Question

This a question for someone who has an auditing background:

Ch 3 Q 3

Identify the two types of audit plans and indicate the purpose of each.

Answer 1

The two types of audit plans are (1)Risk Assessment procedures or the internal control program and (2) the substantive audit plan.

The internal control program contains procedures which are used to obtain an understanding of the entity's business and its environment, including its internal control. It includes preliminary analytical procedures , inquires done with management to identify any fraud, observing their procedures, internal control framework and these procedures are performed to assess the inherent risk and the control risk related to the financial account balances.

The substantive audit plan contains procedures designed to identify any material misstatement in an account balance by performing test of details and substantive analytical procedures.