Question

Auditors should design the written audit plan so that:

Multiple Choice

• substantive tests prior to the balance sheet date will be minimized.

• each account balance will be tested under either tests of controls or tests of transactions.

• the audit procedures selected will achieve specific audit objectives.

• all material transactions will be selected for substantive testing.

Answer 1

Correct answer: The auditor procedures selected will achieve audit objectives.
Audit prepares a written audit plan to obtain sufficient and appropriate audit evidences so that he can reduces to an acceptably low level the risk of misstatement. Audit prepares audit program which set forth the audit procedures to be followed to achieve the necessary objectives of the audit. In selecting items for testing, the auditor is required to determine the materiality, relevance and reliability of information to be used as audit evidence.
Objective of a written audit plan is to complete audit in an effective and efficient manner without 100 percent testing otherwise so much time will be consumed in conducting audit that it will lead to inefficient audit.