Audit planning is the first step in establishing the basis of the nature, timing, and extent of the overall audit strategy to determine the validity of the financial statements. An efficient and effective audit plan provides for a thoroughly and properly planned audit (The Importance of Audit Planning). It helps to reduce audit risk to a low level. Audit planning ensures appropriate attention to critical areas and that potential problems are identified on a timely basis.
Determine Acceptance of Engagement
Request permission from Keystone Computers & Networks, Inc. (KCN) for authorization to inquire with Adams, Barnes, & Co. And for consent to reviews Adams, Barnes, & Co. working papers for current year and prior year audits (AU Section 315).
Inquire for specific and reasonable information.
Information that might bear the integrity of management.
Disagreements with management concerning principles, procedures, and significant matters.
Communications to audit committees or others with equivalent authority and responsibility regarding fraud, illegal acts of client, internal control related matters, and Adams, Barnes, & Co.'s understanding as to the reasons for the change in auditors. May want to inquiry for other reasonable information.
4. If Adams, Barnes, & Co. clearly states that response is limited, it should be noted for acceptance consideration because it can be limited due to impending, threatened, or potential litigation, disciplinary proceedings, or other unusual circumstances.
C. Review of Working Papers
1. Reach an understanding with Adams, Barnes, & Co. As to the uses of the working papers.
2. Review documentation of planning, internal control, audit results, and other matters of continuance of accounting principles and audit significance, such as analysis of balance sheet accounts and others relating to contingencies to obtain sufficient, appropriate, evidential matter to afford a reasonable basis of expressing opinion of the financial statements, including evaluating for consistency in the application of accounting principles and analysis for opening balances. These matters are of professional judgment and can include the most recent audited financial statements for current and prior years, Adams, Barnes, & Co.'s audit report, results of Adams, Barnes, & Co.'s inquiry, and our review of Adam's, Barnes, & Co.'s working papers and audit procedures on current transactions.
D. Decision...
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