Why Plan an Audit?

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Plan the audit so that the engagement will be performed in an effective manner

Time spent planning the audit to ensure it is carried out efficiently will reduce the time taken and thus the cost.

The planning process will also assess and thus reduce risk.

The auditor will want to ensure that the correct team is in place to conduct the audit, they are working efficiently and that work is focused on material areas of risk and potential problem areas.

Planning Activities

  • Risk Assessment
    • We will look in detail later at risk assessment, but at this point we should be aware that the identification of risk will determine the entire audit process.

  • Audit Strategy

    The audit strategy sets out the scope, timing and direction of the audit.

    • The Scope:

      The scope of the audit will be determined by the reporting framework applied as  well as any industry specific requirements.

      If there are any geographical or other factors which may affect the audit, they will be considered here.

    • Timing:

      The timing of the audit will set out any deadlines applicable and the dates of the interim and final audit visits.

      The interim audit is conducted before the final audit to evaluate controls and document the systems in place.  


      In addition there may be some substantive tests carried out. 


      The attendance at the stock count will be carried out at this time and perhaps the receivables circularisation.

      The final audit will involve the bulk of the audit work and it may be possible to concentrate on the statement of financial position figures if sufficient work has been carried out during the interim audit.

    • Direction:

      The direction of the audit will be determined by the identification of high risk areas and materiality.

      The strategy decided upon will be tailored to the client and the nature of their business and their structure.  

      The auditor must ensure that the strategy selected is appropriate.

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