Steps of Coducting an Audit

I sincerely hope that this assignment meets your approval and demonstrates my ability to resent assignments. If you require further clarification, I will be skilful to contact you according to your convenience. Sincerely, Ishrat Nahid ID 0930183 Executive Summery An scrutinizeor is an official whose inviteeele it is to cargonfully check the accuracy of business records. An auditor can be either an independent auditor unaffiliated with the company being audited or a captive auditor, and some ar elected public officials. auditors argon use of goods and servicesd to ensure that organizations are maintaining accurate and honest financial records and statements.In this sp take in abroad I dumbfound written about the contrive of audit and the immenseness of ndependence of auditors. Planning the audit is an important step to have a bun in the oven the audit. Auditor uses diametrical architectural cookery methods to determine risk assessment, assessment of internal controls etc. The auditor either internal or external cannot complete all the aspects of the audit in one year. The auditors design the audit is such(prenominal) a federal agency they can cover the audit over a period of time. Auditor independence is one of the most important issues in accounting trust today.Independence increases the effectiveness of the audit by providing assurance that the auditor will plan and execute the audit objectively. High- fiber audits enhance the reliability of the financial reporting passage by investors and other users. Topic 1. Planning of audit 15- 163. References Page no 5-14 2. Independence of auditor 17 audit report Planning refers to the adjoin of deciding what to do and how to do it. Planning involves selecting mission and objective and the actions to come across them it requires decision making that is, choosing from among alternative future course of actions.Plans thus domiciliate a rational approach to achieving reselected objectives. Planning is an intellectually demanding process it requires that we consciously determine ourses of action and base our decisions on purpose, knowledge and considered estimates. An audit plan is the specific guideling to be followed when conducting an internal or external audit. Internal audits are usually conducted by a companys accounting staff and are to begin with used for a management review of accounting process.External audits are conduct by external public accounting firms or private bear witness accountants (CPA) to ensure outside stakeholders that the companys financial discipline is prepared in symmetry with that Jurisdictions accepted accounting principles. External audit usually use a formal audit plan for auditors to follow when conducting audits. Audit planning improves the quality of audit work. It is necessary for an effective, efficient and timely audit. Adequate audit planning establishes the right means to achieve the objectives of audit.It helps in identifying potent ial problems and ensures that work is terminate expeditiously. An audit plan does help the auditor not only to figure the scope of audit but also facilities smooth conduct of audit. Auditors use v types of test to determine whether financial statements are fairly tell rocedures to obtain understanding of internal control, tests of controls, substantive tests of transactions, analytical procedures and tests of details of balances. altogether audit procedures fall into one or more than one of these five categories.By these tests detection risk reduces and effectiveness of internal control has increase. Five types of tests are firstly, update and evaluate the auditors previous experience with the entity. Secondly, make inquiries of invitee personnel. Thirdly, read clients policy and systems manuals. Fourthly, examine documents and records. Fifthly, observe entity and trading operations. A meaningful audit plan considers some basic steps. If these basic steps are the minimal pos sible time. pure tone 1 Talk to the client The auditor discusses the nature of the intimacy and the clients business and industry trends at the beginning of planning.Insights gained from this discussion help the au ditor navigate through the remainder of the audit planning procedures. These insights set the pegleg for an active two way communication process that result in a fully engaged audi tor. Step 2 Obtaining background in orderion An extensive understanding of the clients business and industry and knowledge bout the companys operations are essential for doing an adequate audit. The auditor asks about recent developments in the company that may cause the audit to differ from prior years.Developments such as mergers, stark naked locations or new product lines may have a significant impact on the audit plan for the legitimate year. These discussions take place at the client 10 cation. Going on site provides the auditor the opportunity to meet with key employees or new employ ees and to see for him or herself any changes in the overall operations of the client. Step 3 Prepare A Complete list of items pauperisationed from the client Before starting uditing auditors require samples, documents and many other papers those auditors need to audit.A meaningful audit plan pro vides an updated list of client-prepared items that considers the following youthful agendas because of changed risk profiles at the client New schedules resulting from a change in audit ap proach Example schedules and templates so the client prepares them in the auditors desired format Insertion of due dates for each schedule that has been agreed to by the client For larger clients, insert the name of a person respon Sible for the completion of the schedule that has been agreed to by the client