Brundthlan Report

4.1 .- The audit planning.
A. Pre-contract activities.
- Need to establish procedures for accepting or retaining a customer.
- Objective: To minimize the possibility that the auditor is associated with customers, which may ultimately be at risk of lawsuits
- Points to consider in evaluating new customers:
· Obtain and review available financial information (annual accounts, interim reporting, etc.).
· Ask any third party on the future integrity of the client and its management (Banks, members of the business community, etc.).
· Contact the previous auditor in order to analyze whether the reason for the change has been the existence of disagreements.
· Consider whether the prospective customer has specific circumstances that require attention or that could be unusual business and audit risk, such as lawsuits or ongoing management problems.
· Determine if the auditor is independent of the prospective client and is able to provide the service demanded.
· To determine whether the auditor has the technical skill and knowledge to conduct the audit.

B. The audit contract or letter of request.
- Set the terms of the agreement or conditions under which conducted the audit.
- Issues includes:
· Information and accountability.
· Deadline and planning.
• Report and collaboration.
· Fees, hours and period of engagement.
· Agreements for the use of independent experts.
· Application of internal audit work.

C. Activities of planning.
- Stages in the development of planning:
· Determine the audit team needed.
· Value independence
· Obtain knowledge of the client's business and industry
· Value the possibility of conducting the audit
· To drive preliminary analytical procedures
Establish materiality and audit risk, and assess the risk inherent
· Value to a preliminary level of control risk
· Value the possibility of errors, irregularities or illegal acts
• Identify related parties
· Prepare the audit program.

4.2 .- The analytical review.
- It consists in evaluating the information through relations with economic sense.
- Types of analytical procedures:
· Comparison of information over time
· Comparison of information with estimates or projections
· Relations of elements of financial information within the current period
· Comparison of customer information with data from the sector
· Relationships between financial and non financial
- Objectives of analytical procedures:
· Assist the auditor in planning the nature, timing and extent of other procedures.
· As a substantive test