Vacations normally go more smoothly when you have made good reservations and also researched your destination.
Purchasing a car is simpler when you have done all your homework on the car model and also made some early inquiries to line up the financing.
It is a fact of life that in several processes of our daily professional and personal lives, a little good planning could develop a more productive and pleasant experience.
Audits, also, could be much more effective and could provide several advantages to the firm and the client when they are planned properly.
Planning is all about developing the overall strategy for developing and engaging an audit plan, a professional standard has listed six broad advantages to an adequate audit planning of various financial statements audits:
Advantages of audit planning:
The following are some of the advantages associated with audit planning:
- It assists the auditors to identify and devote proper attention to important areas of the audit.
- Assist the auditors to identify and also resolve relevant problems in a timely and daily basis.
- It also assists the auditor manage and organizes the engagement so that is carried out effectively and efficiently.
- Assist in choosing engagement team partners with the right capability and competency to respond to any anticipated risks and also in allocating responsibilities to a team member.
- Encourages the supervision of different engagement team partners and also helps in reviewing their work.
- Helps in proper coordination of all work carried out by specialists.
- It is also complaint with ISA 300 for financial audit
“Spending quality time during the audit planning phase might seem counterproductive at the start of the audit, but adequate audit planning certainly assists in creating more efficient and effective audits,” according to Beth Greenberg, a Sageworks senior consultant that works with different accounting firms for developing efficiency and consistency in audits.
Audit planning also makes it much easier for auditors to give appropriate documentation for any peer review and for making future engagements plans” she added. Other advantages of audit planning are
It avoids misunderstandings
A focused and well-organized audit plan can help in avoiding misunderstandings with the firm.
“spending sufficient time during the planning of an audit can bring out a more adequate and realistic picture of what the whole audit will entail,” says Greenberg. “This could avoid any misunderstandings with the firm.”
Avoids over auditing
A focused and well-organized audit plan could also help in avoiding “over auditing,” or spending unnecessary time during the substantive audit procedures by staring at areas that are irrelevant.
“Ensure you spend quality time in the audit planning phase, specifically during the preliminary analytical review and the risk assessment you undergo, to develop a thought-out and very focused audit plan,” Greenberg added. “This gives room for the other audit process to run well.
Disadvantages of audit planning:
The following are some disadvantages or demerits associated with audit planning:
An audit plan adheres to set patterns and standard approaches. This might stifle initiative and flexibility, therefore disrupting the professional judgment of the people involved.
Rigidity could make the entire process too mechanistic and undermine the audit staff’s creative abilities, and talents. This will eventually leave them with little or no freedom for carrying out their task as well as being technically challenged.
Overlooking the capabilities of audit staffs
An audit plan will make the whole audit process automated thus loosening the sense of duties and responsibility for audit staff. It could decrease inventiveness and initiative, with fee application of audit staff abilities and talents.