Chapter 8 – Audit Planning and Analytical Procedures
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English
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Audit Planning and
Analytical Procedures
Chapter 8
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 1Learning Objective 1
Discuss why adequate audit
planning is essential.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 2Three Main Reasons for
Planning
1. To obtain sufficient competent evidence
for the circumstances
2. To help keep audit costs reasonable
3. To avoid misunderstanding with the client
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 3Risk Terms
Acceptable audit risk
Inherent risk
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 4Planning an Audit and
Designing an Audit Approach
Accept client and perform initial audit planning.
Understand the client’s business and industry.
Assess client business risk.
Perform preliminary analytical procedures.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 5Planning an Audit and
Designing an Audit Approach
Set materiality and assess acceptable audit risk
and inherent risk.
Understand internal control and assess control risk.
Gather information to assess fraud risks.
Develop overall audit plan and audit program.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 6Learning Objective 2
Make client acceptance decisions
and perform initial audit planning.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 7Initial Audit Planning
Client acceptance and continuance
Identify client’s reasons for audit
Obtain an understanding with the client
Develop overall audit strategy
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 8Learning Objective 3
Gain an understanding of the
client’s business and industry.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 9Understanding of the Client’s
Business and Industry
Factors that have increased the
importance of understanding the
client’s business and industry:
Information technology
Global operations
Human capital
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 8 - 10
