The audit can be regarded as an extremely important process that helps ensure that the financial statements that are issued by the company are free from any material misstatements.
Additionally, it is also supposed to give a guarantee to the investors that the internal transactions of the company have been checked and verified, and there are no questionable aspects within the books of the company, to say the least.
In this regard, it is quite important to ensure that auditors are well aware of their responsibility to properly conduct the audit, and give their opinion based on professional judgments that are not clouded by improperly executed strategy.
Therefore, in this regard, the process of audit planning tends to hold tantamount importance owing to the fact that it helps auditors prepare and present a viable strategy that can help them to achieve the required objectives, in due time.
The process of audit planning requires a stringent study of the inherent systems within the organizations, which helps to conduct a useful risk analysis, in order to ascertain the relevant degree of audit risks associated with the audit. It is extremely useful for the process to be carried out and executed in a smooth manner.
Importance of Audit Planning
The importance of audit planning mainly lies on the realms of ensuring that auditors are able to effectively evaluate the relevant risks associated with the audit process so that they can strategize, and come up with ways to mitigate the risk.
In addition to this, audit planning also tends to be highly important because of the following reasons:
- Firstly, it is considered as an important part of the audit process because of the reason that it helps the auditor to decide upon areas which require urgent attention to important areas within the audit process. More importantly, it also calls for auditors to plan their audit in a way that helps them focus on important areas more, and less relevant areas later on during the course of the audit.
- Secondly, Audit Planning tends to be an increasingly important task because of the fact that it helps the auditors to identify issues and high-risk elements on a timely basis. This can further help them to address these concerns in a timely manner too, which saves a considerable amount of time. For example, they might need additional documents to justify a transaction of considerable size. In this case, they can ask their client to arrange for the documents in a proper manner.
- They can also help auditors properly organize and manage the audit engagement, where they are able to allocate their time and resources in an effective manner. This is something that is greatly going to help them plan their activities bearing in mind the time constraint that they have, and major auditing assertions they have to cover during this time period.
- Audit planning is also important in order to ensure that auditors are able to structure their audit teams bearing in mind the scope of the overall audit that is supposed to be conducted. In order to appropriately structure the team based on the capabilities and resources that are required for the audit.
- Most importantly, audit planning really helps the auditors to effectively decide on the direction of the audit process, so that they are able to supervise the work of the engagement team members after the work has been completed. This is a highly important process because of the reason that it acts as a quality control parameter, which can help them to evaluate their performance after the audit has been completed, in comparison to the audit statements presented.
- In the same manner, it can also be seen that audit planning helps auditors to adopt a more structured approach towards the audit process so that they are able to execute the audit in a much effective manner.
Therefore, it can be seen that audit planning can be termed as a highly crucial aspect of the overall process. It is supposed to be one of the earliest processes within audit, and hence, it holds tantamount importance in determining the trajectory of the audit that is going to be conducted.
As a matter of fact, audit planning helps auditors, as well as clients to collaborate in an organized manner, in order for better results to be achieved in a lesser time frame possible. Therefore, this process must be given the required attention it deserves, so that the latter part of the audit can be conducted in a smooth manner.