28/10/2018 1 Studies in Auditing Lecture 4 Chapter 8: Audit Planning Chapter 8: Audit planning and analytical procedures • The first generally accepted auditing standard of field work requires adequate planning: The auditor MUST adequately plan the work and MUST properly supervise the assistants. 2 Dr. Mohamed Elmaghrabi
28/10/2018 2 GAAS Reasons of auditor planning of audit engagements • Three main reasons: 1. To obtain sufficient appropriate evidence for the circumstances (in order to minimize legal liability and maintain a good reputation in the business community) 2. To help keep audit costs reasonable to remain competitive 3. To avoid misunderstandings with the client for good client relations and for facilitating high-quality work at reasonable cost 4 Dr. Mohamed Elmaghrabi
28/10/2018 3 Two risks significantly influence the conduct and cost of audits. • Acceptable audit risk is a measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued. – Lower acceptable audit risk means that the auditor wants to be more certain that the financial statements are not materially misstated.
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- Spring '17