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1) According to SAP one of the Basic Principle Governing an
Expected to plan work in order to perform the audit work in an Effective, Efficient and timing manner.
2) The term planning refers to the aspect of looking into the Future. The audit activity is Not an Exception and it is considered as a Standard Audit practice to plan the audit before executing the assignment. Planning is done both for New and Recurring audits. It is generally prepared by the audit incharge and submitted to the partner for Review.
3) The audit plan is basically based on the Clients Business. Therefore the auditor is required to take into account the following Aspects of the clients business before preparing an audit plan.
i. The Terms of Engagement and Statutory Responsibilities
ii. The Nature and Timing of Reports or other Communication.
iii. Size and Nature of Business.
iv. Complexity of the Audit.
v. Existence of External Control system (ICS) within the organization.
vi. The system of Accounting Policies and Principles adopted by the client.
vii. The Nature and Extent of Audit Evidence to be obtained.
viii. The work of internal auditors and the extent of their involvement, if any, in the audit.

4) The Auditor needs to obtain a level of knowledge of the client’s business that will enable him to identify the events, transactions and practices that in his judgement may have a significant effect on the financial information. The auditor can obtain the knowledge through the following:
a. The client’s annual reports.
b. Minutes of meetings of shareholders, BOD etc.
c. The previous year’s Audit Working papers, and other relevant files.
d. Discussions with client.
e. Relevant publications of the ICFAI and other professional bodies.
5) According to AAS – 8 the term audit planning is expected to be a CONTINUOUS PROCESS and is said to consist of two major aspects.
i. Developing an Overall plan after taking in to account the scope and objective of audit; and
ii. Developing an audit programme for performing audit procedures.
6) Planning takes the shape of an overall audit plan or advance-planning memorandum. The plan consists of three vertical columns – column (1) contains the various Aspects for which information is required from the client. Column (2) contains the Relevant Answers and Information provided by the client; column (3) Remarks.
7) The audit plan ideally Commences at the Conclusion of the previous year’s audit, and along with the related programme, it should be reconsidered for modification as the audit progresses. Such consideration is based on the auditor’s review of the internal control, his preliminary evaluation thereof, and the results o9f his compliance and substantive procedures.

“Advantages” of Audit plan: - A properly drafted audit plan strives to achieve the following advantages:
i. It ensures that Appropriate Attention is devoted for material items.
ii. It helps in proper Utilization of Assistants.
iii. It ensures the Coordination of work done by various persons such as Assistants, Internal Auditors, and Branch Auditors etc.
iv. It helps in the prompt identification of potential problems.
v. It ensures that the Entire audit work is completed satisfactorily according to the standard audit practices.