Question

Why is the planning process of an audit important? What are the framework of audit planning? If you were the lead auditor, what specific techniques would you use to mitigate material misstatement? limit the answer to 200 to 250 words.

Answer 1

Audit planning is done in order to devote proper attention to the important areas and no critical areas are left out . Also audit planning defines the scope and extent of auditor .

Audit framework identifies the areas where the practice needs to improve with the help of sampling . Also it ensures the quality of work to the senior management.The framework identifies the audit objectives and its scope. It is a type of structure as per which auditor have to conduct the audit.

Audit techniques means record of audit procedure performed , evidence obtained and conclusion reached by the auditor.Techinques like Sampling is used where in auditor select some of the sample out of the whole population (generally of larger amount) to verify the authenticity.Also auditor uses ratio analysis where in different ratios are calculated and compared with the previous years and with competitors.

Also Trend analysis is used as a technique where in trends of last 5 years are compared with the current year and any critical areas or high variation are taken into notice