This audit plan template provides an easy to use format that can be used to document the audit plan for the assignment. It is intended that the template would be used in conjunction with the Institute of Certified Public Accountants in Ireland publication AUDIT WORK PAPERS FOR A NOT FOR PROFIT ENTITY ENGAGED IN COMMUNITY DEVELOPMENT ACTIVITIES. An example audit plan is included in the above publication to illustrate the typical content of an audit plan for an audit for a not for profit entity. As it is intended that these work papers will be used on audit assignments of a small company, it is assumed that the auditor will not place reliance on internal controls and that consequently control risk is high. Guide to using the work papers The name of the firm, client, period end, prepared by and reviewed by can be inserted in the page header and footer and this detail will then appear on each page printed. In certain sections of the documents we have included a suggested text (in red text) that may be appropriate in some assignment cases. The user needs to amend this text to suit the actual assignment situation faced.
PRELIMINARY PLANNING PROCEDURES UNDERTAKEN The plan was prepared after completion of the following planning procedures: 1. Review of prior year audit file and client correspondence file. 2. Attendance by engagement partner and audit manager at planning meeting with the Directors of the client company. 3. Updating of the UNDERSTANDING THE COMPANY AND ITS ENVIRONMENT, INCLUDING ITS INTERNAL CONTROL memorandum and a meeting of entire engagement team for assignment briefing and discussion in relation to the assignment. 4. Completion of risk assessment procedures documented as part of the B section of the audit programme. ENGAGEMENT REQUIREMENTS In accordance with the requirements of company law we are to undertake a statutory audit of the financial statements of the company. The audit will be conducted in accordance with International Standards on Auditing (UK and Ireland). KEY CONTACTS IN COMPANY NAME RESPONSIBILITY AUDIT RISK ASSESSMENT PROCEDURES UNDERTAKEN Analytical Review. Discussion and enquiries with the directors. Considering the risk factors set out in Section B 4 of the audit programme. RESULTS OF AUDIT RISK ASSESSMENT Significant Audit Risk Identified Planned audit response
SUMMARY OF AUDIT APPROACH TO MAJOR BALANCE SHEET AREAS BALANCE SHEET CATEGORY PLANNED AUDIT APPROACH Fixed assets Debtors Bank Creditors Member guarantee and reserves Fixed asset additions to be vouched to invoice and fixed assets inspection to be carried out. The need for an impairment review will be considered. In respect of depreciation, the audit approach will be to carry out analytical review on the depreciation charge and do substantive testing (amount based on results of analytical review) on depreciation calculations. Debtors at year-end are likely to be confined to funding agency funding unpaid. Verification of amounts due will be by vouching to funding agency confirmation and subsequent receipts. In response to assessed risk of misstatement, vouch bank reconciliation and obtain bank confirmations. Carry out cut off work. Significant substantive work can be undertaken in this area with minimum input of audit team time. This work will result in a very low level of detection risk being achieved quickly and economically. Amounts due to trade creditors are likely to be small. Carry out analytical review procedures and based on results determine level of substantive testing needed on trade creditors. Select all major suppliers, unusual balances, significant balances and debit balances for verification. Accruals will be largely audited using analytical review procedures, client enquiry and targeted substantive testing arising from the results of analytical review. Undertake significant work in the search for unrecorded liabilities. PAYE to be vouched and calculations during the year reviewed. Risk of grants received (funding) becoming repayable requires special attention. Assessed risk is low as audit team has a detailed knowledge of the company s capital structure. This knowledge does not indicate any changes in the structure during the accounting period. The response to the low assessed risk will be: 1. Review company register and agree details to accounts. In particular ensure that the guarantee of the
members is disclosed. 2. Enquire from client if any changes in share structure during year. Review all minutes of directors meeting and shareholder meetings. 3. Obtain search of company s file in the companies office and agree details to financial statements. 4. Ensure the company has a minimum of seven members at all times. Stocks We do not expect the company to have any stock at year-end.
SUMMARY OF AUDIT APPROACH TO INCOME AND EXPENDITURE ACCOUNT INCOME & EXPENDITURE LINE ITEM AUDIT APPROACH Income The planned response to the assessed risk is: Third party confirmation from funding agency of income. Carry out analytical review procedures to highlight unusual trends etc. Undertake additional audit verification as warranted having reviewed the results of the above work. Check cut off to ensure income is accounted for in correct year. Undertake programme of work on public funding as set out in the audit programme income section. EXPENSES Prepare detailed analytical review. Use the following as basis for comparison: Prior year figures. Non-accounting data where possible. Prepare reconciliation of wages to P35. Where trends / fluctuation cannot be explained consider preparing analysis of the expense account to determine reason for the unexpected fluctuation. Perform detailed checks of wage calculations. Undertake programme of work as outlined in the audit programme expenditure section.
LAW AND REGULATION Law or Regulation identified Related Audit Risk Planned Audit Approach Company law Revenue law Funding agency regulations. Non compliance with company law that could result in a material misstatement in the financial statements. Exposure to additional tax, interest and penalties that are not accrued for in the financial statements. Exposure to possible repayment of funding received from the funding agency, where such refunds are not accrued for in the financial statements. Review of the company s compliance with company law. Consideration of the company exposure to VAT, PAYE/ PRSI and Corporation tax and obtain adequate evidence that there is no exposure to these taxes or where there is an exposure that the financial statements contain adequate provision for the tax. We will review correspondence with the funding agency to identify any possible issues that could give rise to possible refunds. Obtaining written representations on possible noncompliance from the Board. Request access to any inspection / audit reports prepared by the funding.
FRAUD Type of Fraud Susceptibility of the financial statements to material misstatements due to fraud Planned Audit Approach to address risk Fraudulent financial reporting Misappropriation of assets Risk assessment points to the risk of a material misstatement in the financial statements from fraudulent financial reporting as low. This is based on: The knowledge the firm has of the client. Controls operated by directors. The expected financial outcome for the period is predictable. Risk assessment points to the risk of a material misstatement in the financial statements from misappropriation of assets as low. Due to the predictable nature of the income streams and expenditure it would be difficult to conceal misappropriation of assets. Management override While this is possible, the planned audit response is adequate. 1. The planned substantive based audit work will reduce the risk of fraudulent financial reporting going undetected. 2. Analytical review. 3. Application of the knowledge of the entity in making an assessment of the credibility of the final financial statements 1. The planned substantive based audit work will reduce the risk of misstatement in the financial statements from misappropriation of assets. 2. Plan to request a copy of a sample of returned paid cheques to confirm validity of the payments. 3. Plan to confirm existence of scheme participants. 4. Analytical procedures. 1. Overall planned audit work. 2. Risk will be considered throughout the audit process. 3.
Partner Manager Staff member (s) AUDIT STAFF MATERIALITY (AS CALCULATED AT SCHEDULE B2) Overall performance materiality. Specific performance materiality for separate for transactions between company and classes of transactions (where applicable). directors. Specific performance materiality for separate for balances due by directors. classes of balances (where applicable). Specific performance materiality for separate for all disclosures. classes of disclosures (where applicable). Matters regarded as trivial APPROACH TO PLACING RELIANCE ON INTERNAL CONTROLS Due to small number of people involved in management of the entity, segregation of duties is limited and therefore completion of the audit using a predominantly substantive approach is the audit approach planned. APPROACH TO COMPLIANCE WITH ETHICAL STANDARD FOR AUDITORS We will complete Section B1 of the audit programme to identify any potential issues arising for the firm in complying with the ethical standards. The overall approach of the firm to complying with the requirements of the ethical standards will be documented in section B 1 of the audit file.
THIRD PARTY REPORTING REQUIREMENTS During the course of the audit assignment, the audit team will consider the third party reporting obligations set out below and where a reporting obligation is identified, the matter will be immediately brought to the attention of the partner in charge. Indictable offences Proper books of account Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 and 2013. Criminal Justice (Theft and Fraud) Act 2001 Taxes Consolidation Act 1997 Where during the course of the audit we become aware that a director, secretary, agent of the company or the company may have committed an indictable offence under the Companies Act 1963 to 2013 this should be reported to the Director of Corporate Law Enforcement. If the auditor forms the opinion that proper books of account are not kept, then we are required to notify both the company and not later than 7 days after notifying the company notify the Register of Companies of the situation. If auditor is of the opinion that the directors have taken steps to remedy the situation, then the Register need not be informed under section 194 of 1990 Act. Staff are aware that failure to maintain proper books of account is potentially an indictable offence and will be required to be reported to the Director of Corporate Law Enforcement. As our firm is a designated body under antimoney laundering legislation we are required to report our suspicions where we believe that an offence under this legislation has been committed. We are required to report our suspicions to the Garda where we believe that an offence under the above act was committed. As auditor / tax advisor to the company we are required to take the actions specified in the tax acts where we become aware that a material relevant revenue offence under the Act has been committed.(see section 1079 of Tax Act) Task ASSIGNMENT TIMETABLE Date Commence assignment. Issue standard audit request letters: Bank letter, Audit planning letter, Solicitor request letter. Responsible individual review. Issue financial statements for approval by
directors. Sign audit report. AUDIT PLAN REVIEWED AND APPROVED BY: MANAGER PARTNER SIGNATURE DATE
Revisions to audit plan. AUDIT PLAN REVISIONS Partner Date Manager Date