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Updated on October 3, 2015




It’s a vital area of the audit primarily conducted at the beginning of audit process to ensure that

Appropriate attention is devoted to important areas

Potential problems are promptly identified

Work in completed expeditiously

Work is properly coordinated

The plan developed will be revised as necessary during the course of audit

Audit Principal

Auditor should perform the audit with an attitude of “Professional Skepticism” recognizing that circumstances may exist, which cause the financial statements to be materially misstated, such circumstances include.

Inherent limitations of audit

Inherent limitation factors of accounting and internal control system

Fact that most audit evidence are persuasive rather that conclusive

Judgments involved in accounting and audit work


It involves developing a general strategy and detailed approach for expected timing nature and extent of audit.


Overall Plan

It’s the general strategy for audit, which sets the direction for audit, describe the expected scope and conduct of audit and provides guiding for the development of audit programme.

Audit Programme

Detailed set of instructions to implement overall plan for the nature, timing and extent of audit procedure.

General Planning Matters

The following administrative details of an audit should be considered while developing audit plan.


Use of IT

Time budgets

Subsidiary objectives of the assignment


When planning an audit engagement partners or manager has to considers many practical areas like


Client management

Location of the audit

Dead lines


For the selection of audit staff for a particular assignment following considerations should be made.

Appropriate level of qualification

Reasonable experience and expertise

Availability of staff

Relationships with client and within staff members

Boarding and lodging requirements

Client Management

The management of the client may have preferences regarding audit staff. Audit manager should consider their recommendations in the light of independence rule to decide the changing of audit team as consistency of audit staff helps audit efficiency.


Following are important issues

Locations of different premises of client e.g. factory, admin office

Mobility of audit staff

Location of audit review by manager engagement partner

Location of audit staff to each site

Liaison with client staff to ensure each site visits in congenial.

Dead Line

It is important that the auditors know the dead lines and the key dates:

Dates of financial statements approval

Date of main audit visit

Date of stock

Date of manager review

Date of engagement partner’s review

Date of engagement partner’s post audit meeting with client management

Date of which audit report is due to be signed

Date of AGM

Uses Of IT

There are several factors to be considered

whether the client has computerized system

if so whether the auditor will make use of CAATS

whether auditor will use computer for making working papers

if so whether audit team is appropriately equipped

Time Management

Audit must be cost effective therefore, the time to be taken to conduct each part of the audit is to be estimated and the fee set accordingly it is important that

Audit team is aware of time budget

Audit team record variance from time budget. The time budgets will be based on issues such as:

a) Prior years time record

b) Risk assessment

c) Materiality consideration

Subsidiary Objectives

Along with the key purpose of audit i.e. to express an opinion on the financial statements, there may be certain other objectives of audit assignment e.g.

Report on weakness of internal control system

Report to be included in prospectus.

Other ancillary service to be mentioned (recommendation for improvement in compliance with law and regulations.


Overall audit plan describes the expected scope and conduct of the audit:

Factors Affecting The Form And Content Of Overall Audit Plan

Size of the entity.

Complexity of the audit

Specific methodology and technology (e.g. computers) used by the auditor.

Matters To Be Considered In Overall Audit Planning

a) Knowledge Of


General economic factors and industry conditions

Important characteristics of the entity, its business

Performance and reporting requirements and changes therein

Level of competence of management

b) Understanding The Accounting And Internal Control System

The accounting policies adopted and change therein.

The effect of new accounting or auditing pronouncements

The auditor’s cumulative knowledge of internal control and expected emphasis of tests of control and substantive procedures.

c) Risk And Materiality

The expected assessment of inherent and control risk and identification of significant audit areas.

The setting of materiality level.

The possibility of material misstatement

The identification of complex accounting areas

d) Nature, Timing And Extent Of Procedure

Possible change of emphasis of specific audit areas

The effect of information technology on the audit

The work of internal auditing and its effect on external auditing

e) Coordination, Direction, Supervision And Review

The involvement of other auditors

The involvement of experts

The number of locations

Staffing requirements

f) Other Matters

Going concern assumption

Conditions requiring special attention such as related parties

Terms of engagement and any statutory responsibilities

The nature and timing of reports or other communication

Audit Program

Audit program ensures that the work is carried out in accordance with audit plan

Meaning And Objective Of Audit Program

These are written instruction, which lay down the procedures to be performed by the assistants in order to implement the audit plan. It helps in controlling proper execution of the audit work. It may also contain the following.

In Preparing The Audit Program Following Points Should Be Considered

Audit objectives for each area; and

An hourly time budget for various audit areas or procedures.

Assessment of inherent and control risks

Required level of assurance from substantive procedures

Timing of tests of controls and substantive procedures

Availability of assistants

Involvement of other auditors or experts

Assistance from client

Update The Plan

Plans should be revised during the course of audit. Audit planning is a continuous process because of changes in conditions. Circumstances ma causes us to alter the plan; therefore, it is important to record the significant changes.

Audit Planning Memorandum

APM is documentary evidence that the adequate planning is carried out. The audit-planning memorandum should include intended audit approach, risks evaluation, materiality levels, timetable, staffing requirement, and consideration of going concern basis and client’s use of computer systems.

For the above it is apparent that audit plan and APM are the same things.


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    • Sara Algoe profile image

      Sara Algoe 5 years ago from Phoenix, Ariz

      Thanks for visiting. Please share it with others.

    • Sara Algoe profile image

      Sara Algoe 5 years ago from Phoenix, Ariz

      Thanks Mamutse Jemitias

    • profile image

      Mamutse Jemitias 5 years ago

      your report is generous.It could benefit aspiring incumbents if u specify certain critical issues.