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Audit Trails > Best Practices

castor komba, Teacher, Tanzania
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  Anonymous
 

Considerations for Overall Audit Plan

Here are the main things I found to be considered by an external auditor in developing the overall audit plan:

KNOWLEDGE OF THE BUSINESS
  1. General economic factors, Industry conditions affecting the entity’s business.
  2. Important characteristics of the entity, its business, financial performance and its reporting requirements. Including changes since the date of the prior audit.
  3. The general competence level of management.
THE ACCOUNTING AND INTERNAL CONTROL SYSTEMS
  1. The accounting policies adopted by the entity. Changes in those policies.
  2. The effect of new accounting or auditing rules or pronouncements.
  3. The auditor’s cumulative knowledge of the accounting and internal control systems. The relative emphasis expected to be placed on tests of control and substantive procedures.
RISK AND MATERIALITY
  1. The expected assessments of inherent and control risks. The identification of significant audit areas.
  2. The set up of materiality levels for audit purposes.
  3. The possibility of material misstatement or fraud. This includes experiences in past periods.
  4. The identification of complex accounting areas. Including those involving accounting estimates.
NATURE, TIMING AND EXTENT OF PROCEDURES
  1. Possible change of emphasis for specific audit areas.
  2. The effect of IT on the audit.
  3. The situation of internal auditing. Its expected effect on the external audit processes.
COORDINATION, SUPERVISION
  1. Any involvement of other auditors in the audit of parts of the entity like subsidiaries, branches and divisions.
  2. The involvement of experts.
  3. The number of locations.
  4. Staffing requirements.
OTHER MATTERS
  1. The possibility that the going concern assumptions may be subject to question.
  2. Conditions requiring special attention. For example the existence of related parties.
  3. The terms of the engagement. Any statutory responsibilities.
  4. The nature and timing of reports and other communications with the entity.

 
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