Your question: What are the factors the auditor should consider when developing an engagement plan?

Internal auditors must develop and document a plan for each engagement, including the engagement’s objectives, scope, timing, and resource allocations. The plan must consider the organization’s strategies, objectives, and risks relevant to the engagement.

What are the factors that need to be considered during engagement planning?

Engagement planning generally includes the following steps:

  • Understand the context and purpose of the engagement.
  • Gather information to understand the area or process under review.
  • Conduct a preliminary risk assessment of the area or process under review.
  • Form engagement objectives.
  • Establish engagement scope.

What factors should an auditor consider prior to accepting an engagement explain?

Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client’s management and principals, 2) presence of circumstances pointing towards unusual risks in the engagement or …

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What should an auditor consider in developing the audit objectives of a particular engagement?

A1). When developing engagement objectives, internal auditors must consider the probability (often referred to as likelihood) of significant errors, fraud, noncompliance, and other exposures (Standard 2210. A2).

What are the consideration in developing audit plan?

Considerations in Audit Planning

Audit plans should be based on the knowledge of client’s business. The auditor should so plan his work that audit may be conducted in an effective and efficient manner. Due regard must be paid to client’s accounting system, policies and internal control procedures.

What are the 4 phases of an audit process?

Although every audit process is unique, the audit process is similar for most engagements and normally consists of four stages: Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report and Follow-up Review. Client involvement is critical at each stage of the audit process.

What is the first step of Standard 2201?

2201. C1 – Internal auditors must establish an understanding with consulting engagement clients about objectives, scope, respective responsibilities, and other client expectations. For significant engagements, this understanding must be documented.

Why would an auditor perform engagement activities?

Pre-engagement activities take place before the auditor accepts or declines an audit engagement. These activities are performed when the auditor has to decide whether to accept a new client or to continue with the relationship with an existing client.

Why an auditor might decline an engagement?

In relation to the final bullet point, if management impose a limitation on the scope of the auditor’s work in the terms of a proposed audit engagement, the auditor should decline the audit engagement if the limitation could result in the auditor having to disclaim the opinion on the financial statements.

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Why must an auditor consider managements integrity prior to accepting an audit engagement?

Prior to accepting a client, the auditor should investigate the client. The primary purpose is to evaluate the integrity of the client and the possibility of management fraud. The auditor should be especially concerned with the possibility of management fraud since it is difficult to uncover.

What are the steps of audit planning?

Audit Process

  1. Step 1: Planning. The auditor will review prior audits in your area and professional literature. …
  2. Step 2: Notification. …
  3. Step 3: Opening Meeting. …
  4. Step 4: Fieldwork. …
  5. Step 5: Report Drafting. …
  6. Step 6: Management Response. …
  7. Step 7: Closing Meeting. …
  8. Step 8: Final Audit Report Distribution.

What are the steps of an audit?

Steps of an Audit

  • Management Notification. Generally, Internal Audit notifies auditees in writing when their area is selected for an audit. …
  • Entrance Conference. …
  • Audit Survey. …
  • Fieldwork. …
  • Draft Report. …
  • Exit Conference. …
  • Management Response. …
  • Final Report.

What are some examples of analytical procedures?

Examples of analytical procedures are as follows:

  • Compare the days sales outstanding metric to the amount for prior years. …
  • Review the current ratio over several reporting periods. …
  • Compare the ending balances in the compensation expense account for several years. …
  • Examine a trend line of bad debt expenses.
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