Audit Planning Fundamentals

A document summarizing the audit strategy, outlining the audit approach, timing requirements, staff usage, and specific tasks for each item in the financial statements.

The notebook used by the auditor to record observations, evidence, and findings during the audit. It serves as a crucial record for future reference and legal proceedings.

The degree to which the auditor can rely on the client's internal audit function. This is determined by assessing the internal audit's effectiveness and independence.

The level of care required in preparing the audit notebook. It must be accurate, complete, and free from errors to avoid potential legal consequences.

The potential consequences of errors made in the audit notebook, which can impact the accuracy and reliability of subsequent audits.

The process of creating a detailed roadmap for conducting an audit, outlining procedures, timelines, and staff assignments.

Estimating the time required to complete various audit tasks, broken down by categories or activities.

Assigning specific audit tasks to qualified personnel based on their skills, availability, and experience.

Evaluating the effectiveness and reliability of a company's internal controls.

Determining the nature, extent, and timing of audit procedures based on internal control evaluation and risk assessments.

The benefits of having a well-defined audit plan.

The ability to revise the audit plan when necessary to address unforeseen circumstances or changing conditions.

A comprehensive collection of documents and evidence gathered during an audit for a specific year. This includes the audit program, internal control questionnaires, working trial balance, and confirmation letters.

A detailed plan outlining the specific procedures and steps to be performed during the audit.

A series of questions designed to assess the effectiveness of a client's internal control system.

A summary of all the accounts and their balances, used to check the accuracy and completeness of the financial statements.

A list of the account books used and maintained by the client.

Letters sent to third parties (like banks) to confirm directly the balances of accounts.

Calculations made by the auditor to verify the accuracy of financial information, like depreciation, tax liability, or dividends.

Notes taken by the auditor during the audit, referencing specific observations or issues.

The working papers are the property of the auditor, but the auditor may share portions or extracts with the client at their discretion.

A formal document outlining a company's purpose, powers, and objectives.

A set of rules governing a company's internal management and the rights of its shareholders.

A legal agreement outlining the terms of a partnership, including responsibilities, profits distribution, and dispute resolution.

The methods used to record and process financial transactions, including accounting policies and procedures.

Measures implemented to safeguard assets, ensure the accuracy of records, and prevent fraud.

Procedures designed to independently verify the effectiveness of internal controls and detect errors or irregularities.

The process of identifying and investigating discrepancies or irregularities in financial records.

The identification and analysis of any errors, fraud, or misconduct discovered during the audit.

The detailed documentation and evidence gathered by an auditor during the audit process. It includes working papers, notes, and other materials that support the auditor's conclusions and findings.

A permanent collection of audit working papers that hold information relevant to the long-term structure and legal aspects of a company. This file is updated annually and contains key documents like articles of association or partnership deeds.

A type of working paper that contains certified copies of legal documents like the Memorandum of Association (MoA), Articles of Association (AoA) for companies, and Partnership Deeds for partnerships.

A significant advantage of an audit program is that it ensures that all essential parts of the audit are carried out comprehensively, reducing the risk of overlooking important aspects.

Audit programs make it easier for auditors to track the progress of the work. They can easily see which tasks have been completed and what remains to be done.

One of the main benefits of audit programs is that they allow for a clear division of work among audit team members. Each individual can focus on specific tasks, improving efficiency.

A well-structured audit program provides guidance and a checklist for junior audit staff, helping them conduct their work effectively and consistently.