinion of the Auditor. This is indeed a significant factor to consider, for the planning of audit work.
Accounting System and Internal Control Degree
When the Auditor is preparing a plan, he should consider the impact of internal control. Upon reaching a statement, he decides whether to run a test check or an extensive checking mode for the transactions. This point holds major significance among the audit planning steps.
Audit Evidence Extent and Nature
The nature and extent of audit evidence are generally variable as per the circumstances. In a few cases, it can be through physical verification methods or external factors. Again, in some other cases, the Auditor can only depend on the interpretation of audit evidence that has been obtained. This aspect comes as a vital point in audit preparation and planning.
The Work of Internal Auditors
The task carried out by the internal Auditor is often interpreted by the Statutory Auditor. It is helpful for the Auditor in detecting the risks involved in the reports alongside the scope of the work. This is a vital factor to include while evaluating the audit planning steps.
Coordination and establishment of Staffing Needs
One of the crucial factors while the planning of audit work is coordination. The auditor always allocates the task among the members. He even supervises, if the job is performed under expert guidance and is completed in due time.
The planning of audit work ultimately depends on these factors. The auditors look into these aspects and carry out their tasks. The audit plan should include the involvement of these steps to help in efficient research and fair outcome.
Fun Facts about Tools of Auditing
Three main types of auditing tools are there. They are, External audits, Internal audits, and Internal Revenue Service audits.
CPA firms hold expertise in conducting external audits.
The audit planning steps need to be considered to come up with a fair audit report.
Solved Example
Q1. What are the things that the Auditor should follow while planning the audit work and report?
Answer: An auditor generally conducts an audit plan based on the following aspects.
The nature, timing, risk, and extent for the assessing processes.
Terms and conditions of his engagement and responsibilities.
Checking the changes in the auditing policies.
Developing material levels.
Interpretation of the risks involved.
Implementation of legal laws regarding regulations.
The experts hold a clear idea of what is audit planning and carry out their job accordingly.
FAQs on Tools of Auditing: Types and Applications
1. Who is called an Auditor?
Answer: The process of following a particular strategy to verify the financial statements and audit scope inside the brand perfectly defines “what is audit planning”. It is the set-up of the methods that helps in checking the financial reports and records of the said brand. People often get confused with the meaning and roles of an Auditor.
An auditor is the one who verifies and checks the correctness of the financial evaluation for a particular brand or company and makes sure it is following the tax laws. The Auditor prepares the report based on the evidence he gets and concludes his professional opinion on the entity. They are experts regarding how to plan, audit, and execute the financial statement.
2. What is known as Auditing Tools?
Answer: Auditing signifies the scientific ways to check and identify the financial records of any particular brand or enterprise. A common question that we face is what precisely the auditing tool means? In order to understand the aspects related to auditing, it is essential that we learn about the tools of an audit. The auditing tool is generally a scientific term that signifies a system to capture and store data. Through these tools, auditing projects are carried out by the department to make the audit plan. It involves documents, risks, monitoring ways, and so on. With the aid of those tools, audit preparation and planning is conducted.
