ACC 403 Audit Planning and Control Strayer University(USE AS GUIDE ONLY)

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Audit Planning and Control
Audit Planning and Control
Strayer University
ACC403–Auditing and Assurance Service
Audit Planning and Control
The AICPA auditing standards indicates, “The auditor must plan the work and properly
supervise any assistant.” What does audit planning mean? There are many steps involves in a
proper planning of an audit.
First, during the initial audit-planning phase, the auditor must decide whether to accept a new
client to continue its existing engagement to audit a client. The decision is normally risk based. If
a client is notorious for perpetrating fraud and tricking its auditors, the auditor may determine it’s
too risky to accept such an engagement. Second, the auditor finds out what the client’s need is,
whether it’s a financials audit, or operations audit, etc. Third, the auditor establishes the
engagement terms with the client such as what’s to be audited, when the audit report is to be
issued, who the audit report is to be issued to, etc. At this stage, an engagement letter is normally
drafted. Last but not least, the auditor develops a strategy for the audit and properly staff the
audit team.
Once a client is accepted, the auditor must obtain an understanding of the client’s business and
industry. The nature of the client’s business and industry affects client business risk and the risk
of material misstatements in the financial statements. For example, if the client is in the real
estate institute, or a mortgage industry, the recent financial crisis would have caused a great deal
of pressure on management. Also, how is the client’s information system? How heavily is the
client’s business relying on information technology? How complex is the client’s business
transactions? Does the client have offshore business that increase the risk? All of these industry
and external factors, and the way that the company manages its business impact the business
risks.
The auditor obtains an understanding of theclient’s business and industry and use the information
to assess the client’s business risk, the risk that the client will fail to achieve its own business

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Course: ACC 403 Audit Planning and Control Strayer University(USE AS GUIDE ONLY)
Subject: ACC 403 Audit Planning and Control Strayer University(USE AS GUIDE ONLY)
Subject code: ACC 403 Audit Planning and Control Strayer University(USE AS GUIDE ONLY)
Year of study: 17-18
Document
Section: Homework & Assignments
Made on: 28-01-2020
Type: .pdf
Pages: 9
Language: English
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ACC 403 Audit Planning and Control Strayer University(USE AS GUIDE ONLY)