Audit Planning and Control

 Audit Planning and Control

Definition of Auditing

Auditing is one of the recently established profession born out or the complexity of the modern business word.  American institute of accountants defined it as an “Examination of the book of account, vouchers and other records of a public body. Institution corporation, firm or any persons or persons  or persons standing in any capacity for the purpose of ascertaining the accuracy or otherwise of the record and of expressing opinion upon the statement rendered usually in form of certificate.

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On the other hand Bells (1994 P.1) saw  auditing simply as the purpose or why it is done. Revenue account has been defined by (Olukeya 91. 980) as rendering of returns on stewardship relating to the management of funds and other assists of which individual or institution have be custodian. Auditing can be further said to be the examination of information by the third party other than prepare or users with the intend of establishing it is reliability and the reporting of the result of this examination or with the expectation of increasing the usefulness of the information to uses a closer look on this definition it will observed that emphasis is placed on the need for reliability on finace information.

To many auditing the through detection are investigation of books of account for the purposes of detecting fraud. Mr U.C Okpara chartered accountant attributed this erroneous of audit firms do not wholly cooperate with auditors during the work. Dispelling this view. Lard justice lopes described auditing as not bound to be a detective act not to be approached with suspicious nor with to be forgone conclusion that something is wrong, Johnson (1980 P.3)

From the foregoing, Culy (1953 P.1) summarized auditing to by process of verifying the records  which used to show the financial condition or and reports or position and operation result of a business an institution  or a persons. From all the above definition wherefore, it become clear that the auditing involves a complete examination of a period transition oif an enterprise and how the transitions are recorded the extent to which an examination is carried out is dependent on the particular circumstance of the matter.

However, the auditor should obtain relevant and reliable audit evidence sufficient enough to and him in draw conclusion there from an audit often include a written report signed by the auditor and addressed to the person (s) to whom he is to repot.


The advanced learners dictionary defined producer as the order or manner of doing things. In auditing content, auditing producer are act to performed by accounting  firm during the cause of an examination by applying proper techniques and  also constitute the causes of action available in determine the validity of standards and principle Holmes (1947 P,53)

Distinguishing auditing procedures from scientific procedure of solving problem Mr Uchendu a chartered accountant identified auditing procedure as first:

  1. The recognition and acceptance of  composite problem (the auditors assignment )
  2. Observation of factors relevant to the problem
  3. Sub division or composite problems into individual  problems.
  4. Determination of available evidence pertinent to such individual problems.
  5.  Selection of application audit technique and the devlopment of appropriate procedure.
  6. Performance of procedure to obtain evidence (fact finder)
  7. Evaluation of evidence

(i)        With respect to pertinence and validity

(ii)             For indication of any additional problems

(iii)           with respect to adequacy of his judgement formation of opinion.

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(i)                One individual proposition

(ii)             On the complete problem. This auditing procedure have been made evidence with the illustration above showing the order of auditing


It is a process of preparing a written outlay of course of action for carrying out an audit, showing the step by step line of action for audit staff taking into consideration areas flat might require special attention and with constraints as well as Is integration with other non auditing work to be completed by the auditing from within the same time span attwood (1986P.35)


They  1980 Auditing  guideline defined audit control as the direction and supervision of the auditing staff and the review of the working done by the auditing staff.

This 1980 guideline definition refers namely to a reporting partner and his staff (that is the review of an auditing team work by a  senior staff) which raise a pertinent question does it then mean that there with be no need for audit control if the major auditor is activity involved in the audit work done of with his staff?

In clearing this Meige (1964 P.21) highlighted the important of audit control.

  1. Effective management of audit waste, collaboration and inefficiency.
  2. Ensuring compliance with auditing standards and ethics.
  3. Judging the efficiency of operation at all stages of auditing. Thus for control to be effective and efficient, it must consider the over all control features in auditing to ensure the maintenance of good standards of audit work, Attwood (91986 P.35).


They are professional firm of accountants by law chartered accounting firms are established by chartered accountants of Nigeria (ICAN) which came into existence by the companies Act of 1268.


According to Okpara (1901 P. 39) the present day accounting firms offers a wide range of services to the public. The Millichamp (1990 P. 3) Culey (1953 p.13) clearly illustrated as:

  1. a.                 Provision of Accounting Services

Accounting firms prepare companies financial statement who are either too small to employ an accountant or lack basic accounting records. Also they assist in the installation of accounting system, procedures and internal control as well as the maintenance of computerized accounting records.

  1. b.                Provision of tan Services

Accounting firms assist in :

i. Preparing taxation computation and agreeing them with the inland


  1. Rending advice to minimize tan liabilities and enhance tax planning.
  2. Professional advice on VAY returns.

C.      Management Consulting Services:

This consist managerial advice to officers any boar of direction on matters of accounting, finance (budgeting) business policies, organizational procedures and many other phases or business. Conduct and operation.

D.      Finance Advice

Accounting firms are often invited to advice on the best way to finance growth and to mange working capital effectively as well as serve as intermechiaries in the provision of finance through recommendation.

E.      Act as receivers

The term of debenture trust deed may entitle the debenture holders to appoint some one to take temporary control and pay the proceeds to the debenture holders. The persons so appointed is receiver and it is frequently a professional accountant.

F.      Act as liquidations

Accountant are often appointed as liquidator to wind up the affairs of a company. This involves realizing the assets, paying off the liability and returning the surplus if any to the owner (S) shareholder

  1. G.              Profit Forecasts for Merger and Acquisition

Accountant may be employed to report on profit forecasts made in a big situation. In a case either when one company is attempting to take over another (acquisition) or the companies are coming together (mergers) either of the companies involved may  issue forecast of future  level such forecasts ill usually be reported on by accountants.

  1. H.              Provision of Auditing service:
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Porter (1971p. 96) acknowledged that audit services are the best known function of accounting firms. Accounting firms through auditing increase the reliability of financial information as well as accurately reflects the true and  fair view of a  firms financial positive

  1. I.                  Valuation and special Investigation

Accountancy firm may be called upon by purchase of business to independently investigate its past history this is different from auditing and advice on value.

Accountant may be appointed to serve as inspector under companies act 1968 to investigation the affairs of a company at the investigation of the members or the ministry of trade and industry which could be business purchases, fraud or inconection with a proposed loan.

  1. J.                 Facilitating the issue of shares

Before a company can make an issue of share to the public it must issue a prospectus, detailing the terms of the and the financial history of the company for the previous five years. The prospectus will usually include an accountant report on profit figures and detail of assets and liabilities.

  1. K.              Incorporating of companies

According firms render advice in the formulation of companies especially on the requirement for such formation, be it sole proprietorship, partnership, limited complained as well as assisting in the  incorporation through the assembling  and presentation to corporate affairs commission of the necessary document such as the memorandum of a company, article of association and other   registration materials.

1.3            Purpose and objectives of auditing

As the principle are conduct of business have advanced and as financial operation and ramification have become more involved in the past several decided, the purpose for which audit are performed likewise have come to cover  increase ship wider scope of activities.

The purpose for an audit

According to Millichamp (1990 p.2) this problem arose and it is always in existence when mangers report to owners.

Can the owner (share holder) believe the report? Because such report may

i. Contain errors

ii. Not disclosed fraud

iii. Be inadvertence misrelating

  1. Be deliberately misleading
  2. Fail to disclose relevant information

The solution to the above mentioned problem of credibility in report and account lies in appointing independent person called an  auditor to investigate the report on his findings

The final statement are also required to comform to the very detailed and complex requirement of the companies and allied matcher ace 1990 and to the requirement of the many statement of standard accounting practices. The auditor financial statement need to conform with the above requirement.

Another point is that of the modern companies that are large with  Multi- national activities. The accounts preparation of such group is a very complain operation involving the bringing together and summarizing of account of subsidiaries with different convictions, legal system and accounting and controlling system. The examination of such accounts by independent experts trained in the assessment of finical statement  (information) is or great benefit to those who control and operate each organization as well as to owners and outsiders, De Pauler (1970 P. 7)

Objective of an audit

In order that the quantified and measured accounting information contained in the annual financial statement and company and company received the maximum amount of alternation  and other interested persons, the auditor is required to attest to the credibility of the  information by  giving an expert and independent opinion on:

i.  The relevance of the information to the economic activities and transaction it purports to describe and represent, that is on how well the information corresponds to the reality of the business affairs of which company management is give stewardship  account in the financial statement.

  1. The objectivity of the information in reaction to the financial interest and information need of the shareholder in particular ensuring that it has been produced on the basis of objectified and verifiable evidence and that there have  no bias in the qualification and communication processes of the company financial accounting function which could be detrimental to these interest and needs.
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It should be noted that the objective of  relevancy and objectives must both be might before the auditor can be given an unqualified opinion (report). There is very little information may be relevant but totally lacking in objectivity or it may be objective but totally irrelevant in both cases, a true and  fair view can not be stated to exist:

Therefore, it is suggested that the true and fair view of company profit and financial  position should be regarded as the  relevant and objective measurement and description of the company economic progress and finical position mainly for the benefit of its shareholder and other persons such as  potential investor lenders and suppliers who have raised interest in the nature and quality of company financial statement and should also be accepted that the auditor has the moral responsibility to ensure that these interest are not harmed or misled by the information he is given an opinion on.

2.2            The auditor must also verify by examination and exist the accuracy and dependability of the accounting data which has been processed through the book keeping stage or the company financial accounting function. This is accounting information measurement . Also in doing this, auditor must ensure that his date is supported by objectives and verifiably evidence.

In cases where his suspicious arose, suspicious aroused and because  it comd materialy affect the judgement he has to make regarding the accuracy and dependability of accounting information the auditor has a limited of responsibility for detection of fraud and error. In such situation, the auditor should inform company of his suspicious and ensure that the matter is adequately investigated. If the investigation initiated by the auditors must take into account when writing his report to the shareholders. Culey (1953 P.109) .

1.4            Auditing principles and standard

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