Page 93 - DCOM204_AUDITING_THEORY

Unit 5: Audit Planning

3. Planning the audit; Notes

4. Executing the audit;
5. Reporting the audit results; and
6. Follow-up and evaluation of audit findings, conclusions and recommendations.

Audit institution with a strong reputation for the consistently high quality of their work exhibits
certain characteristics in common, regardless of their organizational structure. Among these,
there is the commitment to quality throughout the organization, coupled with a clear
understanding, based on education, training and experience, of what is required to achieve that
goal. Developing this institutional environment of quality is a long-term process that is addressed
in a later sub-section of these guidelines.
This sub-section of the guidelines, together with the forthcoming sub-sections, are addressed to
the more immediate need to establish procedures to control the quality of individual audits
undertaken by an audit team. However, because of the diversity in form and structure of an
audit institution as well as the different types of audits they perform, there is no single set of
detailed procedures that will accomplish the goal of quality in all circumstances. For example,
audit procedures that are appropriate for attesting the reliability of a set of financial statements
are unlikely to be entirely appropriate for a performance audit. Review procedures that work
well in some “audit offices” simply do not fit the structure of some “courts of audit”. Nevertheless,
there are attributes that are applicable to all audit institutions and to all audits. Among these are
the characteristics of quality and the phases of the audit process. Decisions and actions taken by
the audit institutions or its components and by the audit staff during each of the phases of the
audit largely determine the ultimate quality of the audit.
Ensuing sub-sections of these guidelines set out the basic principles that should guide decisions
and actions in each phase of the audit process. It is up to each SAI to determine how best to
implement these principles in the context of its own organization structure and the particular
types of audits that it performs.

In audit institutions with a highly decentralized organization, while setting up the guidelines is
a central management responsibility, implementing these guidelines rests almost entirely on
the component units or chambers.
Special attention is needed to the problems and potential advantages of computerization. Auditing
requires special skills when the auditee operates in a computerized environment. The auditors
in these circumstances must have not only a basic understanding of computers, but must have or
quickly acquire knowledge of the systems used by the auditee.

At the same time, computerized audit tools and programmes – when properly employed – can
greatly increase the efficiency of the audit process. Audit institutions may need to introduce
appropriate training to develop these skills.
Modern audit systems that make extensive use of computers to render audits largely paperless,
including the related working papers and documentation, should contain in-built controls and
safeguards. In such systems all or most stages of the audit could be processed and stored in
electronic format. An automated quality control system should incorporate a strictly defined set
of authorization and approved criteria, as well as features that ensure that standard documents
and checklists (which may be electronically readily available to all team members) are used and
compiled in all cases. With such systems some parts of the work of supervisors and reviewers
are electronically supported on a real time basis. The principles of quality control remain
intrinsically the same as those in a non-automated audit process.
Although an audit requires different layers of quality control measures and criteria, the auditors
carrying out the audit fieldwork should be left with a degree of professional judgement. This

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