Certificate course in

Advance Auditing
By: CA Gautam Saluja
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Audit Planning Materiality Risk Assessment

i. Performing client i. Determining the basis of i. Identify Key Accounts and
acceptance procedures Overall Materiality Processes
ii. Understanding the ii. Calculating Overall ii. Perform Walkthrough
client’s business Materiality a. Identify the path of all
iii. Determining need of an iii. Calculating Performance type of transactions
expert Materiality b. Prepare a flowchart
c. Identify the Risks
iv. Preparing audit budget iv. Calculating the Audit
d. Identify the Controls
v. Allocating of work Misstatement Posting
iii. Prepare / Validate Risk
amongst the audit team Threshold (AMPT)
Control Matrix (RCM)
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Audit Planning New Engagement Recurring Engagement

i. Performing client • Perform background check • Perform independence checks of the
acceptance procedures (including independence) of the company, its director and key
ii. Understanding the company, its director and key management personnel
client’s business management personnel • Obtain details of any change in size,
• Understand the preliminary business complexity or circumstances
iii. Determining need of an of the company Validate / update the risk rating of
expert • Communicate with the previous the company
iv. Preparing audit budget auditor of the company
• Assign a risk rating to the company
v. Allocating of work (Say: Low, medium and high)
amongst the audit team
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Audit Planning New or Recurring Engagement

i. Performing client
• Obtain proposal to be appointed as auditors of the company
acceptance procedures • Reply to above proposal for appointment as auditors along with
ii. Understanding the eligibility certificate
client’s business • Obtain formal letter of appointment as auditors of the company
iii. Determining need of an • Reply to letter of appointment as auditors along with standard
expert Engagement Letter
iv. Preparing audit budget • Obtain copy of acknowledged Engagement Letter from the company
• Obtain copy of intimation sent to ROC
v. Allocating of work
amongst the audit team
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Audit Planning Nature of the business

i. Performing client
acceptance procedures Size of the company and its
Recurring New
ii. Understanding the management structure
Engagement >> Engagement >>
client’s business Update all the Perform all the
iii. Determining need of an Extent of IT involvement
steps steps
expert
iv. Preparing audit budget Legal and Regulatory Framework
v. Allocating of work
amongst the audit team
Competitive landscape
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Audit Planning Sector / Processes Expert needed

i. Performing client Real Estate and Construction Valuation
acceptance procedures Insurance Actuaries
ii. Understanding the
Highly automated processes IT
client’s business
iii. Determining need of an Engineering, procurement, and Expert with specific knowledge
construction (EPC)
expert
iv. Preparing audit budget Oil and Gas Expert with specific knowledge
v. Allocating of work Healthcare Expert with specific knowledge
amongst the audit team
And so on……
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Areas of Audit Staff Senior Manager Partner Total

Audit Planning
Planning 40 100 80 20 240
i. Performing client Materiality 0 10 5 2 17
acceptance procedures Risk Assessment 0 25 10 4 39
ii. Understanding the Walkthrough 200 200 50 10 460
client’s business Internal Controls 200 100 50 10 360
iii. Determining need of an Risk Re-assessment 0 10 5 2 17
expert Substantive Procedures 300 200 75 15 590
iv. Preparing audit budget Conclusion 0 10 50 15 75
v. Allocating of work Reporting 0 0 15 10 25
amongst the audit team Archiving 10 10 5 2 27
Total 750 665 345 90 1850
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Areas of Audit Oct Nov Dec Jan Feb Mar Apr May
Audit Planning
Planning
i. Performing client
Materiality
acceptance procedures
Risk Assessment
ii. Understanding the
Walkthrough
client’s business
Internal Controls
iii. Determining need of an
Risk Re-assessment
expert
Substantive Procedures
iv. Preparing audit budget
v. Allocating of work Conclusion
amongst the audit team Reporting
Archiving
Audit – Lifecycle
Audit Planning, Conclusion,
Materiality and Execution Reporting and
Risk Assessment Archiving

Materiality
i. Determining the basis of
Overall Materiality
ii. Calculating Overall
Materiality
iii. Calculating Performance
Materiality
iv. Calculating the Audit
Misstatement Posting
Threshold (AMPT)