AUDIT PLANNING AND CONTROL PROCEDURE
Auditors should plan the audit work so as to perform the audit in an effective
manner. Planning entails developing a focus and direction for the audit. This is
done by the auditor in a document which contains a general strategy and a
detailed approach for the expected nature, timing and extent of the audit.
The auditor develops the general audit strategy in an overall audit plan to set
the direction for the audit and provide guidance for the development of the
audit programme. The audit programme sets out the detailed procedures
required to implement the strategy as part of planning for the audit.
Planning is necessary for audits of entities of all sizes. The objectives of planning
the audit work, which takes place before the detailed audit work begins, include;
ensuring that appropriate attention is devoted to the different areas of the audit;
potential problems are identified; and facilitating review. The auditor needs to
have a good understanding of the clients business to enable him or her
prepare an audit plan. The process involves the review of the client’s operational
background with regard to its financial, legal and personnel situations and
the industry environment in which it operates
The functions and responsibility of the auditor when properly understood, enable
the members of the audit team to, readily know the extent of their responsibility
and how to go about conducting the audit work allocated to each member of
the audit team. The functions and responsibility of the auditor under the law,
are not diminished by relying on representations made by the directors.
This chapter examines the impact of relevant legislations on the performance
of an audit. An understanding of the laws enables the auditor to test compliance
or otherwise of his or her clients with the provisions of the laws. The auditor
should recognise that non-compliance by the entity with law or regulations
may materially affect the financial statements.
This chapter covers the evaluation of the quality of the audit and maintaining
adequate working papers. Proper documentation enables the auditor to
accomplish his or her statutory (or other) roles in a manner that leaves other
professionals who may need to review or evaluate his working papers, in no
doubt as to the nature of work done actually meeting professional standards
and really supporting the audit opinion.
Planning, documenting and monitoring of time and costs are essential parts of
an audit. The auditor should prepare time and cost estimate as part of the
audit plan. It is necessary for audits of entities of all sizes. Planning of time
and costs assist in the proper assignment of work to members of the audit
team, and in briefing the members of the audit team.
Establishing procedures for obtaining audit evidence, including balance and
transaction testing, analytical procedures and management representation,
enable the auditor obtain, review and assess audit trail supporting his or her
audit opinion. Obtaining management representation does not absolve the
auditor from blame.
Analytical procedures are used by the auditor to assist in planning the nature,
timing and extent of other audit procedures. They are used as substantive
procedures when their use can be more effective or efficient than other
procedures in reducing detection risk for specific financial statement assertions;
and as part of the overall review of the financial statements when completing
the audit.
The learning objectives of this chapter have been carefully considered in
structuring the topics in this chapter. A careful study of this chapter will enable
the reader to know the very essence of audit planning and control procedures.
At the end of this chapter, readers should be able to answer typical examination
questions on audit planning and control procedures.
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