ACCA AAA INT Syllabus D. Audit of Historical Financial Information - Contents of the Plan - Notes 7 / 10
There are several stages in the planning process:
As follows
Ensure understanding of the business
Undertake analytical review
Assess the risks involved with the business
Establish materiality levels
Establish tolerable error for material errors
Decide the audit approach
Ensure auditor independence
Decide the budget and staff requirements
Timetable the audit & set deadlines
Permanent file
The permanent file kept by the audit firm will bring forward a lot of the knowledge of the business, but this must be kept up to date.
Current File
The current file contains the evidence and documents relevant to the current year.
The planning section of the file will cover all of the areas above, and there will be a completion section which will review the audit.
In between there will be a sub-section for each balance sheet item (e.g. Non Current Assets) and for each income statement item (e.g. purchases) with the work done outlined and evidence documented