Question

You have been assigned to audit ABK Sdn Bhd, a company selling and processing meat for burgers. You are planning this audit.

a. Give 3 reasons why auditors should plan their audit. (6marks)

b. In planning an audit, what are the factors that the auditors need to consider relating to “tone of the top”?) Explain why it is important. (4 markah/marks)

c.As the auditor for ABK Sdn Bhd, what are the important information that you need to know and understand about this industry? Why? (5 markah/marks)

Answer 1

a. An Audit plan is the specific guideline to be followed when Conducting audit.An auditor must plan audit to get sufficient Appropriate Audit Evidence.

1.A good audit planning helps auditor to minimise the audit risks, Improve Audit efficiency, and meet its objectives at minimum effort.

2. From the previous audit, Auditors should check what shortcomings happened in the previous audit, prepare proper plan and Schedule about how to handle that.

3. An Auditor must select the Nature, Timing and Extent of Audit.

4. Consider the factors, which effect the Judgement of Auditor.

5. An Auditor also plan for the Materiality of Transactions.

b. In Planning audit auditor must consider various factors to conduct Audit; that are:

1. Size and Complexity of an Entity

2. Area of the Audit.

3. The Assessed Risks of material Misstatements.

4. The Capacities and Compentence of the Individual team members performing the Audit Work.

Why it is Important:

Factors are important becasue auditor has to ensure that risk Identified areas are properly ascertained. to maintain the effectivenes of the Financial Statements.

c. for this audit, we must know about the Industry as follows:

1. Sale of Items.

2. Wheather Processing Meat is outsorced or prepare in the Organisation.

3. what process has been followed to complete the sale?

4. what are the tastes of consumers about this type of products?

5. understand about the various departments of organisation.

These are Important because to complete the process of audit and mainly needed in Audit Planning, that how to Conduct audit?

which areas are crucial and have to paln about all these?

Identified core areas, Risk areas.