- A brief description of the client, its business processes, the accounting process, the key players (e.g., client personnel, customers, vendors), etc.

- Planned audit risk (AR) for the audit.

- Planning materiality and tolerable misstatement for the individual accounts.

- Brief summary of the results of preliminary analytical procedures.

- Identification of the areas (i.e., accounts/transactions/assertions) with the highest risk of material misstatement from error/fraud, along with general comments about how these risks will affect the audit.

- Planned audit strategies for each of the client's individual cycles (related processes/accounts). This includes assessments of inherent risk (IR) and control risk (CR) for each cycle, identification of the resulting required detection risk (DR) and brief discussions of the nature, timing, and extent of the resulting substantive tests.

- Discussion of reliance on the work of internal auditors (if they exist) and the need for any specialists.

- Identification of the timing (dates) of fieldwork (including tests of controls and substantive tests), and reporting deadlines.

ACCT 4543 Audit Planning Project (40 points) Objective: This project is designed to help students experience the audit planning process, and thereby see how it helps direct an effective and efficient audit. In particular, this project should help students see the importance of focusing on materiality and risk during a financial statement audit. It should also help students to gain an appreciation for the role of professional judgment in auditing. Students will be able to practice using professional judgment throughout the project. Description: Use the instructions below, along with concepts learned in class and from the text, to plan the audit of Waren Sports Supply's financial statements. Waren is of course a fictitious company whose company and financial information is available in the SUA materials and in the previous assignment. Planning an audit involves the following processesin no particular order, and by no means independent from each other: 1. Developing an understanding of the client's organization, its processes, and its environment. 2. Identifying important thresholds such as materiality and planned audit risk. 3. Assessing the risks of material misstatement from error and/or fraud (inherent risk) throughout the client's accounting systems. 4. Evaluating the client's internal controls (control risk). 5. Developing and documenting a logical audit plan from the information in 1-4 above. Your audit plan (i.e., memo) should include at least the following: - A brief description of the client, its business processes, the accounting process, the key players (e.g., client personnel, customers, vendors), etc. - Planned audit risk (AR) for the audit. - Planning materiality and tolerable misstatement for the individual accounts. - Brief summary of the results of preliminary analytical procedures. - Identification of the areas (i.e., accounts/transactions/assertions) with the highest risk of material misstatement from error/fraud, along with general comments about how these risks will affect the audit. - Planned audit strategies for each of the client's individual cycles (related processes/accounts). This includes assessments of inherent risk (IR) and control risk (CR) for each cycle, identification of the resulting required detection risk (DR) and brief discussions of the nature, timing, and extent of the resulting substantive tests. - Discussion of reliance on the work of internal auditors (if they exist) and the need for any specialists. - Identification of the timing (dates) of fieldwork (including tests of controls and substantive tests), and reporting deadlines. Special Instructions: The output from your work will be a multi-page memorandum summarizing important information, and documenting all of your planning decisions, as well as the related decision processes, rationales, and supporting analyses/documents. This informal document should summarize planning decisions, and provide direction for the audit. This project is a great opportunity to practice professional judgment. The appropriateness of your decisions and judgments depends on your ability to justify them. Hint: All judgments and conclusions in your plan should be supported by good reasoning and logic. Supporting schedules, analyses, and questionnaires should be included as appendices. For example, thorough preliminary analytical procedures should be performed using EXCEL, and this should be printed out and attached to your memo even though only certain items in the analysis will end up in the body of the memo. A Planning Questionnaire should also be completed to assist in gaining a thorough understanding of the client. This should also be attached to the memo. All significant items from you appendices should be summarized in the body of the memo. All the information you need to plan your audit is contained in the SUA materials, in the previous assignment, or at the course website. Some of this information may require searching and lateral thinking to assemble. If information cannot be found, please make reasonable assumptions and proceed. Do not procrastinate beginning this assignment! A high quality audit plan will require considerable work. Originality and creativity is appreciated. A good strategy is to bring in \"early\" versions of the memo to allow your supervisor to review and make comments. Enjoy