Assignment 2: Audit Planning and Control It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public...

1) The auditor ought to a
ange his work to enable him to conduct a comprehensive audit
in an efficient and timely manner. Plans ought to be supported with information of the
client’s business.
Plans ought to be created to hide, among different things:
•acquiring information of the client’s accounting systems, policies and control
procedures;
•ascertaining the expected degree of reliance which can be placed on internal control;
•determining & programming the character, timing, and extent of all the audit procedures
to be performed; and
•coordinating with the team the work to be performed.
Plans ought to be additional developed and revised as necessary throughout the course of
the audit.
In establishing the audit strategy, the auditor shall:
•Identify the essential characteristics of the engagement that outline its scope;
•Ascertain the coverage and objectives of the engagement to a
ange the temporal order
of the audit & also the nature of the communications required;
•Consider the factors that, within the auditor’s skilled judgment, square measure
important in directional the engagement team’s efforts;
•Consider the results of preliminary engagement activities and, wherever applicable,
whether information gained on different engagements performed by the engagement
partner or team for the entity is relevant; and ascertain the character and extent of
esources which are necessary to perform the engagement.
The auditor shall develop an audit a
angements that shall em
ace an outline of:
•The nature, temporal order and extent of planned risk assessment procedures, as
determined beneath Audit Standards.
•The nature, temporal order and extent of planned additional audit procedures at the
assertion level, as determined beneath Audit Standards.
•Other planned audit procedures that square measure needed to be dispensed so the
engagement complies with Audit Standard's.
The auditor shall update and alter the audit strategy and also the audit a
ange as
necessary throughout the course of the audit. The auditor shall a
ange the character,
temporal order and extent of direction and supervising of engagement team members and
also the review of their work.
The overall audit a
angement and also the programme, however, stay the auditor’s
esponsibility. Audit programme could be a careful a
angement of applying the audit
procedures within the given circumstances with directions for the suitable techniques to
e adopted for accomplishing the audit objectives. to start out with, An auditor having
eference to the character, size and composition of the business and also the responsibility
of the inner management and also the given scope of labor, ought to frame a programme
that ought to aim at providing for a minimum essential work which can be termed as a
egular programme.
2) Performance ratios that we can use to determine which analytical test to perform is
profitability ratio & risk ratio, profitability ratio includes the gross profit ratio, net profit
atio, return on capital, operating profit ratio, and asset turnove
atio ratio, and all this
information generated will help the client in knowing how much the business makes from
all aspects. Risk ratio will help to know the gearing interest ratio & interest cover. The
information generated will be helpful determining the likelihood of the company being
able to pay back its loan installment's and interest thereon. Analytical procedures are
mostly used to evaluate financial datamostly of the company. The company has multiple
accounts to be tested, so we should test their assets & accounts receivable and for this the
analytical procedures to be used will be risk analysis, model based procedures & trend
analysis. The analytical procedures adopred would allow us to capture every essential
information so as to inform the client to be audited on effectiveness of company internal
controls. Risk analysis provides the auditor with information to form an opinion on the
possibility of material misstatements, if chances are there of its existence. According to
Loughran...