Audit Planning and Ethics Chapter 2

Which of the following is incorrect

• In establishing the audit strategy the auditor shall identify characteristics of the engagement that define its scope.

• The auditor shall develop an audit plan that shall include a description of the nature, timing and extent of risk assessment procedures and further audit procedures which are proposed to be performed.

• The auditor shall establish audit strategy on the basis of overall audit plan.

• The auditor shall update and change the audit strategy and audit plan as necessary during course of the audit.

Planning is ______ process of an audit that often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit engagement:

• continuous

• discrete

• neither continuous nor discreet

• strategic

Which of the following in incorrect w.r.t audit programme

• An audit programme consists of a series of verification procedures to be applied.

• It is desirable in respect of each audit and more particularly for bigger audits an audit programme should be drawn up.

• An audit programme is a summarized plan

• There should be periodic review of the audit programme to assess whether the same continues

Which of the following is not included in an audit programme normally?

• Extent of checking

• Date of checking

• Nature or type of procedure

• Planning of risk assessment procedures

.......... sets the scope, timing & direction of the audit and guides the development of the more detailed plan.

• Audit Programme

• Overall Audit Strategy

• Completion Memorandum

• Audit Plan

Which of the following is most important principle for formulating an audit plan?

• Gaining knowledge of client’s workforce

• Gaining knowledge of client’s business

• Gaining knowledge of client’s vendors

• Gaining knowledge of tax laws applicable to client

Which of the following is not considered in planning an audit generally?

• Understanding of legal and regulatory framework of an entity

• Need to consider determination of materiality

• Evaluating audit evidence

• Need to consider involvement of expert

Which of the following is not addressed by the overall audit strategy :

• scope of the audit

• timing of the audit

• direction of the audit

• monitoring of the audit

Statement 1: The establishment of the overall audit strategy and the detailed audit plan are not necessarily discrete or sequential process but are closely inter-related. Statement 2: The auditor shall establish an overall audit strategy that guides the development of audit plan.

• only Statement 1 is correct

• Only Statement 2 is correct

• Both Statements 1 & 2 are correct

• Both Statements 1 & 2 are incorrect

Benefit(s) of audit planning is

• Helping auditor to devote appropriate attention on important areas of the audit

• Better preparation of engagement letter

• Effective communication with retiring auditor

• It ensure compliance with applicable law and regulation