Purposes or Advantages of Audit Planning and its strategy

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'THE OBJECTIVE OF THE AUDITOR IS TO PLAN THE AUDIT SO THAT IT WILL BE PERFORMED IN AN EFFECTIVE MANNER.' (ISA 300 PLANNING AN AUDIT OF FINANCIAL STATEMENTS). PLANNING OBJECTIVES ARE:
  •          Appropriate attention to important areas
  •          Identify potential problems
  •          Organises and manages the audit
  •          Proper staffing and work assignment
  •          Coordination with other parties



Whilst the strategy sets the overall approach to the audit and the plan fills in the operational details of how we achieve the strategy.It is vital that both the strategy and the plan and any consequent updates to them are fully documented as part of audit working papers.Facilitate review



The audit strategy

IT SETS THE SCOPE, TIMING AND DIRECTION OF THE AUDIT. IT ALLOWS THE AUDITOR TO DETERMINE THE FOLLOWING:
·         the resources to deploy for specific audit areas (e.g. experience level, external experts)
·         the amount of resources to allocate (i.e. number of team members)
·         when the resources are to be deployed
  how the resources are managed, directed and supervised, including the timings of meetings, debriefs and reviews.

The audit plan

IT SHOULD INCLUDE SPECIFIC DESCRIPTIONS OF:
·         The nature, timing and extent of risk assessment procedures.
·         The nature, timing and extent of further audit procedures, including:
– what audit procedures we have to follow?
– who should do them?
– how much work we have to do(sample sizes, etc)?
– when the work will complete )?
-how to collect sufficient and appropriate evidence?
·         Any other procedures necessary to conform to ISA's.

Interim audits is a complete part way through a client's accounting year (i.e. before the year end). This allows the auditor to spread out their procedures and enables more effective planning for the final stage of the audit.
Interim audits normally focus on:
• documenting systems and
• evaluating controls.
It may be possible to:
• test specific and complete material transactions, e.g. purchasing new non-current assets
• attend interim inventory counts
• carry out an interim receivables circulation.
The final audit takes place after the year end.
and focuses on the remaining tests and areas that pose significant risk of material misstatement. This
usually involves concentration on year end valuations and areas where there is significant subjectivity.
For an interim audit the client normally needs  a sufficient size because this may increase costs. In argument to this, an interim audit should improve risk assessment and make final procedures more efficient.

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