Phase 1 – Pre-engagement This phase will always be performed by

the auditor.
This phase will require a decision from
the auditor whether or not to accept a new client
Primary objective: To ascertain he degree of
or continue relationship with an existing one.
correspondence between the financial statements
This process would require evaluation not only
prepared by the client’s management and the
of the auditor’s qualification, but also the
financial reporting framework. With this, the
integrity and auditability of the client’s financial
auditor will be able to conclude whether or not
statement.
the financial statements are presented fairly in
Primary objective: To minimize the likelihood accordance with the financial reporting
of being associated to a management whose standards.
management lacks integrity.
Phase 5 – Completing the Audit
Phase 2 – Audit Planning
Wrapping-up procedures are performed;
Audit planning involves the conclusions reached are reviewed; and an
development of an overall audit strategy, audit overall opinion is formed during this phase.
plan, and audit program. The auditor usually
Primary objective: To assist the auditor in
obtained more detailed knowledge about the
assessing the conclusion reached is consistent
client’s business and industry in order to
with evidence gathered.
understand the transactions and events affecting
the financial statements.
Phase 6 – Issuance of Audit Report
Preliminary assessment of risk and
In this stage, auditor prepares and issues
materiality is also made during this phase.
audit report which describes the scope of the
audit and states the auditor’s conclusion
Primary objective: To assess the different risks
regarding the fairness of the financial
associated with the audit to determine the nature,
statements.
timing, and extent of further audit procedures
necessary to be performed. Primary objective: To communicate the
conclusions reached by the auditor to various
Phase 3 – Consideration of Internal Controls intended users.
Since entity’s internal control directly
Phase 7 – Post-audit Responsibilities
affects the reliability of the financial statements,
it is appropriate to study and evaluate these After completion of the audit
controls. engagement, auditor performs procedures that
will enable him/her identify areas for
Primary Objective: To establish a basis for
improvement in the current and future
reliance on internal controls, in determining the
engagements.
nature, timing, and extent of audit procedures to
be performed. Primary objective: To assess and evaluate the
quality of services delivered by the engagement
Phase 4 – Evidence-gathering (Substantive team.
Testing)
Using the information obtained in audit
planning and consideration of internal controls,
the auditor performs substantive test to
determine whether the entity’s financial
statements are presented fairly in accordance
with financial reporting standards. Substantive
procedures could either be analytical procedure
or tests of details of transactions and balances.