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ACTIV- ITIES |
STAGES | ||||
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| CA/R | AP | CT | ST | OF | |
| PL | SP | TP | OP | OP | OP |
| EG | PK | DK | EofO | EofM | CFS |
| EE | AR1 | DR*2 | DR*3 | AR4 | AR5 |
| DM | A/R | AA | CR? | CAB | AO |
Operational planning is short-term planning. Planning in the In the opinion formulation stage is operational planning as the plans are subject to revision at any time during the course of the audit. In auditing, operational planning is the activity of determining what and how much evidence is required to be gathered and evaluated, and when, how and by whom it should be gathered and evaluated. For existing audit engagements, the audit program for an account balance or financial statement item is revised if the audit approach has changed from the previous year.
In the opinion formulation stage, operational planning refers to the preparation of an audit program in respect of the evidence gathering and evaluation activities to be applied during this stage. The objective of these activities is to determine whether the (achievable) audit risk for material financial statement items exceeds the acceptable level. Thus, the auditor plans to gather evidence in relation to:
If, for any one financial statement item, the achievable level exceeds the acceptable level then the auditor concludes that there is an unacceptable risk that the financial statement item is materially misstated.
After the audit program is documented, the auditor gathers the evidence referred to in the audit program. This is evidence of both the acceptable and achievable levels of audit risk at the financial statement level, which primarily involves gathering evidence in relation to the consistency of the financial statements with the auditor's knowledge of the entity. Refer to next activity.
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