1. What is the general objective of planning for an audit?

- The general goal of audit planning is to guarantee that all aspects of the audit receive enough
emphasis. Auditing the entity's high-risk areas should receive more attention. In order to preserve
resources, low-risk areas should be given lesser time. Furthermore, preparation is performed to
identify possible issues during the audit, such as deficiencies in the internal control system that
might have a substantial impact on the financial statements. Lastly, planning aids in the effective
coordination and allocation of financial resources throughout the audit by allocating highly
qualified and experienced personnel to high-risk and critical sectors.
2. Contrast the following terms:
a. Audit strategy, Creating optimal audit ways to obtain the necessary audit assurance at the
lowest cost within the limits of the information available entails designing optimized audit
procedures. This determines the audit's scope, time, and direction, as well as the formulation of a
more thorough audit plan.

b. Audit plan, handle the different issues raised in the overall audit plan, keeping in mind the
requirement to meet the audit objectives while utilizing the auditor's resources efficiently. This
contains a description of the type, timeliness, and scope of risk assessment procedures, as well as
additional audit procedures (controls tests and substantive tests) and other audit procedures that
must be completed for the engagement to comply with PSAs.

c. Audit program, is the list of steps that are to be followed by an audit staff to obtain sufficient
audit evidence.
3. Enumerate the different planning procedures. Explain each one briefly.
- Setting objectives, Plans are made with the intention of achieving specific objectives. As a
result, setting goals is a crucial part of the planning process. The goals of the company should be
reflected in the plans. Policies, procedures, regulations, strategies, budgets, and programs should
all have clear objectives that explain what they are supposed to accomplish. Every action must
contribute to the fulfillment of objectives, according to the plan.
- Develop planning premises, Accurate forecast data, company policies, and strategies are all part
of the premises. Planning is thinking ahead, which demands the company's understanding of how
future situations will influence its operations.
- Determine alternate courses, The planner should examine all of the options, weigh their
advantages and disadvantages, and then choose the most feasible.
- Evaluate alternative courses, Entails the investigation of how various actions are carried out.
Various aspects of such options, such as profitability, investment needs, and so on, should be
assessed against one another. To assess its appropriateness, each option should be thoroughly
investigated.
- Selecting the best course, After weighing the pros and cons of the numerous options, the best
option is chosen. As a result, the strategy may be deemed implemented. It is precisely at this time
when decisions are made. Several different routes can sometimes be taken in the best interests of
the company.
- Formulating derivative plans, The planning process does not stop once the optimal route has
been chosen. A number of derivative plans should assist the main plan. In each functional
department, derivative plans are developed within the framework of a fundamental plan. The
division of the master plan into departmental, sectional, and individual plans aids in
comprehending the true nature of future risks.
- Implementation of plans, Includes putting the plans into action in order to meet the company's
goals. Policies, processes, standards, and budgets must all be established before plans can be
implemented.
4. What is the purpose of analytical procedures performed during audit planning?
- The goal of using analytical procedures in audit planning is to aid with in preparation of the
nature, timing, and scope of auditing procedures that will be utilized to gather evidence for
certain account balances or transaction classes.
5. What are the contents of the audit plan?
- The Auditor shall develop an audit plan that shall include the description of:
(1) The nature, timeliness, and scope of planned risk assessment processes as defined by
PSA 315, "Identifying and Assessing the Risks of Material Misstatement Through
Understanding the Entity and its Environment."
(2) PSA 330, "The auditor's reactions to identified risks," determines the nature, timing,
and scope of anticipated further audit procedures at the assertion level.
(3) Other planned audit processes that must be completed in order for the engagement to
comply with PSAs
6. What are the two types of audit programs? Explain each type briefly.
- Fixed Audit Program, Collection of specified instructions that must be followed while doing an
audit. Although all potential audit methods may not be relevant in each scenario, a set audit
program covers them all. It tries to address every potential audit circumstance by prescribing
procedures to be followed in each one.
- Flexible Audit Program, Does not specify the audit technique to be used. It likes to offer a
general overview of the audit's scope, nature, and limits. It does not specify the type of work that
each member of the audit team will conduct. Many decisions are made as work progresses, and
the auditor gains knowledge of the processes and internal control system's dependability.
7. Planning is a discrete phase of the audit. Is this statement correct? Explain.
- Planning is not a discrete phase/step of an audit; instead, it is a continuous and dynamic process
that can begin soon after (or in conjunction with) the conclusion of the previous audit and
continue until the auditor is aware of the current audit's conclusion.
8. May an external auditor use the work of internal auditor? Explain.
- The work of an internal auditor can be used by an external auditor for audit purposes. Much of
the work completed by an organization's internal audit department might coincide with the work
done by an external auditor, particularly in areas involving the examination of control
mechanisms. Internal audit is expected to execute processes on financial controls related to the
external audit as part of its comprehensive work analyzing and examining the company's internal
control structure.
9. Give examples of other planning considerations.
- Other planning concerns include preparing for corporate support, taking into account the work
of internal auditors, and making plans for effective guidance, monitoring, and evaluation of audit
work.
10. Which of following audit team members may perform supervision duties?
- The manager or another experienced person is generally in charge of managing and oversee the
activities to verify that it follows the audit testing plan.