As per CAAS – 101, matters that are relevant in formulating audit strategy and drawing up the
audit plan are as following:
i. The cost reporting framework generally prescribed by the Cost Audit Report Rules on which the cost information to be audited has been prepared, including need for reconciliation with financial reporting framework.
ii. The specific requirements of industry specific cost accounting record rules.
iii. Industry regulators’ requirement as to how costs will be handled.
iv. Unique features of an industry that influence audit requirements e.g. definition of product in the newspaper industry.
v. Reliance that can be placed on the work of financial auditors, other cost auditors appointed by the entity and internal auditors for example their attendance in annual stocktaking
vi. State of IT implementation, whether the entity is using an ERP system or internally developed systems and the reliance that can be placed on them.
vii. Statutory timelines for cost reporting which can be modified by managements for early completion.
viii. Timelines for Board/ audit committee meetings which can set the time limits for completion of audit work.
ix. Resources required and available in terms of manpower, equipment and others and the assignment of these to specific parts of the work.
audit plan are as following:
i. The cost reporting framework generally prescribed by the Cost Audit Report Rules on which the cost information to be audited has been prepared, including need for reconciliation with financial reporting framework.
ii. The specific requirements of industry specific cost accounting record rules.
iii. Industry regulators’ requirement as to how costs will be handled.
iv. Unique features of an industry that influence audit requirements e.g. definition of product in the newspaper industry.
v. Reliance that can be placed on the work of financial auditors, other cost auditors appointed by the entity and internal auditors for example their attendance in annual stocktaking
vi. State of IT implementation, whether the entity is using an ERP system or internally developed systems and the reliance that can be placed on them.
vii. Statutory timelines for cost reporting which can be modified by managements for early completion.
viii. Timelines for Board/ audit committee meetings which can set the time limits for completion of audit work.
ix. Resources required and available in terms of manpower, equipment and others and the assignment of these to specific parts of the work.
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