How Do I ... Plan an Audit?

Planning procedures are the first and perhaps most important step in conducting a successful internal audit. Without adequate planning, the likelihood of missing relevant control weaknesses or encountering engagement-related problems increases considerably. Moreover, improper planning can lead to changes in scope or objectives after much of the audit work has already been completed.

OBJECTIVES AND SCOPE 

Audit objectives represent the high-level goals and anticipated accomplishments of the review and address controls and risks associated with the client's activity. The audit's scope defines the parameters to be used toward achieving those objectives.

Auditors should determine the review's scope and objectives well in advance of fieldwork. Objectives should address the risk and controls associated with the activities under review.

CLIENT OPERATIONS

The engagement team should gain an understanding of the auditable unit's business and operations as well as any of its unique characteristics or business practices. To begin, the team should review any prior-year workpapers related to the client. They should also consider obtaining background information on the client's responsibilities and processes via Web searches, company document reviews, and discussions with senior management or other personnel familiar with the client's business area.

ADMINISTRATIVE STEPS

Administrative planning items help lay the foundation for planning work and should be completed before fieldwork begins. Internal auditing should begin by creating a checklist to guide the planning process, including items such as client notification, client contacts, any documentation needed before fieldwork, and creation of the audit program and budget. Auditors should also draft an announcement letter or similar communication to the auditable unit and company leadership.

CLIENT OPENING MEETING

The project planning meeting should be held before fieldwork begins. During the meeting, auditors should inquire about any recent or proposed changes in the client's organization, including system changes. They should also discuss other practical and logistical concerns.

AUDIT PROGRAM

The audit program sets forth the procedures necessary to complete an efficient and effective audit. It consists of a detailed plan of the work to be performed and includes the steps required to achieve audit objectives. In most instances, a well-structured audit program:

• Provides an outline of the work to be performed and encourages a thorough understanding of the audited unit.
• Assists in controlling work and assigning responsibility.
• Aids in reviewing the audit.
• Furnishes evidence that the work is adequately planned.
• Provides a record that can be reviewed and approved by management before performance of work, thereby contributing to assignment supervision.
• Provides assurances that all appropriate risk areas have received adequate consideration and that important aspects of the audit have not been omitted.

Finally, a well-structured program gives order and coherence to the audit and provides a record of work completed.

Adapted from "Planning for Success," by Randal Rife (Internal Auditor, "Back to Basics," October 2006).

 

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