Key Takeaways

• What are the key stages of planning an audit?

  • Planning the assignment
  • Planning process
  • Materiality
  • Analytical Procedures
  • Risk assessment
  • Understanding the entity
• Materiality is vital concept when auditors seek to determine company's financial statement give a true and fair view
• Auditors set materially thresholds early in the engagement.
• Analytic procedures are used at all stages of the audit, but in this section we consider their use in planning the audit
• What are Analytical produces?

  • Consist of the analysis of significant ratio and trends
  • During planning, analytical procedures are used as a means of understanding the business and identifying audit risk
• Common forms of Analytical procdures (Compare client data with)

  • Industry data
  • Similar prior-period data
  • Client-determined expected results
  • Auditor-determined expected results
  • Expected results using non financial data