Audit planning and audit control.

Audit Plan
Contains of audit plan
The audit plan should cover the following mainly:
a)
b)
c)
d)

Determining the scope of audit

Gaining knowledge of clients' accounting system
Gaining knowledge of client's internal control system
Determining the programme of audit, fixing up time schedules, and nature and extent of
audit procedures to be carried out
e) Man power planning.

Audit Engagement Letter

An audit engagement letter contains, usually, the following matters:

1. Auditor's role-whether an accountant or an auditor, or a consultant,
2. Audit aims matters to be audited, opinions to be expressed, and certifications to be done,
areas over which expert advice is to be expressed.
3. Audit expectations having regard to special enactments, pronouncements of professional
bodies, and specific requests of the clients,
4. Duties of client during audit - documents, statements, facilities to be provided/prepared,
5. Limitations of audit - setting out inherent limitations generally,
6. Matters concerning the dealing with the work of internal auditor, outside experts by the
statutory auditor for his work,
7. Duration of audit and scheduling of time, audit programme in a brief manner,
8. Auditor's remuneration, reimbursement of out-of - pocket expenses.

Audit Programme.
Professor Meigs defines an Audit Programme as: "An audit program is a detailed plan of the
auditing work to be performed, specifying the procedures to be followed in verification of each
item in the financial statements and giving the estimated time required."

Advantages of Audit Programme.

The advantages of such an audit programme may be outlined as below:
1.

It ensures that all necessary work has been done and nothing has been omitted.

2.
3.
4.

5.
6.

7.

8.

9.
10.
11.

The auditor is in a position to know about the progress of the work done by his
assistants.
A uniformity of the. Work can be attained as the same programme will be followed at
subsequent audits.
Work of the audit can be divided amongst the different juniors who will be
responsible for their work. In case a clerk goes on leave, his work can be resumed by
another clerk who is in a position to know what work has already been done.
It simplifies the allocation of work to various grades of articled and audit clerks.
In case of a change of negligence against the auditor for not having done some work,
the auditor can defend himself that the .work had been done by him or his assistant
who had duly signed the audit programme.
It is a kind of guidance to the audit clerk for the work he has to perform. Thus it is a
kind of assurance to the auditor that the junior will not overlook essential points while
checking the accounts.
In case any fraud or error hasTemained undetected, the responsibility for negligence
can be fixed on the clerk who had performed that work as his initials are put on the
audit programme.
It facilitate the final review before the report is signed.
For a new clerk the audit programme is a guide to his duty.
It is a useful basis for planning the programme for the subsequent year.

Disadvantages of Audit Programme

There are, however, certain disadvantages of such an Audit programme, which may be detailed
below:1. An efficient clerk loses his initiative because he adheres to the programme which has
been fixed for him. He may not make any suggestion.
2. Even if the audit programme is well drawn up, it may not cover everything that might
come up during the course of audit.
3. The audit programme may be followed mechanically year after year though some
changes in the routine or internal check might have been introduced by the client. As a
matter of fact the audit programme for each new audit should be an improvement over
the previous year according to experience.
4. Each business may have a separate problem of its own and hence a rigid programme
cannot be laid down for each type of business.
5. Drawing up of an audit programme may be unnecessary for a small concern.
6. The audit clerk may regard the work entrusted to him according to the programme as the
maximum work to be done by him.

Audit Note-Book

An Audit Note-Book is a book which is maintained by the audit clerk During the course of audit,
the clerk comes across several difficulties or new points which he has to discuss with his senior
or the auditor He makes several inquiries which, he thinks, have not been satisfactorilv
answered. Lest he might forget these points, he noted down these in a book which is called by
different names such as Audit Note Book or Audit Memoranda. Such a book is a written record
of queries made, replies received thereto, correspondence entered into, etc. This book may be of
great help to the auditor preparing his Audit Report from such a record. A separate Audit Note
Book is maintained for each concern.

Contents of an Audit Note Book

Some of the points which are noted down in an Audit Note book are given below:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

A list of books of account maintained by the client;

The names of the principal officers, their powers, duties and responsibilities;
The technical terms used in the business;
The points which require further explanation and clarification;
The particulars of the missing vouchers, the duplicates of which have to be obtained;
The mistakes and errors discovered;
Totals or balances of certain books of account, Bank Reconciliation. , statement;
Notes and queries which might be required at a subsequent audit;
The points which have to be incorporated in the Audit Report;
Any matter which requires discussion with the senior or with the auditor;
Accounting method followed in the business;
Dates of commencement and completion of the audit;
Provisions in the Articles and Memorandum of Association affecting the accounts and
audit.

Working Papers
Working Papers are those papers which contain essential facts about accounts so that the auditor
may not have again to go over the accounts of his client in case he wants to refer to them later on
during the course of his audit,

Audit Files
The working papers are filed for future reference. Certain matters may be of permanent
importance and certain other matters may relate to a single period of audit. Matters of permanent
interest are filed in permanent file. A permanent file, for instance may include information
concerning organizational form like memorandum of association / articles of association in case
of company client, partnership deeds in case of firm client, important minutes of meetings,

review points of internal control system, accounting policies, audit and accounts reports of every
preceding year. In current file matters concerning the audit of current (or single period of year)
are filed. For instance, the current file may include matters documented in regard to acceptance
of reappointment, audit programme of the year, important extracts of audit notes concerning
checking of transactions, balances, events, matters arising from communicating with or
discussing with experts, third parties, client's staff, representations of management on accounting
matters, copy of financial statement and audit report of the relevant period under file.