Page 55 - CA Final PARAM Digital Book.

• Proper Organisation and Management of Audit Engagement – Adequate planning would
help the auditor in properly organizing and managing the audit engagement so that it is
performed in an effective and efficient manner.
• Proper Selection of Engagement Team - Planning would assist the auditor in the selection
of engagement team members with appropriate levels of capabilities and competence to
respond to anticipated risks, and the proper assignment of work to them.
• Direction and Supervision of Engagement Team - It would further facilitate the direction
and supervision of engagement team members and the review of their work.
• Easy Coordination - Also, planning would be helpful to the auditor in coordination of work
done by auditors of components and experts.

Advantages: -
Appropriate selection & assignment of work / responsibility & accountability of work delegated improves /
clear set of instructions to juniors / systematic plan with proper emphasis on important areas / less
chances of overlooking.
e.g. EPS checking omitted / identify & resolve potential problems.
e.g. need of expert in inventory determination & valuation / helps in co-ordination with other
auditors / helps in controlling / supervising audit work / serves as guide in succeeding years / serves
as evidence in case of charge against negligence.

QNO Key phases of audit execution Old Course – (N18R)
149.010 TITANIUM CNO—APSE.320
Key phases in the audit execution stage are Execution Planning, Risk and Control Evaluation, Testing and

Reporting. Explain.
Answer ➢ Key phases in the audit execution stage are Execution Planning, Risk and Control
Evaluation, Testing and Reporting.

• Execution Planning:
Prior to commencement of an audit engagement, it is important to lay down the roadmap
for audit execution to ensure timely and quality audit results. The auditors need to plan
their work in order to carry out the audit in an effective, efficient and timely manner. A
detailed audit program is prepared laying down the audit objectives, scope and audit
approach. The manpower requirement, audit team qualifications, and the time element,
etc. are some of the important considerations during execution planning. In order to plan
effectively, the auditor may need some more information about the audit area. A
preliminary survey would help in gathering the required information.

• Risk and Control Evaluation:

For each segment of audit, the auditors should conduct a detailed risk and control
assessment i.e. list the risks that must be reviewed in that segment, capture for each risk
the controls that exist or those that are needed to protect against the risk and show for
each control, the work steps required to test the effectiveness of the controls. While
making Risk &Control assessment it is necessary to borne in mind Materiality levels as
the same is linked with Audit Risks.

• Testing:

Once a comprehensive understanding is gained of the key risks and the controls to be
evaluated in a given audit area, the auditors should test the operating effectiveness of the
controls to determine whether controls are operating as designed. There are multiple test
methods which can be used to arrive at the conclusions on the effectiveness of the
controls.
www.auditguru.in PARAM 3.5 | P a g e