Write a 3 page essay on Outline the nature of audit planning and describe its principal objectives, identifying issues that you consider to be relevant to the planning of the audit of FXT.
Planning in auditing the books of FXT International Limited will ensure that the auditing process produces the maximum out of the minimum. The various aspects of auditing the books of FXT International Limited include vouching, verification and valuation (Kumar and Sharma, 2005, p. 59).
It is Abacus’ plan to conduct an effective audit through an efficient approach that will last the shortest possible time. The basis of the auditing plan is FXT International Limited’s line of business. FXT International Limited offers structured financial products as well as financial derivatives to institutional investors. Therefore, the basis of the auditing plan is the understanding of the financial and derivatives market. Abacus will perform tests of control and procedures to come up with reasonable conclusions that will assist in the formation of an opinion on the client’s financial statements (Kumar and Sharma, 2005, p. 72). The plan will be based on FXT International Limited’s accounting system policies and procedures that direct its internal control processes. Concisely, some of the factors that Abacus will consider when planning the audit include:
4. Knowledge of FXT International Limited business apart from the reporting requirements of financial services institutions. It is the most important factors that Abacus will consider when planning an audit.
It is the most important factor because it will enable Abacus to identify the events, transactions and practices that may affect financial information. Auditors will derive such knowledge from areas such as:
The article of association will give auditors ideas about FXT International Limited’s size and nature. Additionally, auditors from Abacus will acquaint themselves with the management of FXT International Limited’s business (Kumar and Sharma, 2005, p. 80).
Accounting standards requires that listed companies publish audited books of account. The rationale is