Question

You have recently been appointed as an audit assistant for MKZ Auditing LLC, a popular auditing firm based in Al Ain. Your line manager spoke to you two weeks ago to inform you that you have been assigned with another senior auditing staff to undertake a visit and audit a client called SMC Hotels LLC.

Your line manager has tasked you to liaise with the senior auditing staff to prepare a presentation to be delivered to the senior management on how you propose to investigate and plan the audit of SMC Hotels LLC.

Required

Analyse the relevance of the concept of assurance to the planned audit of SMC Hotels LLC (PC 1.5 – 4 marks)

Answer 1

Relevance of Planned Audit :

Audits could be much more effective and could provide several advantages to the firm and the client when they are planned properly.

Planning is all about developing the overall strategy for the developing and engaging an audit plan. Audit planning is a important area of the audit primarily conducted at the beginning of audit process to ensure that appropriate attention is devoted to important areas, potential problems are promptly identified, work is completed expeditiously and work is properly coordinated.

Following is broad advantage of Planned Audit :

• helps the auditor obtain sufficient appropriate evidence for the circumstances
• helps to keep audit costs at a reasonable level.
• helps to avoid misunderstandings with the client.
• helps to ensure that potential problems are promptly identified
• helps to know the scope of audit program by an Auditor.
• helps to carry out the audit work smoothly and in a well defined manner