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Kim Smith.
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Noah098
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Which of the following is NOT part of the planning stage of
the audit?
A Preliminary materiality assessment
B Risk assessment
C Developing the audit strategy
D Final analytical proceduresma’am my study text states that D is the answer. but i feel C should be correct too. This is because an audit strategy will always be made before audit plan, so how can audit plan include audit strategy?
Noah098
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In fact i feel A should also be one of the answers too, because preliminary materiality assessment is done as a part of audit strategy already, so i feel it should not be repeated as a part of audit plan.
Noah098
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ma’am can you pls explain why not C and A?
Kim Smith
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Please remember to tell me the source of things you quote.
“Audit planning” is the topic of an ISA (ISA 300 Planning an Audit of Financial Statements) – planning is a process that involves “establishing the overall audit strategy … AND developing an audit plan”. The strategy sets the scope, timing and direction of the audit guides the development of the more detailed audit plan. Planning activities include risk assessment – which is inextricably linked to materiality.
So A, B and C are all part of the planning process (“stage”) – leaving only D which is NOT.
Planning must include analytical procedures (as a risk assessment procedure) but this is not the same as the final (“overall”) analytical review – see Chapter 10.
Noah098
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