E.8 Scoping and Planning the Engagement

Overview

  1. Effective scoping and planning helps to ensure each audit is focused on the areas of highest priority and conducted in the most efficient and effective manner.

  2. Scoping and planning helps to ensure:

    • agreement between the audit team and the audit client;
    • the audit effort is focused on the most important areas;
    • the audit is conducted in the most efficient and effective manner; and
    • business disturbance is minimized.

Key Scoping and Planning Activities

  1. The key scoping and planning activities cover steps 1 to 5 of the audit execution overview, as follows:
Audit Step Description and Guidance
  1. Audit announcement memo (AAM)

The AAM is used to notify the business of the upcoming audit.

NB: The AAM may be replaced by an email or (on some occasions) a verbal announcement of the audit, depending on the target audience.
  1. Scoping meeting

The scoping meeting is used to confirm the focus and approach for the audit.

The audit team is expected to prepare for the scoping meeting by reviewing the following, at a minimum:

  • Organization charts
  • Key performance indicators for the activity
  • Analytical review of key financial and operational results
  • Policies and procedures
  • Prior audit reports and any open audit items
  • External research (Internet, etc.)
  • Brainstorming of initial thoughts on key business risks and expected controls
  • Any site-specific requirements

NB: Consider whether data analytics could be used on the engagement and include this for discussion in the scoping.

NB: At a minimum, the audit team should prepare an agenda and/or slide pack for discussion at the scoping meeting.
  1. Audit scope document

The scope document sets out the agreed scope and approach for the audit.

The audit scope document should be sent to management well in advance of the opening meeting.
  1. Opening meeting

This meeting acts as the formal commencement of the audit.

The opening workshop should cover the following:

  1. A sound understanding of the audit process
  2. Confirmation of the audit scope, including key business risks and controls to be tested
  3. Initial thoughts on whether there are any control gaps or other concerns noted by management
  4. Next steps and expected sequence of the audit process, including:
    • Timing of fieldwork
    • Access to people
    • Likely information requests
    • Use of data analytics, where applicable
    • Process for rating observations
    • Process for confirming any preliminary observations
    • Anticipated closing workshop date and potential attendees
    • Contact details for the audit team

Minutes from the opening meetings should be documented and retained in the audit file.
  1. Development of audit program

The audit program the foundation for the fieldwork. It represents the output of the planning activities, through the documentation of key risks and controls and confirms the audit steps that will be conducted.

The audit program helps to ensure that:

  • audits are performed in a consistent manner;
  • audit teams are well briefed on the audit requirements;
  • audit effort is focused on the most important areas;
  • unnecessary audit testing is avoided; and
  • audit conclusions are supported by sufficient evidence.

The audit program should be reviewed and confirmed by the audit team lead prior to commencement of fieldwork.
Last modified:
2018-02-20