AUDIT PLANNING PROCEDURES & DOCUMENTATION Audit planning refers to the planning by the auditor to enable them to conduct an effective audit in an efficient & timely manner & includes planning about area, scope, depth of transactions to be audited, time to be devoted, persons to be deployed for audit etc. Factors : complexity of Audit , The environment in which the entity operates , Knowledge of client’s business , previous experience with the clients AAS 8 identities the sources from which knowledge about client’s business can be acquired. Internal reports , external reports , discussions with management, visit to client’s premises.
ADVANTAGES OF AN AUDIT PROGRAMME• Guidance to Assistance• No omission or repetition of work• Specific instructions regarding audit procedures• Delegation and supervision of work• Allocation and responsibilities of work• Evidence in court• Timely completion of Audit• Flexibility audit programme
DISADVANTAGES & OVERCOME• Mechanical work • Changes in control• Work to Rule • Changes in operations &• Defense against deficiencies practices• Insufficient evidence in court • Assistant’s suggestions• Rigid time table • Revision• Fixed Audit programme • Additional tests
AUDIT NOTEBOOK• It is a notebook maintained by the auditor fir recording a large variety of matters observed during the course of audit. It is a part of record of the auditor available for future reference. It contains errors, difficulties, doubtful queries of various accounting records. It is also called as Audit memoranda. It is written record of the queries made, replies received there to, correspondence entered into etc.• Structure of the audit notebook• Contents of audit notebook• Auditing techniques : Inspection Observation Enquiry & confirmation Computation Analytical review
• PRECAUTIONSTEST CHECK +VE & -VE &precautionsDISADVANTAGES • Classify & stratify transactionsBiasedUnauthentic • SystemsGreater RiskUnscientific • Internal controlChange in level • PlanningADVANTAGESAudit objective • Bias freeExpertiseException principle • Avoidance of unsuitable areasAssessment of risk • No of transactionsSaving in timeReduction in work load • Significance of ErrorMoral check
AUDIT SAMPLE • EVALUATION OF SAMPLE According to AAS – 15 audit sampling means the RESULT application of audit procedures to less than 100% of the items within an account balance or class of • Analysis of errors in the sample transactions to enable the auditor to obtain & evaluate audit evidence about some characteristic • Projection of errors of the items selected in order to form or assist in forming conclusion concerning the population. • Reassessing sampling risk FACTORS: Audit Objectives Population Audit evidence METHODS OF SELECTING SAMPLE ITEMS: Random selection Systematic selection Haphazard selection
OTHER• Discussion of the auditor with the client for planning an audit• Overall audit plan• Audit programme• Steps taken before commencement of audit• Working papers• Ownership , custody, access of the other parties to audit• Overall audit approach• Sampling risk• Tolerable error• Expected error• Liability of the auditor conducting audit passed on samplr