Question

Discuss the purpose of planning the audit and identify the steps that are performed during this phase of the engagement?

Answer 1

Purpose of planning the audit:-

1. Keep audit cost minimum.

2. Avoid misunderstanding with the client.

3. Carry audit smoothly

4. Identify the potential problem in audit.

Steps performed during the planning phase:-

1	Client is accepted, and initial audit planning is performed.
2	Auditor takes the understanding of the clients business and industry.
3	Auditor will assess the business risk of the client.
4	Auditor will perform preliminary analytical procedures.
5	Materiality is determined, and audit risk and inherent risk is assessed.
6	Auditor will take an understanding of internal control and control risk is assessed.
7	Auditor will obtain information to assess fraud risks.
8	The auditor will develop an overall audit plan.

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