In planning the audit of a new client, the auditor should carry out the following procedures.
1. Carry out a preliminary review of the client. This will involve obtaining a good
understanding of the nature of the client’s business.
2. Discuss with management to obtain an understanding of the management structure and a general feel of the current operating circumstances of the client and any factors that affect client’s procurement and internal control system.
3. Communicate with previous auditor of the client and obtain from him all the information that is relevant to the audit of the new client.
4. Seek to obtain a preliminary understanding of the nature of the clients’ procurement and internal control system. This assists determine the extent to which the auditor will rely on the client’s internal control system.
5. Consider any procurement standards and legislations that could have an impact on the audit of the new client.
6. The audit senior should check the nature and timing of reports and other communications of the client so that such timings can be accommodated in the audit plan. E.g. dates of the AGM, stock takes and when management reports are ready.
7. The audit senior should determine the number of audit staff required, their experience and any special skills required and the timing of the audit visit.
8. Prepare an audit planning memorandum that summarizes the scope of the work under the engagement and the strategy to be followed to meet the client’s needs.
