AUDIT PLAN

Definition :
An audit plan is the specific guideline to be followed when conducting an
audit.it helps the auditor obtain sufficient appropriate evidence for the
circumstances, helps keep audit costs at a reasonable level, and helps avoid
misunderstandings with the client. Audit planning includes establishing the
overall strategy for the audit engagement, with a particular focus on planned
risk assessment procedures and responses to the identified risks of material
misstatement.
Objective:

The objective of an audit is to form an independent opinion on the financial statements of the
audited entity. The opinion includes whether the financial statements show a true and fair view,
and have been properly prepared in accordance with accounting standards.
Importance :

Planning your audit ensures that all areas of the process

are covered and given appropriate attention. It can also
help you identify any potential problems or obstacles
with the auditing process, map out activity so that it is
carried out in a timely way, and manage your audit
workflow for maximum efficiency.
Type of Audit:
 Tax planning.
 System design and integration.
 Internal reporting.
 Risk assessment.
 Benchmarking.
 Electronic commerce.
Elements of Audit Plan:

 Research the Audit Area.

 Maintain Open Communications Throughout the Planning Process.
 Conduct Process Walk-Throughs.
 Map Risks to the Organization, Process, or Function.
 Obtain Data Prior to Fieldwork.
 Internal audit External audit IRS tax audit

Type of Financial Operational Compliance

audit audit audit
Audit
Information Payroll audit Pay
system audit
Good Audit plan :
Audit plans should cover knowledge about client's
accounting systems and policies, internal control
procedures and coordinating the work to be performed.
Plans should be flexible so that they can be developed or
revised as and when required by the auditor.
Phase of audit planning:

The first phase of audit planning is risk assessment. When the

prospective client has previously been audited, GAAS requires
that the successor auditor make inquiries of the predecessor
auditor before accepting the engagement.
 i)Inherent risk:

Inherent risk in auditing is the risk of a material misstatement in financial

statements because of something other than the failure of internal and related
controls.

Type of Risk ii)Detection risk:

Detection risk is the chance that an auditor will fail to find material misstatements
that exist in an entity's financial statements.

iii)Control risk:

Control risk is the chance of a material misstatement in a company's financial statements

because there aren't any relevant internal controls to mitigate a particular risk or the
internal controls in place malfunctioned
Audit Planning Report:

It seeks to provide the Audit Committee with an overview of

our initial risk identification for the upcoming audit and any
changes in risks identified in the current year.
Benefits of Audit Plan:
A. It helps the auditor obtain sufficient appropriate evidence for the
circumstances.
B. It helps to keep audit costs at a reasonable level.
C. It helps to avoid misunderstandings with the client.
D. It helps to ensure that potential problems are promptly identified.
E. It helps to know the scope of audit program by an auditor.
F. It helps to carry out the audit work smoothly and in a well-defined
manner.
THANK YOU