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Audit Planning Memorandum

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  1. Audit Planning Memorandum

  2. Audit Planning Memorandum • Audit Planning Memorandum is prepared • To set out the objectives of the audit • To spell out how the auditor aims to achieve these objectives • It is also a tool to • monitor the progress of the audit and • promotes high quality and professional audit work.

  3. Elements of audit planning memorandum • Background • information about the audited entity; • Materiality • the overall materiality level the auditor chose and • any exceptions, e.g.if the auditor has chosen a separate, lower materiality level for certain figures; • Risk assessment • the auditor’s assessment of risks, taking into account their opinion of the control environment together with the controls in place for each of the areas being reviewed;

  4. Elements of audit planning memorandum • Audit objectives • General Objectives - set out the relevant constitutional and legal provisions • Main Objectives - this will be the accuracy of the financial statements and the legality and regularity of the underlying transactions • Specific Objectives - any audit work in addition to the main objective. For example, to investigate an area of special interest or to follow up a recommendation from a previous year

  5. Elements of audit planning memorandum • Audit approach • summarising the testing to be undertaken, • the extent of substantive testing • the extent to which the auditor intends to use analytical procedures, if at all. • If yes, the auditor would set out the account figure they plan to test in this way, and how they will make the forecast. . For instance, for testing salaries, the auditor may use personnel records and salary rates to make a forecast and would therefore note the sources of information they aim to use.

  6. Elements of audit planning memorandum • Resources and timing • the date of starting and completing the audit • the number of days the audit team would spend at the offices of the entity • responsibilities and tasks allotted to the team members • and dates of discussion with the auditee and to take into account the comments furnished by them • the dates of finalisation of report.

  7. Elements of audit planning memorandum • Key contacts at the entity • listing one or more important persons within the audited entity, including names, department, postal address, telephone number, and e-mail address

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