Audit Planning and Control: External and Internal Audits

Audit Planning and Control
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Introduction
It is well understood that an audit planning provide the auditors with a guide which they are supposed to adhere to when performing an audit. External audits performed by public audit firms provide an assurance to the outside stakeholders that the preparation of financial statements follows the GAAPs or the IFRS (Spradling, et.al, 2019).
The main objectives of auditing are checking the internal system, genuineness and validity of all the transactions done by the company, accuracy of books of accounts among others. As per ISAs the auditor plans the audit for effectiveness of the audit process.
Being a senior partner in Ernst and Young Global Limited, I will do the audit planning and control for Apple Inc. This is an American Multinational Technology company publicly traded in Nasdaq-American Stock Exchange. It is well known for designing, prototyping; developing and selling electronic appliances, computer softwares and also offering the online services to a wide range of clientele.
1 Audit Planning Steps
Possible eight steps will include;
First is to allow in the client and conduct the initial audit planning. According to Coleman (2018), the client is accepted and the audit program together with getting to know why the client needed external audit continues. It is quite important to understand your client at this stage and then select the staff to work with possibly from the side of the client for easier engagement.
Secondly, the audit firm should have an in-depth knowledge of business operations being audited. The auditor must have a good and detailed understanding of the client’s industry and business to ensure effectively planned audit program. Some of these industry and business aspects that the auditor needs to note are: management and governance, business processes and operations, the strategies and objectives, and measurements and performance.
Third step involves the assessment of risks in client’s business. The can be done through controls and disclosure processes to tap a lot of information about the business he is auditing. The auditor together with the audit committee must be informed by the management of any internal control’s solid inadequacy.
Fourth step is where the auditor conducts introductory analytical processes. This entails relating the Apple’s financial ratios to industry standard ratios. It would help determine client relationship to the industry and determine performance ratio variation
Next step entails specifying materiality, assessing agreeable audit and looking at the inherent risks in the technology industry as well as for the Apple Company.
In the sixth step, the auditor will assess the control risk upon understanding the Apple Inc. internal control.
The seventh step is fraud risks assessment and evaluation. This happens when the auditor collects all the available information for the task.
Finally, the auditor goes ahead and develops the general audit program and plan.
2 Analytical procedures and financial performance ratios
Analytical tests in determining the general ...