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Unit 5: Audit Planning

These measures would also ensure that the issues that are relevant to the organisation Notes
and the auditee team are addressed. This will also ensure that there is an ongoing
value addition out of the audit process.
3. The CAE decided to improve the following areas:
(a) Resource allocation in line with the scope: The knowledge and skills required for
each audit was sought to be formally identified and matched with the ability
of the team members. In case there was a mismatch, the CAE considered the
option of training a team member in the area in advance and also involving
an outside professional for the specific aspect of audit as part of the on the job
training for the team. The option of including a guest auditor from within the
organisation also was considered.
(b) Detailed Audit Programme with specific priority for audit checks: Normally the
Audit Programmes were packed with all possible tests to be conducted during
an audit for all identified risks and controls. The team decided to identify
which controls significantly mitigate the risk (Key Control). Single control
mitigating multiple risks were also sought to be specifically identified in a
list of controls. The audit priority was focused on key controls. This focus
improved audit effectiveness.

Conclusions
These measures were implemented in the quarter and some significant improvements
were observed. The gaps identified vis a vis the standard and the measures already taken
and thus impact were shared with the Audit Committee. The initiatives taken were highly
appreciated by the Audit Committee members.

All the action of CAE were based on Internal audit standard issued by the Institute of
Chartered Accountant of India.

Exhibit 1: Standards of Internal Audit – 1 of The Institute of Chartered Accountants of
India
The internal auditor should, in consultation with those charged with governance, including
the audit committee, develop and document a plan for each internal audit engagement to
help him conduct the engagement in an efficient and timely manner.
The internal audit plan should be comprehensive enough to ensure that it helps in achieving
of the above overall objectives of an internal audit. The internal audit plan should, generally,
also be consistent with the goals and objectives of the internal audit function as listed out
in the internal audit charter as well as the goals and objectives of the organisation. An
internal audit charter is an important document defining the position of the internal audit
vis a vis the organisation. The internal audit charter also outlines the scope of internal
audit as well as the duties, responsibilities and powers of the internal auditor(s). In case
the entire internal audit or the particular internal audit engagement has been outsourced,
the internal auditor should also ensure that the plan is consistent with the terms of
engagement.
A plan once prepared should be continuously reviewed by the internal auditor to identify
any modifications required to bring the same in line with the changes, if any, in the audit
environment. However, any major modification to the internal audit plan should be done
in consultation with those charged with governance. Further, the internal auditor should
also document the changes to the internal audit plan.
Contd...

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