by
Hashem Albasha , Accounting Support Adviser , AL Mustwa AL Raqi
thanks for the invitation
-Understanding the accounting and internal control systems
- Reviewing matters raised in the previous year’s audit
- Assessing the effects of any changes in legislation or accounting practice affecting the financial statements of the company
- The auditor should consult with management and staff of the organization about current trading circumstances and any significant changes in the business carried on and the management of the enterprise
- Identify any significant changes in the clients accounting procedures such as installation of a new computer information system
-Conditions requiring special attention such as the existence of related parties
- Consider any current or impending financial difficulties
- The auditor should check the nature and timing of reports
- Set materiality levels for audit purposes and in particular identify areas with material transactions, which call for more audit work.
Factors are :_The audit plan may be revised as the audit progress, and shouldn't be viewed as being fixed in place the main planning phase has ended-Audit sampling is the application of an audit procedure to less thanpercent of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance of class._There are two general approaches to audit sampling.: nonstatisical snd statistical.Both of them require that the auditor use professional judgment in planning performing and evaluating a sample and in relating the evidental matter produced by the sample to another evidential matter when when forming a conclusion about the related account balance
Understanding the accounting and internal control systems·the auditor should seek to understand the accounting policies adopted by the entity and changes in these policies. The auditor’s cumulative knowledge of the accounting and internal control systems and the relative emphasis expected to be placed on tests of control and substantive procedures.·Reviewing matters raised in the previous year’s audit, which may have continuing relevance in the current year. This is done by reviewing previous year’s working papers. The auditor will be able to identify areas noted as having weak controls or specific accounting problems. Attention should be paid to such areas in the audit plan.·Assessing the effects of any changes in legislation or accounting practice affecting the financial statements of the company. The audit plan should include a review of these changes and whether the client has complied.·The auditor should consult with management and staff of the organization about current trading circumstances and any significant changes in the business carried on and the management of the enterprise. E.g. changes in management might weaken the internal control system.·Identify any significant changes in the clients accounting procedures such as installation of a new computer information system. Changes to a computerized system could result in weak controls.·Conditions requiring special attention such as the existence of related parties.·Consider any current or impending financial difficulties, which could face the company. E.g. shortage of raw materials or failure to raise working capital.·The auditor should check the nature and timing of reports and other communications with the client so that the audit plan accommodates such timings e.g. he should consider the dates of the annual general meeting, stock taking, dates when management reports are available.·Set materiality levels for audit purposes and in particular identify areas with material transactions, which call for more audit work.·The assessment of internal audit department and level of reliance to be place on its work.·The auditor should also determine the number of audit staff required, experience and special skills required and the timing of the audit visits.
