Show
Our sites
Useful links
Most popular
The following auditing standard is not the current version and does not reflect any amendments effective on or after December 31, 2016. The current version of the auditing standards can be found here. Auditing Standard No. 9Audit Planning Effective Date: For audits of fiscal years beginning on or after Dec. 15, 2010Final Rule: PCAOB Release No. 2010-004Summary Table of Contents
Introduction1. This standard establishes requirements regarding planning an audit. Objective2. The objective of the auditor is to plan the audit so that the audit is conducted effectively. Responsibility of the Engagement Partner for Planning3. The engagement partner is responsible for the engagement and its performance. Accordingly, the engagement partner is responsible for planning the audit and may seek assistance from appropriate engagement team members in fulfilling this responsibility. Engagement team members who assist the engagement partner with audit planning also should comply with the relevant requirements in this standard. Planning an Audit4. The auditor should properly plan the audit. This standard describes the auditor's responsibilities for properly planning the audit. 5. Planning the audit includes establishing the overall audit strategy for the engagement and developing an audit plan, which includes, in particular, planned risk assessment procedures and planned responses to the risks of material misstatement. Planning is not a discrete phase of an audit but, rather, a continual and iterative process that might begin shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit. Preliminary Engagement Activities6. The auditor should perform the following activities at the beginning of the audit:
Planning Activities7. The nature and extent of planning activities that are necessary depend on the size and complexity of the company, the auditor's previous experience with the company, and changes in circumstances that occur during the audit. When developing the audit strategy and audit plan, as discussed in paragraphs 8-10, the auditor should evaluate whether the following matters are important to the company's financial statements and internal control over financial reporting and, if so, how they will affect the auditor's procedures:
Audit Strategy8. The auditor should establish an overall audit strategy that sets the scope, timing, and direction of the audit and guides the development of the audit plan. 9. In establishing the overall audit strategy, the auditor should take into account:
Audit Plan10. The auditor should develop and document an audit plan that includes a description of:
Multi-location Engagements11. In an audit of the financial statements of a company with operations in multiple locations or business units, the auditor should determine the extent to which audit procedures should be performed at selected locations or business units to obtain sufficient appropriate evidence to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. This includes determining the locations or business units at which to perform audit procedures, as well as the nature, timing, and extent of the procedures to be performed at those individual locations or business units. The auditor should assess the risks of material misstatement to the consolidated financial statements associated with the location or business unit and correlate the amount of audit attention devoted to the location or business unit with the degree of risk of material misstatement associated with that location or business unit. 12. Factors that are relevant to the assessment of the risks of material misstatement associated with a particular location or business unit and the determination of the necessary audit procedures include: [The following subparagraph a. is effective for audits of fiscal years beginning on or after December 15, 2014. See PCAOB Release No. 2014-002. For audits of fiscal years beginning before December 15, 2014, click here.]
13. In determining the locations or business units at which to perform audit procedures, the auditor may take into account relevant activities performed by internal audit, as described in AU sec. 322, The Auditor's Consideration of the Internal Audit Function in an Audit of Financial Statements, or others, as described in Auditing Standard No. 5. AU sec. 322 and Auditing Standard No. 5 establish requirements regarding using the work of internal audit and others, respectively. 14. AU sec. 543, Part of Audit Performed by Other Independent Auditors, describes the auditor's responsibilities regarding using the work and reports of other independent auditors who audit the financial statements of one or more of the locations or business units that are included in the consolidated financial statements. In those situations, the auditor should perform the procedures in paragraphs 11-13 of this standard to determine the locations or business units at which audit procedures should be performed. Changes During the Course of the Audit15. The auditor should modify the overall audit strategy and the audit plan as necessary if circumstances change significantly during the course of the audit, including changes due to a revised assessment of the risks of material misstatement or the discovery of a previously unidentified risk of material misstatement. Persons with Specialized Skill or Knowledge16. The auditor should determine whether specialized skill or knowledge is needed to perform appropriate risk assessments, plan or perform audit procedures, or evaluate audit results. 17. If a person with specialized skill or knowledge employed or engaged by the auditor participates in the audit, the auditor should have sufficient knowledge of the subject matter to be addressed by such a person to enable the auditor to:
Additional Considerations in Initial Audits18. The auditor should undertake the following activities before starting an initial audit:
19. The purpose and objective of planning the audit are the same for an initial audit or a recurring audit engagement. However, for an initial audit, the auditor should determine the additional planning activities necessary to establish an appropriate audit strategy and audit plan, including determining the audit procedures necessary to obtain sufficient appropriate audit evidence regarding the opening balances. Terms defined in Appendix A, Definitions, are set in boldface type the first time they appear. The term, "auditor," as used in this standard, encompasses both the engagement partner and the engagement team members who assist the engagement partner in planning the audit. Paragraphs .14-.16 of QC sec. 20, System of Quality Control for a CPA Firm's Accounting and Auditing Practice. AU sec. 161, The Relationship of Generally Accepted Auditing Standards to Quality Control Standards, explains how the quality control standards relate to the conduct of audits. [Footnote deleted, effective for audits of fiscal years beginning on or after December 15, 2012. See PCAOB Release No. 2012-004. For audits of fiscal years beginning before December 15, 2012, click here.] Auditing Standard No. 11, Consideration of Materiality in Planning and Performing an Audit. If no audit committee exists, all references to the audit committee in this standard apply to the entire board of directors of the company. See 15 U.S.C. §§ 78c(a)58 and 7201(a)(3). [The following footnote is effective for audits of fiscal years beginning on or after December 15, 2012. See PCAOB Release No. 2012-004. For audits of fiscal years beginning before December 15, 2012, click here.] See, e.g., Auditing Standard No. 16, Communications with Audit Committees. Also, various laws or regulations require other matters to be communicated. (See, e.g., Rule 2-07 of Regulation S-X, 17 CFR 210.2-07; and Rule 10A-3 under the Securities Exchange Act of 1934, 17 CFR 240.10A-3.) The requirements of this standard do not modify communications required by those other laws or regulations. See, e.g., paragraph 6 of Auditing Standard No. 10, Supervision of the Audit Engagement. Paragraph 6 of this standard. See, e.g., paragraph .06 of AU sec. 230, Due Professional Care in the Performance of Work, paragraph 16 of this standard, and paragraph 5.a. of Auditing Standard No. 13, The Auditor's Responses to the Risks of Material Misstatement. Auditing Standard No. 12, Identifying and Assessing Risks of Material Misstatement. Auditing Standard No. 13 and Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements. The term "business units" includes subsidiaries, divisions, branches, components, or investments. Paragraph .66 of AU sec. 316, Consideration of Fraud in a Financial Statement Audit. Paragraph 10 of Auditing Standard No. 11 describes the consideration of materiality in planning and performing audit procedures at an individual location or business unit. There is a reasonable possibility of an event, as used in this standard, when the likelihood of the event is either "reasonably possible" or "probable," as those terms are used in the FASB Accounting Standards Codification, Contingencies Topic, paragraph 450-20-25-1. When an auditor is planning an audit the auditor should?17. In planning the audit, the auditor should consider the timing and extent of direction and supervision of engagement team members and review of their work.
Why it is important that auditors should plan their audit work?Planning your audit ensures that all areas of the process are covered and given appropriate attention. It can also help you identify any potential problems or obstacles with the auditing process, map out activity so that it is carried out in a timely way, and manage your audit workflow for maximum efficiency.
How does an auditor plan an audit?Typically an audit plan will include sections dealing with business understanding, risk assessment procedures, planned audit procedures ie the responses to the risks identified and other mandatory audit procedures. The audit strategy and audit plan are not fixed once the planning stage of the audit is complete.
Is a detailed plan of the audit work to be performed?The audit plan is more detailed than the overall audit strategy that includes the nature, timing and extent of audit procedures to be performed by engagement team members. Planning for these audit procedures takes place over the course of the audit as the audit plan for the engagement develops.
|