Steps in Planning Procurement Audit

1. Basic discussions with the client about the nature of the engagement and the client’s business and industry are performed first, and the auditor meets the key employees, or new employees of a continuing client. The overall audit strategy or the timing of the audit may be discussed, but not the specific audit procedures.
2. Review of audit documentation from previous audits performed the procurement audit firm or a predecessor auditor (if the latter makes these audit documentation available) will assist in developing an outline of the audit program.
3. Ask about recent developments in the company such as mergers and new product lines which will cause the audit to differ from earlier years.
4. Interim procurement records are analyzed to identify procurement transactions that differ from expectations (based on factors such as budgets or prior periods (procurement planning = actual cost of the contract – planned contract cost). The performance of such analytical procedures is mandatory in the planning of an audit to identify accounts that may be misstated and that deserve special emphasis in the audit program.
5. Non-audit personnel of the procurement audit firm who have provided services (such as tax preparation) to the client should be identified and consulted to learn more about the client.
6. Staffing for the audit should be determined and a meeting held to discuss the engagement.
7. Timing of the various audit procedures should be determined. For example, internal control testing needs to be performed early in the engagement, inventory counts need to be performed at or near the balance sheet date and the client representation letter cannot be obtained until the end of the audit fieldwork.
8. Outside assistance needs should be determined, including the use of a specialist as required (a tax practitioner or an information technology (IT) professional) and the determination of the extent of involvement of the internal auditors of the client.

9. Pronouncements on procurement audit principles and audit guides should be read or reviewed to assist in the development of complete audit programs fitting the unique needs of client’s business and industry.
10. scheduling with the client is needed to coordinate activities. For example, client-prepared schedules need to be ready when the auditor is expected to examine them, and the client needs to be informed of dates when they will be prohibited from accessing bank safe deposit boxes to ensure the integrity of counts of securities held at banks.

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