Chapter 8, Problem 1RQ

To determine

Indicate the benefits that are derived from planning audits.

Explanation of Solution

Auditing: The analytical process of evaluating and assessing the accounting information furnished by the company, and communicating the reliability and relevance of accounting information to the public is referred to as auditing.

Audit Planning: Audit planning is the first step in the auditing process. Auditor gathers all the information about the company such as company’s objective, policies and procedures during this phase. Auditor also reviews the general control and application control and designs the plan for tests of controls and substantive control.

Indicate the benefits that are derived from planning audits:

There are three primary benefits from planning audits, they are:

• It helps the auditor to achieve sufficient suitable evidence for the circumstances,
• It helps to avoid misunderstandings with the client, and
• It helps to keep the audit costs at a reasonable price.