An audit is a professional service to a client. The review of accounting, financial and other operations form a basis of such service. Before commencing audit, an auditor must prepare himself well. Preparation for an audit relates to audit planning, preliminary preparations by the auditor, audit programme, audit note book, audit working papers, audit evidence, commencement of a new audit, test checking, and routine checking.
Planning is required to complete the audit effectively within the specified time. Audit planning is a process of deciding in advance what is to be done, who is to do it, how it is to be done and when it is to be done by the auditor in order to have efficient and effective completion of work.
Audit planning can be done only when, the auditor is having knowledge of the business of the client. It helps in accomplishment of objectives of audit and enables the auditor to cover different aspects of audit work in a systematic manner within a preset time frame. It enhances the quality of audit work. Audit plans should cover knowledge about client’s accounting systems and policies, internal control procedures and coordinating the work to be performed. Plans should be flexible so that they can be developed or revised as and when required by the auditor.
An efficient and effective audit plan provides the following benefits:
· Accomplishment of Objectives: Audit plan ensures that it provides right means to accomplish audit objectives. Further it also ensures that appropriate attention is devoted to important areas of audit.
· Identification of Problems: A well drawn and established audit plan helps in identifying potential problems.
· Timely Completion of Work: It ensures that work is completed properly within the specified time and no important area is left out. It also ensures that all important areas of management receive attention.
· Facilitates Coordination: It facilitates coordination of the audit work done by auditors and other experts.
· Better Audit Work: It helps in improving the quality of audit work and provides promptness and perfection in audit performance.
The following factors should receive due consideration while planning:
· Size of the company and nature of its operations.
· Accounting system, internal control and adherence to standard.
· Environment in which the company operates.
· Previous experience with the client; and
· Knowledge of client’s business.