Learning outcome 4.

1: Plan for audit in line with the business needs

Audit is an objective examination and evaluation of the financial statements of
an organization to make sure that the records are a fair and accurate
representation of the transactions they claim to represent.

Audit planning means developing a general strategy and a detailed approach

for the expected nature, timing and extent of the audit. The auditor plans to
perform the audit in an efficient and timely manner
TYPES OF AUDIT

Strategy audit: how well the organization is internally aligned to support the
strategy, and how viable the strategy is when compared to external market,
competitor and financial realities.

Management Audit: How well the management has been operating the business
of the company?”; “Is managerial style well suited for business operation?”

Financial audit: In providing an opinion whether financial statements are fairly

stated in accordance with accounting standards, the auditor gathers evidence to
determine whether the statements contain material errors or other misstatements.
Operational Audit : It is a systematic review of effectiveness, efficiency and economy
of operation. the operational policies and achievements related to organizational
objectives.
Quality audit help determine if the organization complies with the defined quality
system processes and can involve procedural or results-based assessment criteria.
IT audit: determine whether IT controls protect corporate assets, ensure data integrity
and are aligned with the business’s overall goals

Audit should be internal or external

 Benefits of an internal audit.

Effectiveness and efficiency of operations. .

Reliability of financial reporting. .
Compliance with applicable laws and
regulations
 AUDIT PLAN 88pge

It is the specific guideline to be followed when conducting an audit. It

helps keep audit costs at a reasonable level, and helps avoid
misunderstandings with the client. It addresses the specifics of what,
where, who, when and how
It respond to the following questions:

-What are the audit objectives?

– Where will the audit be done? (i.e. scope)
– When will the audit(s) occur? (How long?)
– Who are the auditors?
– How will the audit be done?
OBJECTIVES OF AUDIT PLANNING

– Ensure that appropriate attention is devoted to important areas of the audit.

– Ensure that potential problems are promptly identified;
– Ensure that the work is completed expeditiously;
– Utilize the assistants properly; and
– Coordinate the work done by other auditors and experts
Factors to be considered in audit planning

Planning his audit, the auditor will consider the following factors:
– Complexity of the Audit.
– Environment in which the entity operates
– Previous experience with the client
– Knowledge of the client’s business
– Discussion with Client
– Time – Budget
Review relevant document and meeting with concerned people

Points to consider in seeking for clarification

. Asking clear and concise questions;

. Using open or closed questions appropriately;
. Listening actively and effectively; and
. Considering the interviewee’s responses
Analyze audit findings in comparison with standards
model of comparison matrix
Identification of risks associated to non-compliance
Report audit findings and recommendations
to the management team

The audit findings and recommendations are always included in the whole
audit report content. In other words, they are parts of an audit report
Characteristics of good recommendations

✓ Should be constructive: recommendations should offer solutions instead of

just identifying problems.
✓ Specific: Be specific when writing recommendations , both about the areas
that are done well and areas that need improvement
✓ Measurable: Recommendations should be measurable so that it will be
evident when changes have been made.
✓ Sensitive: Keep recommendations and comments on a positive note and
avoid any negativity
✓ Balanced: Remember to point out strengths as well as weaknesses.
TYPES OF AUDIT REPORT

AUDIT REPORT PRESENTATION