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i. Knowledge of the Business. This entails getting information on general economic factors and industry conditions affecting client‘s business. Also ascertaining, important characteristics of the business is necessary.
ii. Understanding the Accounting and I.C.S: The auditor should find out to what extent he can rely on the client‘s internal control system.
iii. Risk and Materiality: The auditor should identify audit risk areas and inform his team about them. He should consider setting materiality levels.
iv. Nature, timing and extent of procedures: auditor should ascertain the possibility of change of emphasis on specific audit areas; time spent on the various audit areas should be budgeted for.
v. Coordination, Direction, Supervision and Review: Here, the auditor considers the involvement of other auditors in the audit of components e.g. subsidiaries. He‘ll also consider need for experts, staffing requirements and areas to visit.
vi. Terms of engagement: These should be formally recorded and agreed with the client.
vii. Extent of internal audit department involvement: The auditor would consider the degree of reliance on client‘s internal audit department.
viii. Effect of Accounting and Auditing Standards: Auditor should consider the effect of accounting and auditing standards on the audit work.
Wilfykil answered the question on February 22, 2019 at 08:57
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