Audit Plan for Reliable Printer Ltd.

Running head: AUDIT PLAN
AUDIT PLAN
Name of the Student:
Name of the University:
Author Note

1AUDIT PLAN
Table of Contents
Purpose of report........................................................................................................................2
The Audit Strategy.....................................................................................................................2
Audit plan...................................................................................................................................3
Assigning and scheduling staff..................................................................................................4
Analytical procedure..................................................................................................................5
Ratio.......................................................................................................................................5
Trend analysis........................................................................................................................6
References..................................................................................................................................7
Appendix....................................................................................................................................9
Trend analysis........................................................................................................................9
Ratio computation................................................................................................................10

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Purpose of report
The report is prepared to present the audit plan for Reliable Printer Ltd. for the year
ended 30th June 2015. This report provides the evidence of proper planning of the audit work
including the guidance to the inexperienced staff. Further, this report provides the evidence of
work performed and consideration of the internal control in relation to proposed procedures
of the audit (Adler et al. 2018). This report also means of controlling time spent on the
engagement. The report will also consider the level of control risk and the predominantly
substantive approach. On the other hand, the main purpose of the report of this report is to
develop the audit strategy, audit plan and assigning the staff.
The Audit Strategy
If the control risk can be assesses lower than there is less chance of material
misstatement occurring. Here the material misstatement is referred to those material
misstatements that are not identified and fixed or prevented by the internal control system of
the firm. Hence, the audit would not need to consider the as much evidence that the control
activities are efficiently performing (Griffiths 2016). The strategy of this audit is to lower the
assessed level of control risk by identifying the material misstatement and solving them. For
this the auditor should use the various audit procedure and the principles. The lower level of
control risks assessed are associated with the purchase and the inventory as the firm
purchases 50% of inventory form Australia and 50% from the Asia at different prices but the
recording of the inventory are not made separately and moreover valued at the average cost.
Similarly, the cash receipts are also associated with lower level of assessed control risks as
some payment received by the firm in cheques though the mail but accountant does not pass
the proper entry of this event (Louwers et al. 2015).

3AUDIT PLAN
Hence, the auditor shall perform the classification test in respect of this to identify and
resolve the risks associated with purchase and inventory. Recording of inventory shall be
made using proper valuation method cost or market value and shall be separated on the basis
of the country from where it is received. Further, in respect of risk associated with cash the
auditor shall try to resolve this risk by recommending the proper accounting entry to
accountant of the firm for such type of revenues. Cheque received through mail shall be
recorded properly at the bank book and shall be reconciled on regular interval. The auditor
shall also review various areas of the firm and resolve it by recommending proper accounting
procedures and principles (William, Glover and Prawitt 2016)
The audit follows the substantive audit approach. In this, the auditors verified the
transaction and event in the financial statement by considering the maximum possible volume
of those transaction and events. Hence, this audit will also follow the same strategy and
perform the verification of transaction and the financial event by covering the maximum
possible volume of the transaction and events. This allow the auditor to reach and identifies
the each material misstatement while also reduces the probability of uncovered material
misstatements. The strategy is based on the principle First one is that the auditor review the
internal control program, which affect the financial reporting system or the areas being
audited (Kim, Baikand Cho 2016). While, the second principle the auditor assures that the all
control area of the organisation should perform properly. Then, the auditor analyse the
control areas of the firm, as they are reliable or not. If the areas become reliable then it means
that the material misstatement risk, which are not easily identified by the auditor are become
low.
Audit plan
The audit procedure is an activity used by the auditor to identify the quality of the
financial information by the clients. There are various procedures available to analyse and