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Unformatted text preview: Planning and Supervision 81 AU Section 311 Planning and Supervision (Supersedes SAS No. 22) Source: SAS No. 108; SAS No. 114. See section 9311 for interpretations of this section. Effective for audits of financial statements for periods beginning on or after December 15, 2006. Earlier application is permitted. .01 The first standard of field work states, "The auditor must adequately plan the work and must properly supervise any assistants." This section estab- lishes standards and provides guidance to the independent auditor conducting an audit in accordance with generally accepted auditing standards on the con- siderations and activities applicable to planning and supervision. Planning and supervision continue throughout the audit. .02 Audit planning involves developing an overall audit strategy for the expected conduct, organization, and staffing of the audit. The nature, timing, and extent of planning vary with the size and complexity of the entity, and with the auditor's experience with the entity and understanding of the entity and its environment, including its internal control. .03 Obtaining an understanding of the entity and its environment, in- cluding its internal control, is an essential part of planning and performing an audit in accordance with generally accepted auditing standards. 1 The audi- tor must plan the audit so that it is responsive to the assessment of the risk of material misstatement based on the auditor's understanding of the entity and its environment, including its internal control. Planning is not a discrete phase of the audit, but rather an iterative process that begins with engagement acceptance and continues throughout the audit as the auditor performs audit procedures and accumulates sufficient appropriate audit evidence to support the audit opinion. As a result of performing planned audit procedures, 2 the au- ditor may obtain disconfirming evidence that might cause the auditor to revise the overall audit strategy. 1 Section 314, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement , establishes standards and provides guidance on obtaining an understanding of the entity and its environment, including its internal control, sufficient to assess the risks of material misstatement, whether due to error or fraud, at the financial statement and relevant assertion levels. Section 318, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained , establishes standards and provides guidance on the auditor's overall responses and the nature, timing, and extent of further audit procedures that are responsive to the assessed risks. 2 Paragraph .03 of section 314 provides guidance with respect to the procedures the auditor per- forms in obtaining an understanding of the entity and its environment to establish a frame of reference within which the auditor plans the audit and exercises professional judgment about assessing the risk of material misstatement of the financial statements....
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This note was uploaded on 04/10/2010 for the course ACCOUNTING 122 taught by Professor Dick during the Spring '10 term at American Academy of Art.
- Spring '10