chapter 8 - Chapter 8 Audit Planning and Analytical...

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1 Chapter 8 Audit Planning and Analytical Procedures 1. Planning a. Why should the auditor properly plan engagement? 1. 2. 3. b. The eight steps of audit planning 1. 2. 3. 4. 5. 6. 7. 8. Review Question 8-2 2. STEP 1/8: Accept Client and Perform Initial Audit Planning a. Content of initial audit planning : 1. 2. 3. 4. b. Reasons for not accepting a new client or not continuing an existing client: - - c. New client investigation: What does SAS 84 say about accepting a client that was previously audited by another CPA firm? - - Review Question 8-3 d. Continuing clients: What are some of the current practices for retaining existing clients? - -
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e. Identify client’s reasons for audit - - f. Obtain an understanding with the client – engagement letter Review Question 8-5 g. Develop overall audit strategy - Select staff for engagement - Evaluate need for outside specialists Note: SAS 73 regulation regarding hiring specialists – Review Question 8-4 3. Step 2/8: Understanding The Client’s Business and Industry a. Why is it becoming more important to understand the client’s businesses in recent years? - - - - - b. Why? - Three reasons for obtaining a good understanding of the client’s industry and external environment: 1. 2. 3. Review Question 8-8 c. What? – What does an auditor need to know about the client’s businesses? - Client’s major sources of revenue, key customers and suppliers, sources of financing, etc. -
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chapter 8 - Chapter 8 Audit Planning and Analytical...

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