CA Kushwanth AVSR
Quick Summary
In the Advanced Auditing and Professional Ethics subject in CA Final, students mostly lose marks due to not writing appropriate answers for given questions. This is due to the length of the subject which creates various hurdles in remembering the points in these topics.
So, these are few short cuts to remember the points with ease in Chapter 2 - Audit Planning, Strategy and Execution
Chapter 2 - Audit Planning, Strategy and Execution
1. Benefits/ Advantages of Planning in Audit of Financial Statements: - DRACOS (Similar to Dracaryes in GOT)
- Direction and Supervision of Audit Team
- Timely Resolution of Potential Problems
- Attention to Important Areas
- Easy Coordination
- Proper Organisation and Management of Audit Engagement
- Proper Selection of Engagement Team
2. Factors for change to Planning Decisions: - CUE
- Changes in Conditions
- Result of Unexpected Events
- Audit Evidence obtained from the result of audit procedures
3. Formulation of Audit Strategy: - PREND (Similar to the word Friend)
- Preliminary Work
- Reporting Objectives
- Team Efforts
- Nature, Timing and Extent of Resources
- Determination of Characteristics of Audit
4. Benefits of Overall Audit Strategy: - MADE
- Management of Resources
- Allocation of Quantity of Resources
- Timely Deployment of Resources
- Employment of Qualitative Resources
5. Matters that need to be considered for formulating an Audit Program: - PANICS
- Overall Plan
- Accounting and Management Policies
- Nature of Business in which organisation is engaged
- Information regrading organisation of business
- System of Internal Control and Auditing Procedures
- Size of Organisation and Structure of its management
6. Circumstances where audit programme have to be suitably altered: - TIME
- Designed for a certain volume of Turnover and subsequently, it has substantially increased
- Discovered that Internal Control procedures were not as effective as assumed
- Suspicion is aroused that assets of the company have been Misappropriated.
- Extraordinary increase in the amount of book debts or stocks as compared to the previous year
FAQ :
Students often lose marks due to not writing appropriate answers, primarily because the subject's length makes it difficult to remember all the necessary points.
The mnemonic DRACOS helps remember the benefits of planning: Direction and Supervision of Audit Team, Timely Resolution of Potential Problems, Attention to Important Areas, Easy Coordination, Proper Organisation and Management of Audit Engagement, and Proper Selection of Engagement Team.
CUE stands for Changes in Conditions, Result of Unexpected Events, and Audit Evidence obtained from the result of audit procedures, which are factors that can lead to changes in audit planning decisions.
The mnemonic PREND can be used to remember factors for formulating an audit strategy: Preliminary Work, Reporting Objectives, Team Efforts, Nature, Timing and Extent of Resources, and Determination of Characteristics of Audit.
PANICS represents the matters to consider for formulating an audit program: Overall Plan, Accounting and Management Policies, Nature of Business, Information regarding organisation of business, System of Internal Control and Auditing Procedures, and Size of Organisation and Structure of its management.
An audit programme may need alteration if it was designed for a certain turnover that has substantially increased, if internal control procedures are less effective than assumed, if there's suspicion of asset misappropriation, or if there's an extraordinary increase in book debts or stocks.
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