Professional Documents
Culture Documents
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One type of audit plan is developed to describe the nature, timing, and extent of further audit
procedures to be performed to assess the risk of material misstatement at the financial statement
and the assertion level. It will identify the relevant financial statement assertions of existence,
occurrence, completeness, cutoff, rights and obligations, valuation and allocation, accuracy,
classification, and understandability for the significant financial statement accounts and
disclosures of an audit client. Another type of audit plan is a substantive audit plan. It would
contain a list of audit procedures for gathering evidence related to the relevant assertions
identified for an audit clients significant financial statement accounts and disclosures. The
substantive audit depends almost exclusively upon the assessment of risk at an audit client.
An audit plan (formerly referred
to as an audit program ) is a list of the audit procedures that auditors need to
perform to
gather sufficient appropriate evidence on which to base their opinion on the
financial
statements. The procedures in an audit plan should be stated in enough detail to
instruct
the assistants about the work to be done. (You will see detailed audit plans later in
this
textbook.) pg. 51
An audit plan is a comprehensive list of the specific audit procedures that the audit
team
needs to perform to gather sufficient appropriate evidence on which to base their
opinion
on the financial statements. The professional standards require that the auditor plan
each audit engagement, including the establishment of an overall strategy for each
audit
engagement. Specifically, when planning the engagement, the auditor needs to develop
and document a plan that describes the nature, timing, and extent of further audit
procedures
to be performed to assess the risk of material misstatement at the financial statement
and the assertion level. Next, the auditor must carefully plan the nature, timing, and
extent
of control tests and substantive tests that are designed to mitigate these risks to an
acceptable
level. This planning process is required to be led by the assigned engagement partner.
Pg. 84
the evaluation of the risk of material misstatement is likely to vary for different
financial statement accounts and may even vary for different classes of significant
transactions related to the same financial statement account. Ultimately, the audit plan
will need to identify the relevant financial statement assertions (i.e., existence,
occurrence,
completeness, cutoff, rights and obligations, valuation and allocation, accuracy,
classification, and understandability ) for the significant financial statement accounts
and