Auditing

ISA PSA 315 (Redrafted), ‘Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement”, provide guidance on the engagement team’s discussion of the susceptibility of the entity to material misstatements of the financial statements.

AUDIT PLAN

audit plan ( audit planning memorandum ) A document outlining the audit strategy to be applied to each manageable area of the accounting system and financial statements of an audit client.

The audit plan is more detailed than the overall audit strategy in that it includes the

nature, timing and extent of audit procedures to be performed by engagement team

members. Planning for these audit procedures takes place over the course of the

audit as the audit plan for the engagement develops. For example, planning of the

auditor's risk assessment procedures ordinarily occurs early in the audit process.

However, planning of the nature, timing and extent of specific further audit

procedures depends on the outcome of those risk assessment procedures. In

addition, the auditor may begin the execution of further audit procedures for some

classes of transactions, account balances and disclosures before completing the

audit plan of all remaining further audit procedures.

DIRECTION, SUPERVISION AND REVIEW

The nature, timing and extent of the direction and supervision of engagement team

members and review of their work vary depending on many factors, including:

•

The size and complexity of the entity.

•

The area of the audit.

•

The assessed risks of material misstatement (for example, an increase in the

assessed risk of material misstatement for a given area of the audit ordinarily

requires a corresponding increase in the extent and timeliness of direction and

supervision of engagement team members, and a more detailed review of their

work).

•

The capabilities and competence of the individual team members performing

the audit work

DOCUMENTATION

A13. The...