Planning is an important tool in conducting detail audit works. The purpose of the audit planning is to set the audit works. The audit tools that the auditors used to record the audit observation in their working papers as a piece of evidence they have collected. It can be in a checklist form of hard copy or softcopy. To develop an audit program needs a skill auditors and in a team process in which will be supervised by the supervisor. In developing the audit program, there is a standard that the auditors should follow. During planning the auditors should provide detail audit programme which should include several aspects in their audit planning memorandum such as the background, financial analysis significant, objective audit, methodology, detail audit program, the audit criteria and sub-criteria, audit procedure, audit risks, impact and matters of potential significance. The detailed audit planned, or Audit Planning Memorandum is the tools to guide the auditor to carry out the auditing and complete audit works efficiently and effectively. It is an assurance that the end of the day, the audit report produced is high quality and the audit has been completed properly and in compliance with the standards adopted. This checklist can be used as a guide to the other similar programs of audit and be placed in the audit library of an audit program for references. Each and when the audit program are built and approved by the authorised person in the organisation, it should be placed in the audit library of an audit program to empowered the knowledge of the auditors. Developing the audit program and the checklist is not a straightforward process and it depends on the criteria or the speciality of the topic/subject choose. Before selecting an audit topic, an auditor should engage in the overview phase or preliminary phase by doing a literature review, reviewing past audit report, collecting information, some little groundworks to verify the issues to determine the weight of the topic chosen. As for an example, the audit on the infrastructure projects the elements that should include in the detailed audit program are procurement procedure, tender document processing, financial allocation, project agreement/contract management, implementation phase of the project which focus on the completion time, bill of quantity/specification/drawing, workmanship/quality of works, variation orders, extension of time, penalty imposed, default period, and customer satisfaction during handing over the project and so forth. These are the main elements a checklist need to develop in auditing the infrastructure project as a tool for an auditor to carry out the audit works efficiently and effectively. If they fail to develop a checklist properly, it might most probably end up produced poor quality of the audit report. The checklist is detailed and is used to evaluate or do an assessment of the elements build in the audit of the infrastructure project.
The auditor must bear in mind materiality in planning is important in the audit planning memorandum. Materiality varies and depends on the issues and the size of the program or activity or combination of both chose in an organisation. ISSAI 300 does specifically mention the level of materiality but some hints or guides in preparing the materiality level in performance audit planning. In the audit planning memorandum, an auditor should consider materiality at all stage of the audit program or activity or processes or elements build. Materiality in Performance audit is different from financial audit and compliance audit whereas the materiality defines in the performance audit more broaden than the two types of audit. In the performance audit, besides the financial aspect, there should be given emphasise on social and political aspects of the subject matter. Materiality in performance is a subjective manner which depends on the magnitude of its impacts. It depends whether the activity is comparatively minor and whether shortcomings in the area focus could influence other activities within the audited entity. An issue is considered material if the issues are considered important, and improvements would have an impact on the organisation activity or program. It is to be said less materiality if the issues are routine and the impact is restricted to a small area or minimal. In the performance audit, monetary wise is not be a primary concern but the result and outcome of whether the program assessed met the program objective set up by the entity. So, it is important to consider while preparing the audit planning the matters of potentially significant and materiality of all aspects of performance audits such as the selection of topics, evaluation of evidence and document and management of the risks, low impacts audit finding or report — transformation in the workplace.
By
Datuk Juhari Bin Haron
