Audit Planning & Risk Assessment

Let’s examine some of the recommended requirements for the Audit Planning & Risk Assessment external audit phase.

The importance of robust pre-engagement acceptance procedures is clear. An auditor who takes on an engagement that they are either ill-equipped to perform, or are prohibited from performing under relevant legislation or professional standards, can expose the firm to a variety of risks including litigation and reputational.

Audit Engagement File Setup

Preliminary Engagement Activities

To help your planning process pre-audit, Agile Audit has:

• A smart pre-engagement checklist that address the requirements of ASQC 1 and ASA 220.
• A template Engagement Letter (based on the example in ASA 210 appendix) and a placeholder option for easy and consistent filing of the signed letter.

Planning the Audit Engagement

On planning an audit, Dave Stevens advises:

“One of the key auditing standard objectives of an audit is to plan it so that it will be performed in an effective manner. A broader business objective of the audit firm is for an audit to also be performed in an efficient manner. Measure twice, cut once.

Investing sufficient time to understand the entity and assess identified risks will enable the audit team to devote the resources necessary to tackle risk areas of the audit, and reduce over-auditing in less risky audit areas. The benefits of a well-planned audit in the current period will also have positive implications for subsequent audit engagements.” 

Agile Audit allows auditors to efficiently and effectively document their understanding, their consideration of risk areas, and their overall audit strategy plan.

Features such as:

• Concise ‘Understanding the Entity’ worksheets assist with all relevant considerations required by ASA 240 and 315. 
• The Risk and Controls modules enables easy recording and referencing of identified risks and controls to the planned audit work that will assess and address each.
• The Risk Assessment Report provides a powerful visual snapshot of each financial statement area and the resulting assessments.