Audit Planning "NSA 300"

[nShrestha]

Definition: It’s a vital area of the audit, primarily conducted at the beginning of audit process to ensure that appropriate attention is given in important areas, potential problems are promptly identified, work in completed expeditiously and properly coordinated.

It Addresses the specifics of what, where, who, when and how:

• What are the audit objectives?
• Where will the audit be done? (i.e., scope)
• When will the audit(s) occur? (how long?)
• Who are the auditors?
• How will the audit be done?

Process of Audit Planning

It includes following procedures

• Knowledge of Client's Business
• Development of Audit strategies or overall plan (Who, when and how)
• Preparation of Audit Programme

Knowledge of Client's Business

Auditor must have following information of auditee before commencing any audit.

• What auditee's major business areas.
• Internal policies and internal control system followed by the auditee.
• Organizational structure and key personnel of the auditee.
• Financial system followed by the auditee.
• Understand the client's business risk
• Set materiality level and assess acceptable audit risk and inherent risk.

Audit Strategies/Overall Plan

Audit strategies tell the audit team about the followings;

• Risk and Materiality level
• Nature, timing and extent of audit procedures
• Where will the audit be done? (i.e., scope)
• When will the audit(s) occur? (how long?)
• Who will conduct the audit?
• Coordination, direction and supervision and review

Audit Programme

The auditor should develop and document an audit program setting out the nature, timing and extent of planned audit procedures required to implement the overall audit plan
It is a detail work plan of audit which includes list of all procedures and technique to be applied in the audit.

• Help junior staff to conduct audit
• Responsibility assignment
  
• Complete the task within time
• Avoid overlooking of major audit areas.