Audit Planning & Audit Program Pertemuan 13-14 Matakuliah : A0294/Audit SI Lanjutan Tahun : 2009 Audit Planning & Audit Program Pertemuan 13-14

Learning Outcomes Pada akhir pertemuan ini, diharapkan mahasiswa akan mampu : Menjelaskan audit planning Menjelaskan audit program Bina Nusantara University

Audit Planning Process Strategic/tactical audit planning Engagement letter Risk assessment Preliminary evaluation of internal controls Audit plan, program and scope Classification, scope of audit Bina Nusantara University

Strategic/tactical Audit Planning Short term Takes into account audit issues that will be covered during the year Long term Relates to audit plans that will take into account risk related issues regarding changes in the organization’s IT strategic direction that will affect the organization’s IT environment Bina Nusantara University

Areas to be audited Enables management Ensures that relevant information Establishes a basis for effectively managing the audit departement Provides a summary of how the individual audit subject is related to the overall organization as well as to the business plans Bina Nusantara University

Steps to perform audit planning Gain an understanding of the business's mission, objectives, purpose and processes, which include information and processing requirements, such as availability, integrity, security and business technology Touring key organization facilities Reading background material including industry publications, annual reports and independent financial analysis reports Reviewing long term strategic plans Interviewing key managers to understand business issues Reviewing prior reports Identify stated contents, such as policies, standards and required guidelines, procedures, and organization structure Bina Nusantara University

Steps to perform audit planning Evaluate risk assessment and any privacy impact analysis carried out by management Perform a risk analysis Conduct an internal control review Set the audit scope and audit objectives Develop the audit approach or audit strategy Assign personnel resources to the audit and address engagement logistics Bina Nusantara University

Risk Assessment Risk assessment method Areas to be audited Use of risk assessment in audit planning (S11, G13, P1) Bina Nusantara University

Risk Assessment Method Qualitative and Quantitative Methods Semiquantitative Analysis Methods Quantitative Analysis Methods Bina Nusantara University

Audit Program Obtaining and recording and understanding of the audit area/subject Risk assessment and general audit plan and schedule Detailed audit planning Preliminary review of the audit area/subject Evaluating the audit area/subject Compliance testing (often referred to as test of controls) Substantive testing Reporting (communicating results) Follow up Bina Nusantara University

PLANNING PREPLAN CLIENT ACCEPTANCE OR CONTINUATION REASONS FOR AUDIT INVESTIGATION REASONS FOR AUDIT ENGAGEMENT LETTER SELECT STAFF Bina Nusantara University

OBTAIN BACKGROUND INFORMATION Knowledge of Client Industry Tour Client Facilities Identify Related Parties Needs For Specialists CLIENT LEGAL OBLIGATIONS Charter And By Laws Minutes Of Meetings Contracts PRELIMINARY ANALYTICAL REVIEW Bina Nusantara University

WORKING PAPERS PURPOSES OF WORKING PAPERS CONTENT AND ORGANIZATION Planning Audit Record Evidence Gathered Basis For Audit Report Basis For Review CONTENT AND ORGANIZATION Permanent Files Current Files Bina Nusantara University

For Each Major Category, Listing Of All Account Type WORKING TRIAL BALANCE Grouped Trial Balance LEAD SCHEDULES For Each Major Category, Listing Of All Account Type ADJUSTING AND RECLASSIFICATION ENTRIES SUPPORTING SCHEDULES ANALYSIS TRIAL BALANCE OR LIST RECONCILIATION TEST OF REASONABLENESS SUMMARY OF PROCEDURES SUPPORTING DOCUMENTS OUTSIDE DOCUMENTATION Bina Nusantara University

PREPARATION OF WORKING PAPERS HEADING INDEXING AND CROSS-REFERENCING INDICATE AUDIT WORK PERFORMED TICK MARKS OBJECTIVE OF PREPARING WORK PAPER CONCLUSIONS OWNERSHIP OF WORK PAPERS CONFIDENTIALITY Bina Nusantara University

PLANNING PREPLAN CLIENT ACCEPTANCE OR CONTINUATION REASONS FOR AUDIT INVESTIGATION REASONS FOR AUDIT ENGAGEMENT LETTER SELECT STAFF Bina Nusantara University

OBTAIN BACKGROUND INFORMATION KNOWLEDGE OF CLIENT INDUSTRY TOUR CLIENT FACILITIES IDENTIFY RELATED PARTIES NEED FOR SPECIALISTS CLIENT LEGAL OBLIGATIONS CHARTER AND BYLAWS MINUTES OF MEETINGS CONTARCTS PRELIMINARY ANALYTICAL REVIEW Bina Nusantara University

WORKING PAPERS PURPOSES OF WORKING PAPERS CONTENT AND ORGANIZATION PLANNING AUDIT RECORD EVIDENCE GATHERED BASIS FOR AUDIT REPORT BASIS FOR REVIEW CONTENT AND ORGANIZATION PERMANENT FILES CURRENT FILES Bina Nusantara University

WORKING PAPERS Functions: Assignment and coordinating audit work Supervising and reviewing the work of assistants Supporting the report Complying with the stds of field work Planning and conducting the next audit Bina Nusantara University

TYPES OF WORKING PAPERS Administrative working papers Audit plan Audit program Time budget Internal control documentation Working trial balance Lead schedules Adjusting journal entries Bina Nusantara University

Types of Working Papers Supporting schedules Analysis of a ledger account Corroborating documents Bina Nusantara University

ORGANIZATION Current files – one file per year Permanent file – preserves working papers that show relatively few or no changes Articles of incorporation Bylaws Leases Pension plans, labor contracts Tax returns Bina Nusantara University

TYPES OF TESTS PROCEDURES TO OBTAIN UNDERSTANDING OF INTERNAL CONTROL INQUIRIES OF CLIENT READ POLICY AND PROCEDURES MANUALS EXAMINE DOCUMENTS OBSERVE PERSONNEL TESTS OF CONTROL REPERFORM PROCEDURES WAS PROCEDURE PERFORMED? WAS IT PERFORMED CONSISTENTLY WHO PERFORMED IT? Bina Nusantara University

SUBSTANTIVE TESTS OF TRANSACTIONS TEST FOR DOLLAR MISSTATEMENT SATISFY ALL SIX TRANSACTION-RELATED OBJECTIVES FOR EACH CLASS OF TRANSACTIONS RECORED SALES OCCURRED RECORDED SALES ARE COMPLETE RECORDED SALES ARE ACCURATE RECORDED SALES ARE IN CORRECT TIME PERIOD RECORDED SALES ARE PROPERLY CLASSIFIED RECORDED SALES ARE ACCURATELY SUMMARIZED ANALYTICAL PROCEDURES COMPARISONS OF DATA FOUR PURPOSES Bina Nusantara University

TESTS OF DETAILS OF BALANCES FOCUS ON ENDING G/L BALANCES EXTENT DEPENDENT ON RESULTS OF OTHER TESTS TESTS OF CONTROL ANALYTICAL PROCEDURES TESTS OF TRANSACTIONS SUMMARY OF TYPES OF TESTS CONTROL RISK ASSESSMENT LOWER DETECTION RISK Bina Nusantara University

AUDIT EVIDENCE Any information that corroborates or refutes an assertion. Must be: Competent – relevant and valid (Quality) Sufficient – Quantity There is an inverse relationship between competent and sufficiency. Bina Nusantara University

TYPES OF EVIDENCE Physical evidence- provides evidence about existence but needs to be supplemented by other types of evidence. Bina Nusantara University

TYPES OF EVIDENCE 2. Third party representations Confirmations – effective at providing evidence about existence. Lawyers’ Letters – primary source of evidence regarding lawsuits and litigation. Reports of specialists Bina Nusantara University

TYPES OF EVIDENCE 3. Documents 4. Computations 5. Analytical reviews Created outside the client and transmitted directly to the auditors Created outside the client and held by the client Created and held within the client 4. Computations 5. Analytical reviews 6. Oral and written client representation 7. Accounting records Bina Nusantara University

TESTS_EVIDENCE Relationship RELATIVE COSTS ANALYTICAL PROCEDURES PROCEDURES TO OBTAIN UNDERSTANDING OF I/C AND TESTS OF CONTROL SUBSTANTIVE TESTS OF TRANSACTIONS TESTS OF DETAIL OF BALANCES RELATION BETWEEN TESTS OF CONTROL AND SUBSTANTIVE TESTS DEVIATION FROM CONTROL INCREASES RISK OF DOLLAR ERROR Bina Nusantara University

EVIDENCE MIX TRADE OFF BETWEEN TESTS OF CONTROL AND SUBSTANTIVE TESTS Bina Nusantara University

AUDIT PLAN (AUDIT PROGRAM) Detailed listing of the audit procedures to be performed in the course of the audit (nature, timing, and extent). Objectives: Design to accomplish audit objectives with respect to each major account in the financial statements. These objectives are: Existence or occurrence Completeness Rights and obligations Valuation or allocation Presentation and disclosure Accuracy Cutoff Classification Bina Nusantara University

DESIGN AUDIT PROGRAM TESTS OF CONTROL AND SUBSTANTIVE TESTS OF TRANSACTIONS FOUR STEPS APPLY TRANSACTION-RELATED OBJECTIVES IDENTIFY SPECIFIC CONTROLS TO REDUCE RISK DEVELOP TESTS OF CONTROL DESIGN SUBSTANTIVE TESTS OF TRANSACTIONS FOR POTENTIAL MISSTATEMENTS CONSIDER CONTROL RISK ASSESSMENT Bina Nusantara University

ANALYTICAL PROCEDURES AUDITOR JUDGMENT INDUSTRY-SPECIFIC PROCEDURES TESTS OF DETAIL OF BALANCES SET MATERIALITY LEVEL, ACCEPTABLE AUDIT RISK, AND ASSESS INHERENT RISK ASSESS CONTROL RISK DESIGN TESTS OF BALANCES FOR EACH BALANCE-RELATED OBJECTIVE RELATION OF AUDIT OBJECTIVES Bina Nusantara University

AUDIT PROCESS PHASE I PHASE II PHASE III PHASE IV PLAN AUDIT DESIGN APPROACH PHASE II PERFORM TESTS OF CONTROLS PERFORM TESTS OF TRANSACTIONS PHASE III PERFORM ANALYTICAL PROCEDURES PERFORM TESTS OF BALANCES PHASE IV COMPLETE AUDIT AND ISSUE REPORT Bina Nusantara University

AUDIT PROCEDURES Hal-hal yang perlu dipertimbangkan dalam menyusun rencana kerja audit Timing Nature Extent Cost Bina Nusantara University

OTHER CONSIDERATIONS Confidential nature Ownership of working papers Auditors’ liability Differences of opinion Bina Nusantara University

THE End Bina Nusantara University