Audit Plan

Question 1

NATURE-
TIMING
EXTENT

Answer 1

Question 2

Nature - Necessity
- Possible
- Desirable

Answer 2

Necessity- There is a very large volume of transactions
* Transactions are highly complex
* There is no visible audit trail to audit (will need to test general IT controls)
* Transactions are computer-generated (will need to test general IT controls)

Question 3

Possible

Answer 3

There are controls in place which, if effective, would ensure the integrity of financial
information
* The control environment of the client appears to be effective
* We have the necessary staff and resources to test controls

Question 4

Desirable

Answer 4

• Testing controls will provide a cost-benefit to the audit firm (usually the case)
• Testing controls will provide an opportunity to give value-added advice to clients
• Testing controls will provide an opportunity to train staff
• The client has specifically requested the auditor to test control or there is an expectation that
  they will do so
• Specific control weaknesses were identified in the previous audit and the client has
  undertaken to amend them
• The auditor needs to audit the corporate governance statement on the effectiveness of
  internal controls
• The auditor can rely on previous years’ tests of control. This will be the case if:
  o The control system and personnel have not changed since the last test
  o The controls were last tested within the previous three years
  o The controls are not over a significant risk
  o Controls were found to be effective during the previous test

Question 5

Timing

Answer 5

The auditor must determine when to perform audit testing on the given balance or transaction. The
following consideration will apply:
* If there are tight audit deadlines roll-forward may be necessary for transactional testing
* If the client is high-risk, procedures may be done close to the year-end
* If the client has outsourced its functions the availability of data will impact the timing of
procedures

Question 6

Extent

Answer 6

The extent of testing will be influenced by the following factors:
* High-risk clients will require extended testing and larger sample sizes
* If the client’s systems change during the year the auditor may have to test both systems
* The use of CAATs may enable the auditor to test the whole population instead of a sample

Question 7

There is something about possible l guess which says preceding 3 years

CAATS
- Availability of Software
- Client co-operation
- Cost-efficiency.

Answer 7

If you wish to place reliance on:
- Manual dependant controls
- Automated controls

You must test general IT controls:
- Programme Change Controls
- Programme Development Controls
- Access Controls
- Continuity of operations
- Personnel practices
- Control environment
- Standards
- Documentation
3. Test Application Control