Audit Planning: Auditor's Main Objective
Audit Planning: Auditor's Main Objective
Audit Planning: Auditor's Main Objective
A first-time audit requires more work than a In designing an audit plan, the auditor
repeat engagement because of the problem should make a preliminary estimate of
associated with the verification of opening materiality. Materiality may be viewed
balances. as:
the largest amount of
PSA 510 requires the auditor to obtain sufficient misstatement that the auditor
evidence that could tolerate in the financial
the opening balances do not contain statements, or
misstatements that materially affect the the smallest aggregate amount
current year’s financial statements; that could misstate the financial
statements
the prior period’s closing balances have - materiality is a matter of professional
been correctly brought forward to the judgement and necessarily involves
current period or, when appropriate, quantitative (amount of item) and
have been restated; and qualitative ( nature of misstatement)
factors
appropriate accounting policies are
consistently applied or changes in o Importance of materiality in planning
accounting policies have been properly
an audit
accounted for and adequately disclosed.
- To determine the amount of evidence to
- Auditor may be able to obtain evidence accumulate
by reviewing the predecessor auditor’s - There’s inverse relationship between
working papers (auditor would also materiality and evidences.
consider the independence and - More evidences will be required to a low
reputation of predecessor auditor) peso amount of materiality
RISK
TIME BUDGET
- an estimate of the time that will be spent
audit in executing the audit procedures listed
- The audit should focus on; in the audit program
Enhancing the auditor’s understanding
Changes to audit plan and program
of the client’s business
Identifying areas that may represent - The overall audit plan and the audit
specific risks. program should be revised as necessary
during the course of the audit and the
reasons for significant changes would
be recorded.