Audit planning is defined as the process in which strategy is designed to conduct the expected result which also defines the scope of audit inside the company. The size, nature and the time for the audit plan may vary. It depends on the size of the business. If the business is spread to the large scale, the strategy making and its implementation will take more time and also the overall scope of audit plan may also increase. It is basically the step by step methodology where the auditor in control reviews the financial process and the internal environment along with the engagement preparation. We can also define audit plan as the designing of processes which will help to review the financial events. The aim of doing audit planning is primarily to make the procurement records error free and secondly to spend less time reviewing or cross checking the events. Planning in audit facilitates the overall business and the most hectic job for rectifying the accounts will now be done in lesser time. Preparing the audit plan for your company can be the most stressful or frustrated job especially when there is no strategy been implemented previously. During the planning portion of the audit, the auditor notifies the client of the audit, discusses the scope and objectives of the examination in a formal meeting with organization management, gathers information on important processes, evaluates existing controls, and plans the remaining audit steps. In audit planning, an auditor goes through these basic steps:
1. He has to conduct mock audits
2. Define the roles and responsibilities of the auditors
3. Should conduct risk assessment for the company
4. Close out the audit findings.
These would help the company’s auditor to easily assess the business which their firm performs. The audit planning helps to notate major risk in audits inside the company. The protocols the company’s internal financial events, another job for the auditors are to control and get the overall testing done before and after the year’s end. These strategies are very much important for the company’s efficiency.
Objectives of Audit Planning
Effective planning of an audit is essential to ensure that auditors focus on the areas of greater risk and carry out their audits efficiently.
Adequate audit planning helps to:
• Ensure that appropriate attention is devoted to important areas of the audit.
• Ensure that potential problems are promptly identified;
• Ensure that the work is completed expeditiously;
• Utilize the assistants properly; and
• Co-ordinate the work done by other auditors and experts.
In planning his audit, the auditor will consider factors such as complexity of the audit, the environment in which the entity operates his previous experience with the client and knowledge of the client’s business.