Auditing - Audit Planning

Audit planning is required for an Auditor to conduct an effective and efficient audit. Target of audit planning should be about the following −

  • Time budgets
  • Recruitment of audit staff
  • Schedule about date of audit procedure

Base of Audit Planning

Audit planning should be based on the following −

  • Complete accounting knowledge of client’s business
  • Reliability of internal control system
  • Programming of audit procedures and
  • Co-ordination of staff

Development of Audit Plan

The following points need to be considered at the time of preparation of an audit plan −

  • Auditor Engagement terms
  • Statutory responsibility of Auditor
  • Co-ordination with other Auditors
  • Internal control system of branches and subsidiaries
  • Reliability of internal control system of an organization
  • To mark important audit areas
  • Impact of legal rules
  • Nature and timing of reports

Standard on Auditing 300 (SA 300)

The Standard on Auditing (SA) came into effect from 1st April, 2008; this deals with the auditor’s responsibility to plan an audit of financial statements.

Scope SA 300 deals with the Auditors responsibility to plan an audit of financial statements.
Objective To plan the audit to perform it in an effective manner.
Effective SA 300 is effective on financial statements for the period starts from 1st April, 2008
Preliminary Engagement Activities Auditor shall communicate with predecessor Auditor, in case of change in Auditor. Auditor shall undertake performing procedures as per SA 220, evaluating compliance of ethical requirement as per SA 220 and establishing terms as engagement as per SA 210.
Planning Activities

To set the scope, directions and timing of audit which guide the development of audit program, the Auditor shall establish an overall audit strategy.

  • Identify the characteristics of the engagement that defines scope.

  • To Plan the timing of audit and the nature of communication, ascertainment of the reporting objectives of the engagement plan is required.

  • Consideration of significant factors in directing the engagement team’s effort.

  • Overall audit strategy.

  • The Audit Plan.

  • In case of any significant changes made the overall strategy or audit plan and reasons for such changes.