Do We Really Have to Plan Small Audits?
by AccountingWeb on
We used to do our audit planning in the back seat of the car on the way to the client’s office. I once worked for one partner who planned the audit of a bank located in our office building as we rode the elevator to the first floor! In my early years, we didn’t do much planning because audit procedures were designed on the fly. By that I mean we obtained an understanding of a client’s business and industry, internal controls and operations and targeted the areas where risks were high. Sure, we wrote programs but mostly after the audit was done! But then times began to change. SAS No. 22, Planning and Supervision, said we should plan the audit before it began. Most of us continued to follow the audit approaches of the past and, again, filled out the required planning forms after the audit was done (we had to pass peer review you know!). It wasn’t long, however, until peer reviewers began to ask us when we filled out those planning forms and we could not tell a lie! So we began to plan a little. SAS No. 99 on fraud risk assessment accelerated our planning pace. We had to “brainstorm” fraud risks. Most people, except for some of us sole practitioners, have to meet with another person to brainstorm. If you’re a sole practitioner like me, we’re used to talking to ourselves anyway (now we can call it brainstorming)! So we brainstormed and planned some more. Only when the so-called risk assessment standards became effective in 2007 did some of us finally become believers. We began to recognize that effective planning actually reduced engagement performance time! Now we’re at the bottom of the barrel with our headline question, “Do We Really Have to Plan Small Audits?” The answer is a resounding “yes.” Not only do we have to plan to satisfy the requirements of SASs, we have to plan if we are to have hope of engagement profits! Post a comment and tell us how you have benefited from planning on small audits. Planning and other small audit issues are the subjects of our 15-week webcast series at CPE Link which is co-sponsored by AccountingWeb. The secret we’re learning is that planning does help us make more money on small audits!