The main objective of audit planning is to ensure appropriate attention is given to all areas of the audit. More attention should be devoted in auditing high risk of the entity. Low risk areas should be given less time to conserve resources.
Secondly planning is done to pick potential problems during audit such as weaknesses in the internal control system and may have material effects on the financial statements.
Finally planning is useful in ensuring proper coordination and allocation of financial resources during the audit by assigning highly and experienced staff to high risk and most important areas.
Proper planning facilitates efficient use of audit resources and effective carrying out of the audit. When planning is correctly done, audit team is likely to identify events, transactions and practices which may have material effects on the financial statements and subsequently the auditor’s opinion.
The following are various planning stages that an auditor need to take:
• Acquiring detailed knowledge of the client’s business• Carrying out risk assessment• Setting materiality levels• Carrying out analytical review procedures• Development of overall audit programme• Planning the logistics
Proper audit planning helps in reaching audit objectives.