Audit Planning And Procedures

Notes

A well prepared audit has three basic stages:

  1. Planning

  2. An interim audit

  3. A final audit

The purposes and benefits of planning an audit are:

  • To enable the audit to be performed efficiently and effectively

  • To enable the appropriate audit team to be assigned

  • To identify resources to be assigned

  • To ensure that the appropriate opinion will be issued when the audit is complete, therefore the risk of an incorrect opinion is minimised

Evidence

In an audit, sufficient and appropriate evidence should be obtained.

  • Sufficiency relates to the quantity of the evidence

  • Appropriateness relates to the quality of the evidence obtained

Tests of control and substantive tests

Evidence is obtained via tests of control and substantive tests.

  • An example of a test of control is re-performing transactions.

  • Examples of substantive testing are examining material journal entries and reconciling financial statements to underlying accounting records. 

    These are performed to establish the cause of errors or omissions in financial records.

An operational audit is that type of audit that looks at the effectiveness of controls.

Notes