presentation 2 - planning and internal control evaluation
TRANSCRIPT
![Page 1: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/1.jpg)
Prepared by Marzanur Rahman
Audit Planning and Control Evaluation
![Page 2: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/2.jpg)
Audit Planning and Control Evaluation
We have discussed regarding audit planning process in our previous session. Here, we will be focusing on planning procedure. We will what planning activity we need to perform as per Audit Practice Manual (APM)
![Page 3: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/3.jpg)
Audit Planning and Control Evaluation
Sl No. Document Title Reference No.
1 Audit Planning Summary C12 Acceptance Procedures C1.13 Audit Planning Checklist C24 Audit Planning Memorandum C35 Audit Planning Notes C46 Systems and Internal Control Summary C57 Review of Design And Implementation of internal
Controls C5.18 Audit Risk Summary C69 Audit Risk Checklist C6.1
10 Risk Response Summary C6.211 Specific Risk Action Plan C6.312 Detailed Risk Assessment C6.413 Preliminary Analytical Review C714 Materiality Summary C815 Comparison of Financial Statements C8.116 Accounting Work Planning 17 Sample Size Planning C9.218 Assignment Planning C9.319 Budget and Performance Summary C9.420 Job Progress Report C9.521 Opening balance and Comparative Checklist C 10
![Page 4: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/4.jpg)
Audit planning summary – C1
An overall strategy for audit has been established
An audit plan has been developed to reduce risk
Fraud risks have been consideredOverall strategy and audit plan have been
properlydocumentedAcceptance procedures are followed
properlyAudit planning checklist is followed
Professional skepticism
![Page 5: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/5.jpg)
Acceptance procedures –C1.1
We have discussed on acceptance procedure in our previous session
![Page 6: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/6.jpg)
Audit planning checklist – C 2
Strategic consideration – Financial reporting framework, industry specific requirements, group reporting etc.
Client back ground- ‘know your client checklist’, significant accounting policies etc.
Laws and regulations Audit risk General – materiality, external
confirmations, opening balance checklist, audit program etc.
Quality control- Ethical requirements, partner’s review, cold review etc.
![Page 7: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/7.jpg)
Planning memorandum C-3
Background information Scope of engagement Key personnel Timetable Key risk and responses at financial
statements level Key risk and responses at assertion level Outline the audit approach to the above
areas
![Page 8: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/8.jpg)
Notes of planning meeting – C4
• Attendees and date of meeting• Susceptibility of entity’s financial
statements to• material misstatement• Susceptibility of the entity to fraud• Other matters
![Page 9: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/9.jpg)
Systems and internal controls summary – C 5
Complete the basic questionaries' Document relevant systems and control Significant weaknesses and specific risk
action plan Internal control evaluation
![Page 10: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/10.jpg)
Review of design & implementation of internal controls – C 5.1
• Business area – FA, Payable etc.• Outline of information systems and
controls• Comment on implementation of controls• Client’s comments• Further testing required ?
![Page 11: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/11.jpg)
Audit Risk Summary – C 6
The audit risk checklist (C.61) Risk response (C6.2) and risk action plan
(C.03) for risks that may result in a material misstatement
Overall risk assessment at FS level
![Page 12: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/12.jpg)
Audit risk checklist – C 6.1
It is a guide to monitor whether appropriate risk response, risk action plan and overall risk at FS level have been considered to reduce the risk at an acceptable level.
![Page 13: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/13.jpg)
Risk response summary – C 6.2
Major risk factors of individual items e.g. tangible assets
Risk level ( High, Medium, Low) Justification of risk Audit approach and reference to program
![Page 14: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/14.jpg)
Specific risk action plan C- 6.3
Specific risk affecting the client Risk level ( High, Medium, Low) Management response Financial reporting areas and assertions
affected Audit approach Outcome
![Page 15: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/15.jpg)
Detailed risk assessment C-6.4
Industry conditions Regulatory environment Business operations Investments Financial reporting Fraud and error etc.
![Page 16: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/16.jpg)
Preliminary analytical review – C 7Analytical procedures mean evaluation of financial information made by a study of plausible relationships among both financial and non financial data. It has been used as part of risk assessment and as part of the final review process. It may be used as substantive procedures also.
Technique of analytical review:
o Ratio analysiso Simple comparisonso Examining related accountso Reasonableness testso Trend analysis etc
![Page 17: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/17.jpg)
Materiality summary C- 8
Range of turnover or gross assets
percentage of turnover or gross assets
Materiality ranges
TK.0-Tk. 500,000 3.00% Tk1-Tk.15,000
TK.500,001-Tk.1,000,000
2.50% Tk15,001-Tk.25,000
TK.1,000,001-Tk.2,000,000
2.00% Tk25,001-Tk.40,000
TK.2,000,001-Tk. 5,600,000
1.50% Tk40,001-Tk.84,000
Over Tk. 5,600,000 1.00% over Tk.84,000
![Page 18: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/18.jpg)
Accountancy work planning – C 9.1
Key accounting head Material Journal entries Observe the ethical
operation Re-calculation and re-
perform Any Contingent issue
![Page 19: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/19.jpg)
Sample size planning C-9.2
Basis of sleeting sample Deeming sampling
threshold Quantity of sample
![Page 20: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/20.jpg)
Assignment planning – timetable C-9.3
Availability of accounting records Staff bookings Stocktaking attendance Bank confirmation, lawyer’s confirmation
and debtors and creditors circularization's Manager and partner review Draft FS and discussions with client Signed FS
![Page 21: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/21.jpg)
Budget and performance summary C-9.4
Item-wise detail budgeted hours as per staff grade VS. Actual hours as per staff grade. Result: Proper planning, cost control and performance evaluation and identify the areas for improvement may be
![Page 22: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/22.jpg)
Job progress report – C 9.5
• Monitor the execution as per plan • Find out the progress of the pan• Prepare action plan to solve the issue
![Page 23: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/23.jpg)
Opening balance and comparatives checklist – C-10
• Closing balances have been correctly b/frw
• Accounting policies consistently applied?
![Page 24: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/24.jpg)
Audit Planning and Control Evaluation
![Page 25: Presentation 2 - Planning and Internal Control Evaluation](https://reader036.vdocuments.us/reader036/viewer/2022081604/586f9fd21a28abcc238b6567/html5/thumbnails/25.jpg)
Audit Planning and Control Evaluation