AUDIT

PLANNING
 AUDIT PLANNING
Overall Audit Strategy Audit Plan

“Planning involves developing a general strategy and a detailed approach

for the expected nature, timing and extent of the audit”

How are we going to conduct Audit

Engagement?
“It is not a discrete phase, but rather a continual and iterative process
that often begins shortly after the completion of the previous audit
and continues until the completion of the current audit”

Risk-based Approach
 ADEQUATE PLANNING
Adequate Planning helps the auditor to:

● Devote appropriate attention to important areas.

● Identify and resolve potential problems on a timely basis.

● Properly organize and manage the audit so that it is performed in an

effective and efficient manner.

● Assist in the selection of team members to respond to anticipated

risks, and the process assignment of work.
 ADEQUATE PLANNING
Adequate Planning helps the auditor, to:
Effective and Efficient
● Facilitate the direction and supervision of team members and review
of their work.
● Coordination of work done by auditors of components and experts. Surprise/
Unpreditability
“Involvement of the engagement partner and other key members in
planning enhances the effectiveness and efficiency of the planning
process”

“Auditor may decide to discuss elements of planning with the client’s management
but with care in order not to compromise the effectiveness of the audit”
 OVERALL AUDIT STRATEGY
In establishing the overall audit strategy, the auditor shall:

● Identify the characteristics of the engagement that define its scope.

i. reporting requirements
ii. expected audit coverage

“Scope of an audit refers to audit procedures deemed necessary”

● Ascertain the reporting objectives to plan the timing of the audit and
the nature of communications required.
i. timetable for reporting
ii. discussions with management and those charged with
governance
 OVERALL AUDIT STRATEGY
Risk-Assessment
In establishing the overall audit strategy, the auditor shall:

● Consider significant factors in directing the engagement team’s

efforts.
i. determination of materiality level Benchmark
ii. significant changes and developments

● Consider the results of preliminary engagement activities.

Competence
● Ascertain the nature, timing and extent of resources necessary to
perform the engagement.
i. selection of engagement team and assignment of work
ii. engagement budgeting
 BENEFITS OF OVERALL AUDIT
STRATEGY
The process of establishing the overall audit strategy assists
the auditor to determine:

● Resources to deploy for specific audit areas such as use of

i. Experienced team members for high risk areas
ii. Experts on complex matters

● Amount of resources to allocate to specific audit areas such as

i. Number of team members assigned to perform a procedure
ii. Extent of review of other auditor’s work
iii. Budget in hours to allocate to high risk areas
 BENEFITS OF OVERALL AUDIT
STRATEGY
The process of establishing the overall audit strategy assists
the auditor to determine:

● When such resources are to be deployed such as

i. Interim audit stage Far from Year-end
ii. Key cut-off dates
Near Year-end
● How such resources are managed, directed and supervised such as
i. Schedule of briefing and debriefing meetings
ii. How reviews are expected to take place
iii. Whether to complete engagement quality control reviews
 AUDIT PLAN
“Once the overall audit strategy has been established, and audit plan
can be developed”

“Audit plan is more detailed than the overall audit strategy in that it
includes the nature, timing and extent of audit procedures to be
performed by engagement team”.

The audit plan shall include a description of

● The nature, timing and extent of planned risk assessment

procedures
● The nature, timing and extent of planned further audit procedures Test of Control
at the assertion level Substantive Test
● Other planned procedures
 DIRECTION, SUPERVISION AND
REVIEW
“The auditor shall plan the nature, timing and extent of direction and
supervision of team members and the review of their work”

It may vary depending on factors, including:

● Size and complexity of the entity

● Area of the audit
● Assessed risk of material misstatements
● Capabilities and competence of the members performing the work
 AUDIT PROGRAM
“An audit program sets out the nature, timing and extent of planned
audit procedures required to implement the overall audit plan”

“It serves as a set of instructions to assistants involved in the audit

and as a mean to control the proper execution of work”

Audit Plan Audit Program

Risk Assessment Procedures Tests of Controls

Further Audit Procedures Substantive Tests

Other Planned Procedures

 CHANGES TO PLANNING

“Planning is not a discrete phase, but rather a continual

and iterative process”

“As a result of unexpected events, changes in conditions, or the audit

evidence obtained, the auditor may need to modify the overall audit
strategy and audit plan”
 DOCUMENTATION
Comply with the
“The auditor shall document the overall audit strategy and standards
the audit plan including any significant changes”

Documentation:

● Overall audit strategy – record of key decisions

● Audit plan– record planned risk assessment procedures and further
procedures
● Significant changes - record of explanation of changes and the final
overall audit strategy and audit plan
 ADDITIONAL CONSIDERATION
● For initial audits, additional matters the auditor may consider
include:
i. Arrangement with the predecessor auditor, such as review of
working papers
ii. Any major issues discussed with management
iii. Audit procedures regarding the opening balances
iv. Other procedures required by the system of quality control for
initial audits

● Consideration of work performed by:

i. Client’s staff, including internal audits – may reduce cost of audit
ii. Specialists or experts – brings unique knowledge and judgement
iii. Other CPAs - when a component is audited by another firm
GROUP 1 (TEAM MEMBERS)

BUENO, JOFEL
ROARING, DARREN R.
CANON, EMEGEAN S.
COPE, ADELA FAYE
DAYA, NICOLE
MELGAR, MA. ISABEL C.