Develop an overall audit plan
Principles of the overall plan and audit program
After the preliminary planning, the development of a general audit plan begins, in which the expected scope and procedure for conducting the audit should be described. When developing a general plan and an audit program, the following principles can be singled out:
• the principle of complexity , meaning the coordination of all stages of work from preliminary planning to drawing up a plan and an audit program;
• the principle of continuity, expressed in the interrelation between strategic and tactical audit planning, especially when the audit firm with the client has been permanently working for a long time (a year or more);
• the optimality principle, providing for the development of several options and the choice of the optimal plan;
• a mobilizing principle, based on real, but effective norms of using specialists' time.
The overall audit plan should be sufficiently detailed, since subsequently an audit program is developed on its basis. The form and content of the overall audit plan may vary depending on the scope and specificity of the entity's activities, the complexity of the audit and the specific techniques used by the auditor.
The overall audit plan is developed by the head of the audit organization based on the following data:
1) type of activity of the entity being audited, including:
• general economic factors and their impact on the activities of the audited entity;
• features of the entity being audited, the state of its accounting (financial) reporting, taking into account changes that have occurred since the date of the previous audit;
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• Overall level of leadership competence;
2) the organization of the accounting system and internal control:
• accounting policies of the entity being audited and its changes;
• Accounting for new regulatory legal acts in the organization of the accounting system of the audited entity;
3) risk and materiality, including:
• Expected estimates of inherent risk and control risk;
• establishing the levels of materiality for the audit;
• the possibility of material misstatement or unfair act;
• Identify subjectivity in the work of the accountant;
4) type, time frame and scope of procedures, including:
• the particular importance of the various accounting sections for conducting audits;
• the impact on the audit of the availability of a computer accounting program and its specificity
• the presence of an internal audit of the audited entity and its impact on external audit;
5) coordination and direction of work, including:
• involvement of other auditors in the audit of branches and divisions of the audited entity;
• Attraction of outside experts;
• accounting for the number of territorially separate units of the audited entity and their territorial distance from each other;
• Determination of the number and qualifications of specialists needed to work with this audited entity;
6) Other issues, including:
• the possibility that the assumption of the continuity of the entity's activities may be in question;
• the presence of related parties, the possibility of bankruptcy, etc.
• features of the contract on rendering of auditor services;
• the term of the auditor's employees and their participation in the provision of related services to an audited person, etc.
In the process of developing the plan, the auditor can, if necessary, assess the effectiveness of the internal control system. He adjusts the scope of the audit in case of revealing unreliable information in the process of internal control. If the revision of the general plan increases the work to a small extent, changes in the plan may be made by the lead auditor without informing the management of the economic entity. When, however, the revision of the general plan leads to a significant increase in the scope of work, changes to the plan must be made solely in agreement with the management of the organization.
The plan should necessarily provide for a method of conducting an audit - continuous or selective. When deciding to conduct a selective audit, the order of the audit sample is determined. It can be based on statistical methods and professional experience in making managerial decisions. For qualitative work, it is necessary to develop tests of control tools and substantive procedures.
When developing a general plan, the auditor establishes an acceptable level of materiality in order to identify significant distortions. The concepts of materiality and its relationship with audit risk are established by FPSAD No. 4 "Materiality in the audit."
The main and final part of the work on the plan is the formation of a team of auditors, their distribution in accordance with their professional qualities and creativity in specific areas of the audit, briefing, familiarization with the audit plan and program. An approximate view of the overall audit plan is presented in Appendix 5.1.
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