The audit planning is a major part of audit works for both internal and external audits. A good audit planning will help the auditor to minimize its risks, improve audit efficiency, and meet its objective at the minimum effort.
Auditors are required to prepare a proper audit plan to ensure that all audit risks are identified and correct audit strategies are deployed to detect all concerning risk areas.
It is essential for the auditor to prepare a good strategic audit plan. If the plan is well prepared, all kind of audit risks is identified and detected.
This will help the auditor to minimize the audits risks of issuing the incorrect opinion to financial statements.
Base of Audit Planning
Audit planning should be based on the following:
- Complete accounting knowledge of client’s business
- Reliability of internal control system
- Programming of audit procedures and
- Co-ordination of staff
Development of Audit Plan
The following points need to be considered at the time of preparation of an audit plan:
- Auditor Engagement terms
- Statutory responsibility of Auditor
- Co-ordination with other Auditors
- Internal control system of branches and subsidiaries
- Reliability of internal control system of an organization
- To mark important audit areas
- Impact of legal rules
- Nature and timing of reports