Chapter 8 – Audit Planning and Analytical Procedures
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English

Chapter 8 – Audit Planning and Analytical Procedures

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Audit Planning andAnalytical ProceduresChapter 8©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 1Learning Objective 1Discuss why adequate auditplanning is essential.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 2Three Main Reasons for Planning1. To obtain sufficient competent evidencefor the circumstances2. To help keep audit costs reasonable3. To avoid misunderstanding with the client©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 3Risk Terms Acceptable audit risk Inherent risk©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 4Planning an Audit and Designing an Audit ApproachAccept client and perform initial audit planning.Understand the client’s business and industry.Assess client business risk.Perform preliminary analytical procedures.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 5Planning an Audit and Designing an Audit ApproachSet materiality and assess acceptable audit riskand inherent risk.Understand internal control and assess control risk.Gather information to assess fraud risks.Develop overall audit plan and audit program.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 6Learning Objective 2Make client acceptance decisionsand perform initial audit planning.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 ...

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Audit Planning and
Analytical Procedures
Chapter 8
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 1Learning Objective 1
Discuss why adequate audit
planning is essential.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 2Three Main Reasons for
Planning
1. To obtain sufficient competent evidence
for the circumstances
2. To help keep audit costs reasonable
3. To avoid misunderstanding with the client
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 3Risk Terms
 Acceptable audit risk
 Inherent risk
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 4Planning an Audit and
Designing an Audit Approach
Accept client and perform initial audit planning.
Understand the client’s business and industry.
Assess client business risk.
Perform preliminary analytical procedures.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 5Planning an Audit and
Designing an Audit Approach
Set materiality and assess acceptable audit risk
and inherent risk.
Understand internal control and assess control risk.
Gather information to assess fraud risks.
Develop overall audit plan and audit program.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 6Learning Objective 2
Make client acceptance decisions
and perform initial audit planning.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 7Initial Audit Planning
 Client acceptance and continuance
 Identify client’s reasons for audit
 Obtain an understanding with the client
 Develop overall audit strategy
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 8Learning Objective 3
Gain an understanding of the
client’s business and industry.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 9Understanding of the Client’s
Business and Industry
Factors that have increased the
importance of understanding the
client’s business and industry:
 Information technology
 Global operations
 Human capital
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 10