Audit Planning: A Risk-Based Approach

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BASIC PLANNING TECHNIQUES

The chief audit executive should effectively manage the internal audit activity to ensure it adds value to the organization.

—IIA Standard 2000

INTRODUCTION

In Chapter One, we have shown the benefits of using risk-based planning along with providing a description of some of the elements that underpin the auditors' approach to developing suitable plans. Chapter Two aims to stand back from the audit context and outline some of the basic concepts that relate to planning. Planning is about defining expectations and focusing resources in a way that is designed to achieve more effective results. For auditors, planning should be flexible enough to achieve several objectives including to:

• Establish good relations with clients.
• Develop a better control environment in the organization.
• Secure a culture that encourages compliance with the procedure within the organization.
• Generally help promote processes that respond effectively to risks that impact the organization's objectives.

Simple models are used to illustrate the factors that support good planning.

BASIC PLANNING MODEL: PHASE ONE

Our first model appears in Figure 2.1.

Figure 2.1 Basic Planning Model: Phase One

Each aspect of the model is described in the following paragraphs.

Corporate Mission

All plans should start with the mission that has been adopted by the entity in question. For auditors, the mission ...