Certified Government Auditing Professional (CGAP) Practice Exam

What is the primary reason why audit planning is important, particularly in performance audits?

1. Efficiency use of audit resources and effective fulfillment of clear audit objectives.

2. It keeps upper-level audit management "busy".

3. Auditors can better defend their work and justify budget requests.

4. It is a generally accepted practice in business.

The correct answer is: Efficiency use of audit resources and effective fulfillment of clear audit objectives.

The primary reason that audit planning is crucial, especially in performance audits, is the efficient use of audit resources and the effective fulfillment of clear audit objectives. A well-structured audit plan enables auditors to systematically identify the goals of the audit, allocate resources appropriately, and ensure that the audit is aligned with the specific needs of the organization. In performance audits, where the assessment focuses on the efficiency, effectiveness, and economy of operations, having a clear plan allows auditors to establish relevant criteria, identify key performance indicators, and outline the methodologies to be used. This not only streamlines the audit process but also enhances the likelihood of achieving meaningful outcomes that can lead to improved organizational performance. While other aspects like the engagement of management or the ability to justify budgets have their own importance, they do not encapsulate the central role of audit planning as effectively as the optimization of resources and the fulfillment of specific objectives, which are fundamental to the success of any audit endeavor.