According to the lecture, is planning documentation the last step of the audit planning?

Why or why
not? *

According to the NO, audit planning is continuous and cumulative so there is last step…

Planning is not a discrete phase of an audit but, rather, a continual and iterative process that might
begin shortly after (or in connection with) the completion of the previous audit and continues until the
completion of the current audit.

From the start up to the end

According to the lecture, planning documentation should begin the moment you started to ask
questions about the entity, even simple questions asked to a utility man should be documented,
because it could play a crucial role to understand how the business operates, which assist in determining
the scope of the audit procedures to be performed to perform an effective and efficient audit. So, to
answer the question planning documentation is not the last step of the audit planning but rather the
main outputs or the last step of audit planning are formulating the audit plan, audit program, and time
budget using the compiled documentations that were organized and accumulated during audit planning.
Audit plan is the overview of the expected scope and conduct of audit, audit program executes the audit
strategy, and time budget is the estimate of the time that will be spent in executing the audit
procedures listed in the audit program.

According to the lecture, planning documentation should begin the moment you begin asking questions
about the entity, even simple questions asked to a utility man, because it can play a critical role in
understanding how the business operates, which aids in determining the scope of the audit procedures
to be performed to perform an effective and efficient audit. To address the question, planning
documentation is not the final stage in audit planning; rather, the key outputs or final step in audit
planning are establishing the audit plan, audit program, and time budget utilizing the compiled
documentations and the summary that documents the main decisions taken that were arranged and
gathered during the course of audit planning. The audit plan provides an overview of the planned scope
and conduct of the audit, the audit program carries out the audit strategy, and the time budget is an
estimate of the time spent executing the audit procedures stated in the audit program.

What documentation can you do as part of understanding the client or entity? Upon your
understanding with the lecture, how will you document your tour of the client's facilities or systems?
*

Auditors should have expertise about the client's business and industry in order to conduct an
effective and efficient audit. Corporate documents such as meeting minutes, material sent to
shareholders or filed with regulatory authorities, promotional literature, internal management reports,
policy manuals, manuals of accounting and internal control systems, chart of account, job descriptions,
marketing, sales plan, and documented responses on employee and manager interviews, as well as the
entity's objectives, strategies, and related business risks should be used to document information about
the entity's operations to evaluate the reasonableness of the client’s estimates and procedures can be
selected with more assurance. Measurement of performance through past working papers and financial
reports should be documented, since this may generate pressure in management, which may inspire or
lead to financial statement falsification.

Moreover, one of the sources of information mentioned in the lecture video was a tour of the
client's facilities or systems, which can be documented through the System Notes and Walkthrough or
SNWT in a real-life audit situation using data flow diagrams, business process diagrams, and flowcharts
such as document flowchart, system flowchart, and program flowchart, which explains how a system
works, including the who, what, when, where, why, and how of data entry, data processing, data
storage, information output and system controls and all of which were discussed in our Accounting
Information System subject back in our 2nd year as BSAc students. 

Documented audit findings

Documented prior year working papers

System Notes and Walkthrough (SNWT) – using flowcharts

Corporate documents such as minutes of the meeting and financial reports

Written of documented responses on the interview with employees and managers

How can analytical procedures be helpful in assessing the risks in audit planning?

The basic premise underlying the application of analytical procedures is that relationships
among data may reasonably be expected to exist in the absence of known conditions to the contrary.
Particular conditions that can cause variations in these relationships include specific unusual
transactions or events, accounting changes, business changes, random fluctuations or misstatements.
Analytical procedures may be helpful in identifying the existence of unusual transactions or events, and
amounts, ratios, and trends that might indicate matters that have financial statement and audit
implications.

In performing analytical procedures as risk assessment procedures, the auditor develops

expectations about plausible relationships that are reasonably expected to exist. When comparison of
those expectations with recorded amounts or ratios developed from recorded amounts yields unusual
or unexpected relationships, the auditor considers those results in identifying risks of material
misstatement. However, when such analytical procedures use data aggregated at a high level the results
of those analytical procedures only provide a broad initial indication about whether a material
misstatement may exist. Accordingly, the auditor considers the results of such analytical procedures
along with the other information gathered in identifying the risks of material misstatement.

In the absence of established conditions to the contrary, the primary premise behind the use of
analytical procedures is that relationships between data may be fairly anticipated to exist. Specific
anomalous transactions or occurrences, accounting changes, company changes, random fluctuations, or
misstatements are all examples of factors that might generate deviations in these connections.
Analytical procedures may be useful in detecting unexpected transactions or occurrences, as well as
quantities, ratios, and patterns that might signal financial statement and audit problems.

The auditor establishes expectations regarding plausible linkages that are reasonably expected
to exist while executing analytical procedures for risk assessment methods. When the auditor compares
those expectations to recorded amounts or ratios calculated from recorded amounts, he or she looks for
odd or unexpected associations to discover material misstatement concerns. However, w When such
analytical procedures employ data aggregated at a high level, the results only offer a broad initial
indication of whether a major misrepresentation may occur. As a response, while determining the risks
of material misstatement, the auditor examines the findings of such analytical procedures, as well as the
other information acquired.