PA503:FUNDAMENTAL OF AUDITING

NUR DALILA BT MOHD ZAMRI(10DAT11F2016)NOR HAZWANI FASIHAH BT MOHAMMAD NAZRI(10DAT11F2046)NORFARAH AQILAH BT MOHAMAD SALEH(10DAT11F2017)NOR AFIERA BT MOHAMMAD HAJI(10DAT11F2031)NUR AMALINA BT IZAHAR(10DAT11F2021)

3.0 AUDIT PLANNING

3.1 Understand the preliminary engagement activities

3.1.1 Determine the purpose of statutory

engagement 3.1.2 Explain the nature of acceptance of engagement 3.1.3 Discuss the changes in the engagement

3.1.1 PURPOSE OF STATUTORY ENGAGEMENT

Based on campany act 1965 : - all company must prepared an audited

report- Every company must appointed an

external auditor- the company must appointed a

qualified external auditor for their company.

3.1.2 Nature of acceptable engagement

Accept client and perform initial audit planning

Understand the client’s business and industry

Assess client business risk

Perform preliminary analytical procedures

Set materiality and assess acceptable audit risk and inherent risk

Understanding internal control and assess control risk

Gather information to assess fraud risks

Develop overall audit plan and audit program

3.1.3 Changes in the Engagement

The auditor should not agree to a change in the terms of the audit engagement when no reasonable justification for doing so exists.

If, prior to completing the audit engagement, the auditor is requested to change the audit engagement to an engagement for which the auditor obtains a lower level of assurance, the auditor should determine whether reasonable justification for doing so exists.

If the terms of the audit engagement are changed, the auditor and management should agree on and document the new terms of the engagement in an engagement letter or other suitable form of written agreement.

If the auditor concludes that no reasonable justification for a change of the terms of the audit engagement exists and is not permitted by management to continue the original audit engagement, the auditor should ;

a. withdraw from the audit engagement when possible under applicable law or regulation,

b. communicate the circumstances to those charged with governance,

c. determine whether any obligation, either legal, contractual, or otherwise, exists to report the circumstances to other parties, such as owners, or regulators.

3.2 Familiar with the letter of engagement

3.2.1 Describe the purpose of the engagement letter

3.2.2 Discuss the content of the letter

3.2.1 Purpose of the engagement letter

To make agreement between the CA firm & the client for the conduct of the audit & related services

To avoid misunderstanding To informing the responsibility for both

side To informing that the auditor cannot

guarantee that all acts of fraud will be discovered

3.2.2 CONTENT OF THE LETTER

Objective of the engagement Responsibilities of the auditor and

management Limitations and scope of engagement Timing of the engagement Agreement of fees

3.3 Appreciate the nature of audit planning

3.3.1 Define the meaning of audit planning 3.3.2 Describe the audit planning objectives 3.3.3 Justify the factors to be

considered when planning the audit

3.3.1 Meaning of Audit Planning

ISA 300 states that the auditor should plan the audit work so that the audit will performed in an effective manner.

Reason;› To obtain sufficient competent evidence› To help keep audit costs reasonable› To avoid misunderstanding

3.3.2 Audit Planning Objective

Appropriate attention is devoted to the different areas of the audit.

Potential problems are identified. Work is completed expeditiously. The proper tasks are assigned to the

members of the audit team and, if outside experts are engaged, that their work is properly coordinated.

3.3.3 Factors to be considered when planning the audit

Knowing of the business Understanding the accounting and internal

control systems Risk and materiality Nature, timing and extent of procedures Coordination, direction, supervision and

review Other related matters such as ‘going

concern assumption, existence of related parties and other statutory responsibilities.

THANK YOU

PREPARED BY;ILAWANIKILAHFIRALYN

REFERENCE ; INTRODUCTION TO AUDITING, MALAYSIA

(CCH ASIA PTE LIMITED)