AUDIT PLANNING MEMORANDUM


An audit-planning memorandum is a summary of the audit strategy. This sets out;

  1. The outline audit approach;
  2. How, by whom and when each item in the financial statements will be audited;
  3. Timing requirements to be met for each item;
  4. Staff usage with time budgets for each set of audit work

Contents of an audit-planning memorandum

The nature of information contained in an audit-planning memorandum will vary from one audit to the other, but generally may include;

  1. A summary of the terms of engagement to lay out the nature and scope of the work;
  2. Job timetable giving the provisional dates of the timing of the audit e.g. date of planned commencement of the audit.
  3. Record of any changes in the client since the last audit e.g. changes in the nature of the client’s business, change in management structure;
  4. Details of the planning decisions such as areas identified as having weak internal controls requiring more detailed audit work, areas where the advise of an expert is needed e.t.c
  5. Extent of reliance expected on internal audit;

Quality controls

Quality control refers to the various policies and procedures put in place by the auditor to ensure that all audits conducted by the firm meet the quality standards set by the accounting profession and the firm’s own quality standards.