Volume 15 Issue 03, March 2025
Impact factor: 2019: 4.679 2020: 5.015 2021: 5.436, 2022: 5.242, 2023:
6.995, 2024 7.75
http://www.internationaljournal.co.in/index.php/jasass
157
PLANNING THE AUDIT: IDENTIFYING AND RESPONDING TO THE RISKS OF
MATERIAL MISSTATEMENT
Yuldasheva Saodat Khalmurzaevna
PhD and associate professor at International School of
Finance Technology and Science, department of “Accounting”
Abstract:
Practice shows that if you have a well-built and organized internal control system, it
also shows an assessment of its effectiveness both in terms of achieving the set goals and in
terms of cost-effectiveness. Audit planning is a set of actions to select an option that allows this
goal to be achieved, i.e., selecting a strategy and tactics for conducting an audit, selecting the
types, volumes and sequence of audit procedures.
Key words:
audit planning, internal control, material misstatements, audit risks, preliminary
planning, business risk.
Introduction.
An audit is a fairly complex process, and it is also limited in time. Therefore, to
ensure high quality work, it is necessary to prepare for it thoroughly. A necessary means of such
preparation is a comprehensively thought-out plan that would create confidence in the
performers that the most effective and efficient audit procedures are used.
The audit organization and the individual auditor are required to plan their work so that the audit
is carried out effectively. Clear planning is also necessary for selecting the proposed approaches
to achieving the audit objectives; performing and monitoring the work; ensuring that attention is
drawn to the main aspects, that the work is carried out completely.
Much depends on what procedures, in what volume and in what sequence the auditor applies:
whether the results of the audit will be sufficiently objective or not, whether the audit will be
more or less labor-intensive, more or less risky, etc.
The regulatory framework for the audit planning stage is established by international standards
ISA 300 “Planning”, planning involves the development of a general strategy and a detailed
approach to the expected nature, timing and scope of audit procedures.
The purpose of planning is to ensure that the audit is carried out in the best (optimal) way from
the point of view of the selected criterion. The auditor, starting the audit, always faces the so-
called optimization problem, i.e. the problem of choosing from a variety of possible solutions
(options) the best one according to some criterion.
The question of which criterion should be selected as the "target function" (optimization
parameter) is within the competence of the audit firm conducting the audit. For example, labor
costs (then the optimization task is reduced to finding conditions that ensure minimum labor
costs with acceptable risk), or audit risk (ensuring minimum risk with acceptable labor costs), or
some other criterion, including a combined one, can be selected as the "target function". The
question of choosing such a criterion (or criteria) is the subject of the relevant internal audit
standard.
In order to carry out high-quality preparation of an audit and optimally solve the tasks facing
auditors at the planning stage, audit organizations need to develop their own internal standard
“Audit Planning” and define in it the procedure for the auditor’s actions: from the moment of
receiving an application for an audit to the issuance of an auditor’s report.
Volume 15 Issue 03, March 2025
Impact factor: 2019: 4.679 2020: 5.015 2021: 5.436, 2022: 5.242, 2023:
6.995, 2024 7.75
http://www.internationaljournal.co.in/index.php/jasass
158
Audit planning is a set of actions to select an option that allows this goal to be achieved, i.e.,
selecting a strategy and tactics for conducting an audit, selecting the types, volumes and
sequence of audit procedures.
The following basic principles can be used when planning an audit:
1) comprehensiveness. The principle of comprehensiveness assumes ensuring the
interconnection and coordination of all stages of planning – from the preliminary stage to the
final procedures;
2) continuity. The principle of continuity is expressed in establishing related tasks for a group of
auditors and linking the planning stages by deadlines and related business entities (structural
divisions, branches, representative offices);
3) optimality. The principle of optimality allows for planning variability in order to select the
optimal version of the general plan and audit program.
Audit experience confirms the validity of these principles and the need to adhere to them when
planning an audit.
The main documents prepared during audit planning are: a working document on studying the
client's economic activity, a letter on conducting an audit, an agreement to conduct an audit, a
general plan and a general audit program.
The results of the planning process are formalized in two documents: an audit plan and an audit
program. In accordance with the data obtained during planning (cost and duration of the audit),
an agreement is drawn up and concluded.
Established practice identifies a number of key stages in the planning process, which are carried
out in a certain sequence:
1) preliminary study of the economic entity and its business (preliminary planning);
2) formalization of relations with the economic entity (drawing up and providing the client with
a letter of commitment, concluding an agreement);
3) assessment of the reliability of the economic entity's internal control system;
4) assessment of the components of audit risk;
5) assessment of the level of materiality (permissible error);
6) identification of accounting areas significant for the audit (areas with increased internal risk);
7) formation of an audit strategy (selection of the type, volume and sequence of audit
procedures);
8) documentary registration of the planning results (drawing up an audit plan and program).
Stages of audit planning.
Audit planning consists of the following stages:
1) preliminary audit planning;
2) preparation and drafting of a general plan;
3) preparation and drafting of an audit program.
Preliminary audit planning means that before concluding an agreement, the auditor must get
acquainted with the potential client, that is, analyze external and internal factors affecting the
economic activity of the enterprise, learn about its individual characteristics. For effective audit
planning, before writing a commitment letter and before concluding an agreement to conduct an
audit, the audit organization must agree with the management of the enterprise on the main
Volume 15 Issue 03, March 2025
Impact factor: 2019: 4.679 2020: 5.015 2021: 5.436, 2022: 5.242, 2023:
6.995, 2024 7.75
http://www.internationaljournal.co.in/index.php/jasass
159
organizational issues related to the audit. The auditor should obtain information about the
organizational structure of the potential client, the specifics of its production activities and the
range of products manufactured, its suppliers and customers, the procedure for distributing the
received profit, the internal control system, the principles of forming the remuneration of
personnel, etc. Based on the results of the enterprise study, the audit firm decides on the issue of
conducting an audit. If the audit firm considers it possible to conduct an audit, it proceeds to
forming a staff for the audit and concludes an agreement with the enterprise. Then a group of
auditors is determined that will conduct the audit at the enterprise. In this case, such issues as the
budget of working time for all stages of the audit, the expected terms of the group's work, the
quantitative composition of the group, etc. should be taken into account.
The next stage of planning is the preparation of the audit plan and program. The general audit
plan and program is prepared taking into account the information obtained at the preliminary
planning stage. The general plan provides for the timing of the audit, its schedule, the time for
preparing the auditor's report, and a written report to the company's management. In the process
of planning the time expenditure, the auditor must take into account the actual labor costs, the
level of materiality, and the assessment of audit risks. The general audit plan must contain
information on the composition of the audit team, briefings, subordination, etc.
The auditor formalizes the audit program. It represents tests intended to collect information
about the internal control system and accounting of the enterprise. The general plan and audit
program must be formalized and endorsed in the manner established by internal corporate
standards. During the first stage (preliminary study of the economic entity), the auditor evaluates
the feasibility of conducting the audit, prepares the information base for subsequent planning
stages, and makes a preliminary assessment of the possible scope and cost of the audit. It is
assumed that the information obtained by the auditor during the preliminary planning stage will
allow him to determine the essential terms of the contract for conducting the audit (duration,
cost).
Subsequent planning stages (assessment of the reliability of the internal control system, etc., up
to the preparation of a plan and program) are carried out according to this scheme after the
conclusion of the contract and are preparatory to the actual audit.
During the preliminary planning stage, the auditor should meet with the client and clarify the
purpose of the audit and the expected results of the audit. During the negotiations, the auditor
obtains the client's consent to provide information necessary to understand its economic
activities that have a significant impact on the preparation of financial statements.
Conclusion
Thus, the auditor needs to develop a document that should form the basis for determining the
scope of audit work, labor costs and their cost assessment, containing maximum information
about the client's economic activity. Such a document can be a questionnaire with a set of
questions and tests filled in by the client or auditor during the preliminary examination of the
state of affairs and documents of the prospective client, depending on the procedure established
in the audit organization. Studying the client's economic activity at the preliminary planning
stage allows the auditor to determine the client's integrity and solvency and thereby reduces the
auditor's entrepreneurial risk.
Reference
Volume 15 Issue 03, March 2025
Impact factor: 2019: 4.679 2020: 5.015 2021: 5.436, 2022: 5.242, 2023:
6.995, 2024 7.75
http://www.internationaljournal.co.in/index.php/jasass
160
1.
13.
Xalmurzayevna, Y. S., Karimovich, S. S., Zairjanovich, Y. S., & Qizi, X. M. I. (2021,
June). HYBRID TEACHING AND LEARNING TIPS FOR Teachers. In Archive of
Conferences (Vol. 28, No. 1, pp. 12-14).
2.
14.
Mahamadali Turdaliyevich Toshxonov, Sherzod Zairjanovich Yuldashev. (2022, October)
THEORETICAL AND PRACTICAL ISSUES OF TEACHING FOREIGN LANGUAGES IN
INSTITUTE OF PHARMACEUTICAL EDUCATION AND RESEARCH. INTERNATIONAL
SCIENTIFIC AND PRACTICAL CONFERENCE "THE TIME OF SCIENTIFIC PROGRESS
3.
15.
Shakabil Karimovich Shayakubov, Saodat Khalmurzayevna Yuldasheva, Sherzod
Zairjanovich Yuldashev, Dilnoza Anvarovna Akhmedova. (2022, 5 November) THE ROLE OF
ASSESSMENT ON ENGLISH FOR THE INSTITUTE OF PHARMACEUTICAL
EDUCATION AND RESEARCH. INTERNATIONAL SCIENTIFIC CONFERENCE"
INNOVATIVE TRENDS IN SCIENCE, PRACTICE AND EDUCATION"
4.
16.
Saodat Khalmurzayevna Yuldasheva, Mahamadali Turdaliyevich Toshxonov, Sherzod
Zairjanovich Yuldashev. (2022, 3 January) USING MOBILE APPS FOR TEACHING
ESL&EFL IN HIGHER EDUCATION INSTITUTIONS. Vol. 2 No. 8 (2023): YOUTH,
SCIENCE, EDUCATION: TOPICAL ISSUES, ACHIEVEMENTS AND INNOVATIONS
5.
17.
Khalmurzayevna, Y. S., Nuritdinovich, F. S., & Karimovich, S. S. (2023). RISK
ASSESSMENT OF THE INTERNAL CONTROL SYSTEM AND THE APPLICATION OF
AUDITING PROCEDURES IN AUDIT OF ENVIRONMENTAL COSTS. International Journal
Of Management And Economics Fundamental, 3(05), 15-27.
6.
18.
Yuldasheva Saodat Khalmurzayevna, Ganiev Shakhriddin Vakhidovich, Yuldashev
Sherzod Zairjanovich (2023/6/9). 21st Century Modern English Teacher’s Professional
Competences. Best Journal of Innovation in Science, Research and Development, 8-13
7.
19.
Yuldasheva Saodat Khalmurzayevna, Yuldashev Sherzod Zairjanovich (2023/9/20) The
Perspectives of English Teachers' Pedagogic Competence In Teaching English Through Online
and Offline Tools. American Journal of Language, Literacy and Learning in STEM Education
(2993-2769), 111-121
8.
20.
Ismailov Kamolatdin Kurultaevich, Yuldashev Sherzod Zairjanovich, Sadikova Dildor
Abdullayevna, Talipov Begzod Botirovich, Taryanikova Marina Anatolievna (2023/10/23).
Specifics Of Teaching Foreign Language Speaking To Students At A Non-Linguistic Institute
(Iper) In The Distance Learning Format. Best Journal of Innovation in Science, Research and
Development, 549-559
9.
21.
Alisherovna R. N. FUNCTIONAL ANALYSIS OF TEXTS IN ENGLISH AND UZBEKI
//Galaxy International Interdisciplinary Research Journal. – 2023. – Т. 11. – №. 1. – С. 185-187.
10.
22.
Yuldasheva Saodat Khalmurzayevna, Yuldashev Sherzod Zairjanovich (2023/11/12).
Overthrown Barriers In Teaching Efl To Non-Linguistic Students (Iper Students). Gospodarka i
Innowacje, 123-132
11.
23.
Talipov Begzod Botirovich, Akhmedova Dilnoza Anvarovna, Toshkhonov Mahamadali
Turdaliyevich. (2023, 2 January) THE DEVELOPMENT OF PBL TEACHING METHOD FOR
TEACHING PRACTICAL ENGLISH IN IPER (INSTITUTE OF PHARMACEUTICAL
EDUCATION AND RESEARCH) “INTERNATIONAL SCIENTIFIC CONFERENCE "
INNOVATIVE TRENDS IN SCIENCE, PRACTICE AND EDUCATION"
12.
24.
Akhmedova Dilnoza Anvarovna. (2023, 23 January) Strategies for Increasing Awareness
of Pharmaceutical Students' Divergences. Miasto Przyszłości 31, 277-280
Volume 15 Issue 03, March 2025
Impact factor: 2019: 4.679 2020: 5.015 2021: 5.436, 2022: 5.242, 2023:
6.995, 2024 7.75
http://www.internationaljournal.co.in/index.php/jasass
161
13.
25.
Talipov Begzod Botirovich, Akhmedova Dilnoza Anvarovna, Toshkhonov Mahamadali
Turdaliyevich. (2023, 31 January) ESP AND STUDENTS' NEEDS IN LEARNING ENGLISH
FOR PHARMACY. “INTERNATIONAL JOURNAL OF SOCIAL SCIENCE &
INTERDISCIPLINARY RESEARCH”
14.
26.
Yuldashev Sherzod Zairjanovich. ENGLISH AND SUBJECT INTEGRATION IN
MATHEMATICS AND GEOGRAPHY. Zbiór artykułów naukowych recenzowanych. 201 pp
15.
27.
Yuldasheva Saodat Khalmurzayevna, Yuldashev Sherzod Zairjanovich (2023/12/22).
OPPORTUNITIES
FOR
DEVELOPING
PROFESSIONAL
COMPETENCIES
OF
PHARMACEUTICAL INSTITUTE STUDENTS IN THE PROCESS OF LEARNING A
FOREIGN LANGUAGE. Best Journal of Innovation in Science, Research and Development,
148-153 pp
16.
28.
Yuldasheva Saodat Khalmurzayevna, Yuldashev Sherzod Zairjanovich (2024/01/19)
Conformation Of the Foreign Language Competence of Pharmacy and Industrial Pharmacy
Students (IPER). Best Journal of Innovation in Science, Research and Development, 304-312 pp
17.
29.
Yuldasheva Saodat Khalmurzayevna, Yuldashev Sherzod Zairjanovich (2024/01/19)
Investigating Non-English Major Students’ (Iper) Needs, Attitudes, And English Language
Learning Ways. INTERNATIONAL JOURNAL OF EUROPEAN RESEARCH OUTPUT, 170-
193 pp
18.
30.
Yuldasheva Saodat Khalmurzayevna, Yuldashev Sherzod Zairjanovich (2024/3/19)
Teaching English Grammar to Iper Students within Internet Resources, Best Journal of
Innovation in Science, Research and Development, 462-472 pp
19.
31.
ZAIRJANOVICH, Y. S., ANATOLIEVNA, T. M., & BOTIROVICH, T. B. (2025).
MODERN METHODS USED FOR ENGLISH LANGUAGE TEACHING IN UZBEK PUBLIC
INSTITUTES. SHOKH LIBRARY.
20.
32.
Khalmurzaevna, Y. S. (2024). MAIN DIRECTIONS AND IMPROVEMENTS OF
INTERNAL AUDIT BASED ON INTERNATIONAL EXPERIENCE. Ethiopian International
Journal of Multidisciplinary Research, 11(12), 647-654.
21.
33.
Khalmurzaevna, Y. S. (2024). THE IMPORTANCE AND EVALUATION OF
INTERNAL AUDIT FOR THE EXTERNAL AUDIT PROCEDURE. Ethiopian International
Journal of Multidisciplinary Research, 11(12), 637-646.
22.
34.
Khalmurzayevna, Y. S., Nuriddinovich, F. S., & Karimovich, S. S. (2024). Ict in
Teaching Economics. Gospodarka i Innowacje., 47, 122-129.
