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CHAPTER

8
Learning Objectives
Audit Planning

After studying this chapter, you should be able to:

1. Discuss why adequate audit planning is essential;
2. Make client acceptance decisions and perform initial audit planning;
3. Gain an understanding of the client’s business and industry;
4. Perform preliminary analytical procedures;
5. Apply the concept of materiality to the audit;
6. Make a preliminary judgment about what amounts to be consider material;
7. Determine performance materiality during audit planning;
8. Use materiality to evaluate audit findings.

Nature of Auditing

Auditing is the accumulation and evaluation

of evidence about information to determine
and report on the degree of correspondence
between the information and established criteria.

Auditing should be done by a competent,

independent person.

LO 1

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Four Phases of an Audit

Perform analytical
Plan and design procedures and
Phase I Phase III
an audit approach. tests of details
of balances.

Perform tests of
Complete the
controls and
Phase II Phase IV audit and issue
substantive tests
an audit report.
of transactions.

LO 1

Learning objective 1

Discuss why adequate audit

planning is essential.

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SA 300: Perencanaan Suatu Learning Objective 1

Discuss why adequate
Audit atas Laporan Keuangan audit planning is essential.

 SA 300 ini mengatur tanggung jawab

auditor untuk merencanakan audit atas
laporan keuangan.
 Perencanaan suatu audit melibatkan
penetapan strategi audit secara
keseluruhan untuk perikatan tersebut dan
pengembangan rencana audit

LO 1

Three Main Reasons for Learning Objective 1

Discuss why adequate
Planning audit planning is essential.

To obtain sufficient appropriate evidence for the

circumstances.

To help keep audit costs reasonable.

To avoid misunderstanding with the client.

LO 1

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Learning Objective 1
Quote Discuss why adequate
audit planning is essential.

If you fail to plan, then you plan to fail

LO 1

Planning an Audit and Learning Objective 1

Discuss why adequate
Designing an Approach audit planning is essential.

Accept client and

perform initial Identify significant risks due to
audit planning fraud or error
Finalize
overall audit
Understand the
strategy and
client’s business
Assess inherent risks audit plan
and industry

Perform preliminary
analytical procedures Understand internal control
and assess control risk
Set preliminary judgment
of materiality and
performance materiality
LO 1

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Learning objective 2

Accept client and

perform initial Make client acceptance
audit planning
decisions and perform
Understand the
client’s business initial audit planning.
and industry

Perform preliminary
analytical procedures

Set preliminary
judgment of materiality
and performance
materiality

Learning Objective 2
Make client acceptance
Initial Audit Planning decisions and perform
initial audit planning.

1. Client acceptance and continuance

2. Identify client’s reasons for audit

3. Obtain an understanding with the client

4. Develop overall audit strategy

LO 2

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Learning Objective 2
Client Acceptance and Make client acceptance

Continuance decisions and perform

initial audit planning.

 New client investigations

 If previously audited, the new auditor is
required to communicate with the
predecessor auditor
 Client permission required

 Continuing clients
 Annual evaluations whether to continue
based on issues, fees, and client integrity
LO 2

Learning Objective 2

Identify Reasons for the Audit

Make client acceptance
decisions and perform
initial audit planning.

 Two major factors affecting acceptable risk

 Likely statement users
 Intended uses of the statements

 Likely to accumulate more evidence for

companies that are
 Publicly held
 Have extreme indebtedness
 Likely to be sold

LO 2

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Learning Objective 2
Obtaining an Understanding Make client acceptance

with the Client decisions and perform

initial audit planning.

 Engagement terms should be understood between

CPA and client.
 Standards require an engagement letter describing:
 objectives
 responsibilities of auditor and management
 schedules and fees
 Informs client that auditor cannot guarantee all acts
of fraud will be discovered

LO 2

Learning Objective 2

Develop Overall Audit Strategy

Make client acceptance
decisions and perform
initial audit planning.

 Preliminary audit strategy should consider

 client’s business and industry
 material misstatement risk areas
 number of client locations
 past effectiveness of controls
 Preliminary strategy helps auditor determine
resource requirements and staffing
 staff continuity
 need for specialists

LO 2

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Learning objective 3

Accept client and

perform initial
audit planning

Gain an understanding
Understand the
client’s business of the client’s business
and industry
and industry.
Perform preliminary
analytical procedures

Set preliminary
judgment of materiality
and performance
materiality

Learning Objective 3
Understanding of the Client’s Gain an understanding of
the client’s business and
Business and Industry industry.

What are some factors that have increased

the importance of understanding the
client’s business and industry?

Economic Information Global Human

declines technology operations capital

LO 3

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Learning Objective 3
Understanding of the Client’s Gain an understanding of

Business and Industry

the client’s business and
industry.

1. Industry and external environment

2. Business operations and processes

3. Management and governance

4. Objectives and strategies

5. Measurement and performance

LO 3

Preliminary Analytical Learning Objective 4

Procedures
Perform preliminary
analytical procedures.

Analytical procedures are defined as

evaluations of financial information made by a
study of plausible relationships among financial
and nonfinancial data involving comparisons of
recorded amounts to expectations developed
by the auditor.

1. Required in the planning phase

2. Often done during the testing phase
3. Required during the completion phase
LO 4

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Preliminary Analytical Learning Objective 4

Procedures
Perform preliminary
analytical procedures.

Comparison of client ratios to industry

or competitor benchmarks provides an
indication of the company’s performance.

Preliminary tests can reveal unusual

changes in ratios.

LO 4

Timing and Purposes of Learning Objective 4

Analytical Procedures
Perform preliminary
analytical procedures.

LO 4

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Learning objective 5

Accept client and

perform initial
audit planning

Apply the concept of

Understand the
client’s business materiality to the audit.
and industry

Perform preliminary
analytical procedures

Set preliminary judgment

of materiality and
performance materiality

Learning Objective 5
Standar Audit Apply the concept of
materiality to the audit.

SA 320: Materialitas dalam Tahap Perencanaan dan

Pelaksanaan Audit

• SA tidak mendefinisikan secara khusus tentang materialitas ini.

• Dalam hubungannya dengan audit, materialitas dijelaskan
sebagai berikut:
1. Kesalahan penyajian, termasuk penghilangan, dianggap material
bila kesalahan penyajian tersebut, secara individual atau agregat,
diperkirakan dapat memengaruhi keputusan ekonomi yang diambil
berdasarkan laporan keuangan oleh pengguna laporan keuangan
tersebut;

LO 5

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Learning Objective 5
Standar Audit Apply the concept of
materiality to the audit.

• SA tidak mendefinisikan secara khusus tentang materialitas ini.

• Dalam hubungannya dengan audit, materialitas dijelaskan
sebagai berikut:
2. Pertimbangan tentang materialitas dibuat dengan
mempertimbangkan berbagai kondisi yang melingkupinya dan
dipengaruhi oleh ukuran atau sifat kesalahan penyajian, atau
kombinasi keduanya; dan
3. Pertimbangan tentang hal-hal yang material bagi pengguna
laporan keuangan didasarkan pada pertimbangan kebutuhan
informasi keuangan yang umum yang diperlukan oleh pengguna
laporan keuangansebagai suatu grup.

LO 5

Learning Objective 5
Standar Audit Apply the concept of
materiality to the audit.

SA 320: Materialitas dalam Tahap Perencanaan dan

Pelaksanaan Audit

Materialitas pelaksanaan (performance materiality) adalah

suatu jumlah yang ditetapkan oleh auditor, pada tingkat yang
lebih rendah daripada materialitas untuk laporan keuangan
secara keseluruhan, untuk mengurangi ke tingkat rendah
yang semestinya kemungkinan kesalahan penyajian yang
tidak dikoreksi dan yang tidak terdeteksi yang secara agregat
melebihi materialitas untuk laporan keuangan secara
keseluruhan.
LO 5

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Learning Objective 5
Auditor’s Responsibility Apply the concept of
materiality to the audit.

The auditor’s responsibility is to

determine whether financial
statements are materially misstated.
If there is a material misstatement,
the auditor will bring it to the client’s
attention so that a correction can be made.

LO 5

Learning Objective 5
Steps in Applying Materiality Apply the concept of
materiality to the audit.

LO 5

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Learning objective 6

Make a preliminary judgment

about what amounts to consider
material.

Learning Objective 6
Set Preliminary Judgment About Make a preliminary

Materiality judgment about what

amounts to consider
material.

Auditors set materiality thresholds early in the

engagement.

Thresholds represent the maximum

statements that could be misstated and still
not affect users decisions.

LO 6

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Learning Objective 6
Make a preliminary

Factors Affecting Judgment judgment about what

amounts to consider
material.

Materiality is a relative rather

than an absolute concept.

Bases are needed for

evaluating materiality.

Qualitative factors also

affect materiality.

LO 6

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