Audit Preparatory Procedures

Effective execution of any audit work requires appropriate planning and a well-designed audit programme. For effective audit planning and for designing appropriate audit programme, the auditor should prepare himself before the commencement of his audit work. For this purpose, the auditor should take the following steps:
 

 

1.    Review issues raised in the previous audit which can affect the current audit;

2.    Examine the effects of changes in legislation and/or accounting practice which affect the financial statement;

3.    Discuss with client’s personnel, changes in business activities and management and review management accounts;

4.    Identify changes in the accounting system of the client;

5.    Assess staff requirement and composition and timetable;

6.    Determine the involvement of experts and component auditors;

7.    Perform risk assessment and set planning materiality;

8.    Prepare audit programme;

9.    Determine or calculate initial sample sizes;

10. Prepare staff allocation and fee budget;

11. Discuss audit timetable with client;

12. Consult joint auditors on the efficient and effective execution of the audit.

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