Audit Planning - Coursework Example

Audit Planning Audit Planning Planning is usually an essential step for any individual or organization in ensuring efficient working in their operations. Auditors are not exempted from the planning exercise. Auditors have to plan prior to their practise to ensure that they lay audit strategies that would enable them perform the auditing efficiently. Planning helps the auditor to identify and devote the necessary attention to areas of importance, identify and resolve time related problems and more importantly organize and manage the audit engagement in an effective and efficient way (Granberg & Hoglund, 2011).

For the success of the planning process, an auditor has to observe several steps. They include risk assessment, conducting a survey, planning meeting and definition of scope and objectives of the audit.Risk assessment is purposed to determine the risks involved in the planned audit. These risks if any can be evaluated to determine their levels and whether or not to be included in the current review. It also helps in deciding the extent of involvement of professionals with the specialised skills during the review process.

In most occasions, these assessments are discussed with the firm’s department to get their perspective on the risks identified and their views.A preliminary survey is conducted to allow an auditor get an overall understanding of the various departments within an organization and their operations. This helps in planning on time and resource allocation to the different audit areas. It also helps in identification of the direction, management and supervision of resources. This stage also enables auditors to design the strategy of the audit process for effective exercise and on time management.

After completion of the survey, a meeting with the organization’s heads is usually convened. This usually is carried out to discuss the strategies for the audit, and ensure that the information gathered during the survey is accurate and reviewing the level of risk assessed. Discussion of the audit scope and objectives is done at this stage. Documentation of the overall audit strategy and plan is compiled, and then the review process is then rolled to the firm.An effective audit process can be executed if there exists a clear understanding of the client’s business operations.

It is usually a challenge for many auditors to perform their operations without having knowledge of their client’s business. It is a requirement in the International Standards on Auditing for the auditor to have knowledge about the company and its environment (ISA 315), as this will give them professional judgement during the auditing process. An auditor can conduct analysis on the companies balance checks, assets and liabilities and the company’s risks to have an understanding of the client’s business.

He/she can also use a questionnaire to acquire necessary information on both internal and external forces within the company. The information aids in understanding the company’s internal and external environment. Auditors can also obtain information by going through the company’s journals, newspapers, the internet and even annual reports (Granberg & Hoglund, 2011).ISA 315 also requires that all the members of an audit team be acquitted with the potential risk misstatements in every client’s financial statements.

This risk assessment is important since it determines the quantity and quality of evidence that needs to be obtained and the number of staffs to be involved (Granberg & Hoglund, 2011). Assessment are done on both internal and external factors. It includes risks communicated by management and also audit department on annual stake holder’s survey. Concerns about risks that are observed by financial auditors, federal agency auditors and even legislative auditors during an external audit that gives insight into the company’s operations.

In carrying out risk assessments at the audit planning stage, several components have to be considered including defining the context, risk identification, risk analysis, risk evaluation, identification and evaluation of existing controls, communication and consultation on the risks, monitoring and review on regular basis, and filing the risks for further review. These components ensure success in risk assessment process as part of the audit planning process. ReferenceGranberg, L. & Hoglund, L. (2011).The auditors’ way to acquire knowledge about a company’s environment.

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