Audit Planning: What Is, Example, Process

Follow us on LinkedIn

The auditing process involves assessing a client’s financial statements to form an audit conclusion. There are several stages involved in this process. Primarily, auditors perform the most critical tasks during the fieldwork stage of an audit. However, they must also have a plan to execute during this stage. This plan falls under the audit planning process.

What is Audit Planning?

Audit planning is a stage during the audit process that involves developing an outline for an audit assignment. It allows auditors to lay the foundation for future audits. Usually, it entails figuring out the audit procedures and techniques to use based on several factors. This plan helps auditors manage their audit workflow and reduce audit risks.

Add your business to our business directory https://harbourfronts.com/directory/ Add your business. Also check out other businesses in the directory

Audit planning is the first stage during an audit engagement. Auditors conduct this stage to ensure they identify the critical areas in the financial statements. Similarly, it allows them to allocate sufficient resources to those areas. On top of that, it also enables auditors to identify areas that may include material misstatements. Overall, audit planning allows for the coordination of the audit process.

How does Audit Planning work?

Audit planning is the first step during an audit engagement. It involves various stages which are essential to developing an outline. Usually, the audit planning process requires auditors to create an audit strategy first. This process requires them to set the scope, timing, and direction of the engagement. On top of that, it also helps allocate resources for specific areas and manage those resources.

Once auditors develop an audit strategy, they can devise an audit plan. This plan is more specific and detailed than the former. Usually, it involves various processes. For example, it includes the nature, timing, and extent of risk assessment procedures. On top of that, it also consists of the audit procedures that auditors expect to perform.

The audit plan also involves other procedures that auditors must perform to conform to the ISAs. Primarily, audit planning requires auditors to develop an audit strategy. Based on that strategy, they must become more specific and include detailed steps to achieve the goals. Audit planning may differ from one client to another based on the nature of the work. However, it involves a similar process.

What are the advantages of Audit Planning?

Audit planning provides various benefits to auditors and helps them achieve their goals during an audit. However, its advantages are more specific than that. Some of those include the following.

  • Helps identify critical areas and allows auditors to focus there.
  • Identifies areas where manual processes can be automated to increase assurance.
  • Allows audit firms to allocate resources efficiently.
  • Helps keep costs down to a reasonable level.
  • Aids in the smooth execution of the audit work in later stages.
  • Allows auditors to focus on and achieve their objectives for a specific engagement.
  • Ensures the timely completion of work without compromising quality.
  • Allows coordinating audit activities to ensure an efficient process.

Apart from these, audit planning can also have other benefits. The above does not constitute an exhaustive list of the benefits of audit planning.

Conclusion

Audit planning is the first stage in an audit engagement. It allows auditors to form an outline for an audit. Primarily, audit planning involves developing an audit strategy and audit plan. The former sets the layout for the whole process. On the other hand, the audit plan creates a detailed outline based on the strategy. Audit planning can have several benefits, as listed above.

Further questions

What's your question? Ask it in the discussion forum

Have an answer to the questions below? Post it here or in the forum

LATEST NEWSChina’s economy shows sparks of life, despite persisting weakness in troubled real estate sector
China’s economy shows sparks of life, despite persisting weakness in troubled real estate sector

BEIJING (AP) — China’s economy showed more signs of reviving in October as retail sales and manufacturing picked up though the property sector remained sluggish, the government said Wednesday. Factory output rose 4.6% from a year earlier in October, while retail sales jumped 7.6%, helped…

Stay up-to-date with the latest news - click here
LATEST NEWSCuban private grocery stores thrive but only a few people can afford them
Cuban private grocery stores thrive but only a few people can afford them

HAVANA (AP) — Until recently, the space was the one-car garage of a private home in Cuba’s capital, Havana. Today, it is a well-stocked, if small, grocery store whose big board at the gate entices shoppers with such offerings as cooking oil, tomato sauce, Hershey’s…

Stay up-to-date with the latest news - click here
LATEST NEWSRail Vikas Nigam shares climb on ₹311 crore Central Railway project win
Rail Vikas Nigam shares climb on ₹311 crore Central Railway project win
Stay up-to-date with the latest news - click here
LATEST NEWSUS, China pledge cooperation on climate following California talks
US, China pledge cooperation on climate following California talks
Stay up-to-date with the latest news - click here
LATEST NEWSChina's factory output, consumption beat forecasts but property still a drag on economy
China's factory output, consumption beat forecasts but property still a drag on economy
Stay up-to-date with the latest news - click here

Leave a Reply