Defence Health Maintenance Limited
Third Quarter Training Week Program
21st – 25th October 2013
AUDIT PLANNING IMPLEMENTATION AND CONTROL
By
Mrs A.F.E Bello
23/10/2013
OUTLINE
 Definition of Audit Plan
 Enumerate activities involved in compiling an audit plan
 List the advantages of audit plan to relevant users
 Adopt some strategies for audit implementation in their
respective organization
INTRODUCTION
Organizations can only achieve desired objectives with
institution of procedures, policies, rules and regulations which
will bring about the 3Es that the managers aim for. The 3Es are
also part of the internal Audit objectives.
The 3Es are:
 a.
Economy (Input); This is a relationship between
production, trade and the supply of money in a particular entity
 b. Efficiency; process of doing things right with no waste of
time, money and resources
 c. Effectiveness (Output); producing the result that is
wanted or intended
Plan
 Things to do
 Alternative ways of performance
 Resources required
The auditor should be concerned with how to organize his
work as any other manager. This ‘how’ is often described as
audit planning and programming.
Adequate planning for information and evidence to be
gathered on the audit objective during each phase of the audit
function with the proposed procedures to accomplish the plan
DEFINITION
 Audit plan could be described as a formal documents which
specifies the areas of audit activity to be carried out, the
resources required and available to cover the work over a set
time period in order that the objectives of the internal audit
section can be met.
 Audit plan can also be described as a statement of objectives
to be attained in the future and an outline of the steps
necessary to teach them.
 Audit planning involves balancing the work to be done
against the resources available in order to achieve adequate
coverage each year and full coverage in the minimum period
of time.
Consideration should be given to:
Pre-plan Activities
Audit objectives
Arrears and services
The extent to which departments are
involved in financial administration,
changes in services, methods and
systems.
 New areas or Risks
 Flexible approach to respond to
dynamic and emergency situations
 Areas to be covered by audit
 Frequency of audit
 Man days of audit
 Evaluation of changes within the
organization
OBJECTIVES OF AUDIT (Internal)
 Appraise and report on:
 a.
The soundness, adequacy and application of
financial and other management controls and the
extent of compliance with established plans and
procedures, policies etc
 b. The extent to which the organization assets and
interest are accounted for; the suitability and
reliability of financial and other management data
develop within the organization.
TYPES OF PLAN
 a.
The Strategic Plan:
This plan sets out the audit objectives
in broad terms, the areas to be covered, the frequency of coverage and
the organizational structure needed to achieve these general targets over
a period of perhaps 2-5 years.
 b.
The Tactical Plan:
This plans sets out the strategic plan
areas to be audited in the immediate future perhaps 3-12 months. It
includes detailed definition of the objective for each audit, e detailed
allocation of resources to meet any contingencies during the period.
 c.
The Operational Plan: This involves what should be prepared
for each audit prior to commencement. This sets out the audit tasks,.
The staff allocated thereto, the tests to be applied and the acceptable
levels of error involved. Where audit programmes exist, the operation
plan may be not more than the tailoring of these to the specific audit in
question.
SOURCES OF INFORMATION
 -Financial Regulations
 -Financial information
 Overhead
 Capital
 Manpower budget
 -Audit control files
 -Results of previous audit plans
 -Other sources
 Published statistics
 Committee reports/meetings
 Experience of senior audit staff in assessing
PREPLAN ACTIVITIES
 Determine the magnitude of the assignment
 Assesses the resources needed
 Obtain approval/instruction to commence audit
 Familiarize with the operations of the department/units
 Determine the focus of audit
 Obtain background information
PLANNING PROCESSES
 Match objectives (in terms of audit activity with staffing
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resources)
Personnel assessment of the auditor
Translate the available audit resources into a suitable unit
measurement
Man days computation
Man hours
Anticipate; Lost time, Public holidays, annual leave, sick leave,
examination/study leave, audit training, courses and conferences.
AUDIT ADMINISTRATION
 Time allocation
 Contingencies
 Separate allocation is desirable
GENERAL ALLOCATION OF DUTIES
 Regular audits
 Special projects
 Audit administration and contingencies
 Approval of audit plan
ADVANTAGES OF AUDIT PLAN
To the Chief Auditor
 Planning exercises necessitates the critical assessment of the audit
activity by ascertaining the basic objectives of the audit functions
and specifying the steps necessary to achieve them
 Motivates by providing predetermined targets for both senior and
junior staff
 Helps to exercise controls by providing a yardstick against which
he can measure actual performance
 Means of conveying the objectives of the audit section and
ultimate achievement to chief executives (and other interested
parties)
 May help avoid the use of audit resources for non-audited duties.
To the External Auditor
 Assistance in assessment of the adequacy of internal audit
 Assist in determining the areas for his own audit
investigations
 Provide free exchange of information and ideas likely for
better relationships between internal and external audit.
To the Chief Executive
 He is provided with an opportunity to direct and approve the
basic objectives and detailed audit plan.
RESERVATIONS/PROBLEMS
 There may be a danger in regarding the audit plan as an
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end in itself rather than as a means to an end. The
following should be noted in production of an audit
plan.
Rigid adherence to the predetermined plan may create its
own problems. A plan must have an adequate degree of
flexibility but into it with appropriate allowances.
Staff targets should be feasible and should constantly be kept
under review especially if staff turnover is high.
A degree of independence must be maintained over
publication and over involvement of service departments in
the preparation of the plan could be detrimental to audit
functions
In view of criticism and need for justification, it is
particularly important to be able to demonstrate that the
procedures and decisions of the audit section have developed
objectively.
IMPLEMENTATION
 Following approval, the plan will need to be analysed on a
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quarterly, monthly or weekly basis to provide the facility for
continuous programming controls and reviews. The success of an
plan depends upon discipline, cooperation and commitment. The
following should be noted:
Motivation of audit staff
Adequate working papers and other supporting documentation
(Audit files, accounting instructions)
Define responsibility for maintaining and controlling the audit
plan
Formulate lines of communication to ensure that resources are
effectively allocated within the guidelines of the plan
 Audit staff and made aware of the targets objectives and
priorities at the pre-audit stage.
 Audit management may continuously assess performance, reappraise priorities and review plans as necessary.
 Control documents should be carefully designed with a view
to clarity, ease of completion and relevance.
 Device a logical coding system to facilitate ready reference.
The audit file reference may be incorporated in the code.
AUDIT CONTROL
Effective implementation of the audit plan requires control over both the
quantity and quality of the work produced by the audit staff. There is a little
point in the meticulous preparation of a plan if staff is subsequently allowed to
exceed targets times without adequate explanation or to produce poor quality
work because of time constraint or in-experience.
QUALITY CONTROL
 The auditor in charge of each audit task should submit regular reports to his
superior showing actual progress against target time and informing the latter
immediately on time.
 Staff must be motivated, because the extent of motivation will inevitably be
reflected in the quality of the work produced. The chief auditor can therefore
identify staff problems and ensure effective audit planning by introducing
quality control measures along the following lines
 Detailed working papers should be prepared for all audit tasks showing the
purpose of the working papers, the work to be carried out, the results of the
work and field of auditors.
CONCLUSION