Audit Planning Steps

Audit Planning Steps:

1. Client Acceptance:
   • Evaluate client integrity, firm's competence, independence.
   • Annual review for continuing clients.
   • Document acceptance using checklists or memos.
2. Understanding Client’s Business:
   • Familiarize with client operations and risks (e.g., industry risks, related parties).
   • Review past audits, management accounts, and industry trends.
3. Business Risk Assessment:
   • Analyze risks affecting client objectives and financial statements.
4. Preliminary Analytical Procedures:
   • Use ratios and industry benchmarks to assess business risks.
5. Setting Materiality:
   • Key processes, 
   • industry factors, and 
   • management controls guide materiality assessment.
6. Audit Plan Development:
   • Define risk assessments, 
   • substantive procedures, and 
   • other planned activities.