1. What is the general objective of planning for an audit?

The general objective in planning an audit is to facilitate the effective achievement of

the aim of an audit: the expression of an opinion on the fairness of the financial statements.

By planning the audit, the auditor is able to determine the amount and type of evidence
and audit procedures required to enable auditor to obtain reasonable assurance that the
Financial statements are free from material misstatement, whether due to fraud or error

2. Contrast the following terms:

a. Audit strategy

The overall audit strategy sets the scope, timing and direction of the audit, and
guides the development of the more detailed audit plan. The establishment of the overall
audit strategy involves:

i. Determining the characteristics of the engagement that define its scope;

ii. Ascertaining the reporting objectives of the engagement to plan the timing of
the audit and the nature of the communications required; and
iii. Considering the important factors that will determine the focus or direction of
the engagement team's efforts.

b. Audit plan

An audit plan is an overview of the expected scope and conduct of the audit. The
overall audit plan sets out in broad terms the nature, timing, and extent of the audit
procedures to be performed. While the audit plan varies for each client, it should be
sufficiently detailed to guide in the development of an audit program.

c. Audit program

An audit program sets out the nature, timing and extent of planned audit
procedures required to implement the overall audit plan. In effect, audit program executes
the audit strategy. It sets out in detail the audit procedures to be performed in each
segment of the audit. The audit program serves as a set of instructions to assistants involved
in the audit and to control and record the proper execution of the work.

The form and content of the audit program may vary for each engagement, but it
should always include detailed list of audit procedures that the auditor believes are
necessary to accomplish the audit objectives

3. Enumerate the different planning procedures. Explain each one briefly.

a. Obtaining an understanding of the client and its environment
b. Assessing the possibility non-compliance
c. Establishing materiality and assessing risk.
 d. Identifying related parties.
e. Performing preliminary analytical procedures
f. Determining the need for experts
g. Development of the overall audit strategy and detailed audit plan.
h. Preparation of preliminary audit programs.

4. What is the purpose of analytical procedures performed during audit planning?

Analytical Procedures used in planning an audit enhances the auditor’s understanding of

the client’s business and identifying areas that may represent specific risks. The auditor's
understanding of the client's business enables the auditor to develop certain expectations
regarding the client's financial position and performance during the period. If the figures
reflected in the financial statements do not conform to the auditor's expectations, questions can
be raised about the reliability of the financial statements or about the accuracy of information
obtained about the entity's business. Thus, analytical procedures performed in the planning
phase of the audit are useful for confirming or challenging the auditor's understanding of the
client's business