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Slide 1
Copyright 2006, The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin November 2008 Audit Planning Methodology
Senior Auditor
Slide 2
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 2 of 74 McGraw-Hill/Irwin Establish
engagement objective 1. Understand scope of services and service
requirements 2. Identify and orient the audit team Understand
business and establish audit strategy Inherent risk 3. Understand
the business 4. Assess internal control at the entity level and the
risks of fraud 5. Develop the preliminary audit strategy Control
risk 6. Understand and evaluate the flow of significant classes of
transactions and sources of information and related control 7.
Perform test of control 8. Perform the risk assessments and develop
substantive audit procedures Perform audit procedures 9. Perform
Analytical and data analysis procedures 10. Perform test of details
11. Perform General audit procedures Conclude the audit and assess
performance 12. Conclude the audit 13. Assess client satisfaction
14. Assess the performance Audit Methodology
Slide 3
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 3 of 74 McGraw-Hill/Irwin 1. Understand scope
of services and service requirements . . ( ) . . Establish
Engagement Objective
Slide 4
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 4 of 74 McGraw-Hill/Irwin 2. Identify and
orient the audit team . : . : . . . . ( ) Establish Engagement
Objective
Slide 5
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 5 of 74 McGraw-Hill/Irwin 2. Identify and
orient the audit team Audit Quality Program Orient the Team Team
Planning Event Post-Interim Event Warp-Up Fieldwork Execution
Fieldwork Execution -------------------------------------- Audit
Workflow Establish Engagement Objective
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 7 of 74 McGraw-Hill/Irwin 3. Understand the
business Understand business and establish audit strategy Nature of
Entity Key Business Risk Financial Statement / Internal Control
Implications Business Objective, Strategies, CSFs Key Financial
Performance Measures Key Market Forces and Environment Key
Stakeholder Influences Significant Risks Internal Control / Fraud
Considerations Long Term Short Term
Slide 8
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 8 of 74 McGraw-Hill/Irwin 3. Understand the
business : . ( ) . . . . . Understand business and establish audit
strategy
Slide 9
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 9 of 74 McGraw-Hill/Irwin 3. Understand the
business . . . . Understand business and establish audit
strategy
Slide 10
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 10 of 74 McGraw-Hill/Irwin 3. Understand the
business : Understand business and establish audit strategy
Slide 11
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 11 of 74 McGraw-Hill/Irwin 3. Understand the
business Understand business and establish audit strategy
Slide 12
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 12 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud 1. . . 2. . .
Understand business and establish audit strategy
Slide 13
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 13 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud : : . . : . : .
Understand business and establish audit strategy
Slide 14
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 14 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud : . : .
Understand business and establish audit strategy
Slide 15
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 15 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud . . . : . . . .
. Understand business and establish audit strategy
Slide 16
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 16 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud . ( ) . ( ) . .
Understand business and establish audit strategy
Slide 17
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 17 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud 3. . / .
Understand business and establish audit strategy
Slide 18
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 18 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud . . ( ) . .
Understand business and establish audit strategy
Slide 19
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 19 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud 4. . .
Understand business and establish audit strategy
Slide 20
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 20 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud . . Understand
business and establish audit strategy
Slide 21
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 21 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud : 1. . 2. . 3. .
4. . Understand business and establish audit strategy
Slide 22
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 22 of 74 McGraw-Hill/Irwin 4. Assess internal
control at the entity level and the risks of fraud 5. . 6. . 7. .
8. . 9. . 10. . 11. . Understand business and establish audit
strategy
Slide 23
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 23 of 74 McGraw-Hill/Irwin Preliminary Audit
Strategy Planning Materiality PM Planning Materiality PM Small
Audit Difference s SAD Nominal Amount Small Audit Difference s SAD
Nominal Amount Tolerable Error TE Tolerable Error TE Understand
business and establish audit strategy 5. Develop the preliminary
audit strategy
Slide 24
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 24 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control . . : 1. . 2. . 3. . 4.
. Understand business and establish audit strategy
Slide 25
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 25 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control : : 1. ( ) . 2. . 3. / .
. Understand business and establish audit strategy
Slide 26
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 26 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control : 1. . 2. . 3. . 4. .
Understand business and establish audit strategy
Slide 27
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 27 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control ( ). : 1. . 2. ( ). 3. .
Understand business and establish audit strategy
Slide 28
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 28 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control : : . : . . . Understand
business and establish audit strategy
Slide 29
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 29 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control : . . . . : 1. / . 2. .
3. . 4. / / . 5. / . Understand business and establish audit
strategy
Slide 30
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 30 of 74 McGraw-Hill/Irwin 6. Understand and
evaluate the flow of significant classes of transactions and
sources of information and related control : 1. . 2. ( ) ( ). 3. .
4. . 5. ( ). Understand business and establish audit strategy
Slide 31
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 31 of 74 McGraw-Hill/Irwin 7. Perform test of
control . . : . . : 1. . 2. ( ). 3. . Understand business and
establish audit strategy
Slide 32
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 32 of 74 McGraw-Hill/Irwin 7. Perform test of
control (Walk-through): . . ( ) . . Understand business and
establish audit strategy
Slide 33
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 33 of 74 McGraw-Hill/Irwin 7. Perform test of
control : 1. ( ). 2. . 3. . 4. . . . . Understand business and
establish audit strategy
Slide 34
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 34 of 74 McGraw-Hill/Irwin 7. Perform test of
control : . . : . / . . . . Understand business and establish audit
strategy
Slide 35
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 35 of 74 McGraw-Hill/Irwin 7. Perform test of
control . / . . . . Understand business and establish audit
strategy
Slide 36
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 36 of 74 McGraw-Hill/Irwin 7. Perform test of
control . . : 1. . 2. . 3. . 4. . . Understand business and
establish audit strategy
Slide 37
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 37 of 74 McGraw-Hill/Irwin 7. Perform test of
control . . : 1. : . 2. : . Understand business and establish audit
strategy
Slide 38
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 38 of 74 McGraw-Hill/Irwin 7. Perform test of
control : . . Understand business and establish audit strategy
Slide 39
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 39 of 74 McGraw-Hill/Irwin 7. Perform test of
control . : 1. ( ) . 2. ( ). Understand business and establish
audit strategy
Slide 40
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 40 of 74 McGraw-Hill/Irwin 7. Perform test of
control . : 1. . 2. ( ) . Understand business and establish audit
strategy
Slide 41
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 41 of 74 McGraw-Hill/Irwin 7. Perform test of
control 3. . . . . 4. . : 5. . 6. . 7. . Understand business and
establish audit strategy
Slide 42
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 42 of 74 McGraw-Hill/Irwin 7. Perform test of
control . . ( ). Understand business and establish audit
strategy
Slide 43
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 43 of 74 McGraw-Hill/Irwin 7. Perform test of
control . : 1. . 2. . 3. . . . Understand business and establish
audit strategy
Slide 44
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 44 of 74 McGraw-Hill/Irwin 7. Perform test of
control . . . Understand business and establish audit strategy
Slide 45
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 45 of 74 McGraw-Hill/Irwin 7. Perform test of
control . . . (ACL) . Understand business and establish audit
strategy
Slide 46
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 46 of 74 McGraw-Hill/Irwin 7. Perform test of
control Understand business and establish audit strategy
Slide 47
Copyright 2006. The McGraw-Hill Companies,
Inc.McGraw-Hill/Irwin 47 of 74 McGraw-Hill/Irwin 7. Perform the
risk assessments and develop substantive audit procedures
Understand business and establish audit strategy