Lesson: Work Completed During the Planning Stage

In this lesson, Nick Palazzolo discusses the various tasks and procedures completed during the planning stage of an audit. These tasks include obtaining an understanding of the client's industry and business, touring facilities, reviewing AICPA auditing guidelines, interviewing client employees, and conducting analytical procedures. The lesson emphasizes the importance of understanding the client's business and industry to ensure that the audit process is thorough. Furthermore, preliminary evaluations for materiality, audit risk, and internal controls are also conducted during this stage. In addition, auditors must consider factors that may require an extension of the engagement, determine the extent of the client's internal auditors’ involvement, and establish a testing timeline. Lastly, a written audit plan is created based on the auditor’s sufficient understanding of the client and their internal control and business environment.