The first step to the plan is the statement of principles. The auditor’s services are considered independent and nothing to cause interference and hence the audit and the compliance committee is required to pre-approve all the services audited and non-audited performed by the independent auditor.
The application of policies and procedures are put in place during the pre-approval of proposed services. Services that exceed pre-approval level cost, the final approval is done by the committee.
The general pre-approval of Audit, Audit-related, tax, and all other services is done by the committee after every twelve months unless stated otherwise. At no time should the committee delegate its mandate of pre-approval services done by the independent auditor to the management.
The next step is delegation; the committee gives the chairman power or authority to pre-approve the entire request done in the committee meetings. It is then required of the chairman to give a report of the pre-approval decisions in the next meeting.
Step three is the audit services and this is approved by the committee. The auditor will require annual consolidated financial statements, subsidiary audits, and testing of internal controls to be able to form his opinion on the company’s consolidated financial statement.
Audit related services are performed by an independent auditor and the services may include financial reporting, accounting, and regulatory reporting matters, among other issues. The committee believes the auditor can provide tax services such as tax compliance, tax advice, and planning. All other services believed to routine and recurring are pre-approved by the committee and handed over to the independent auditor.
The independent auditor provides pre-approval fees levels of all the services and is established annually by the committee. The last step is the procedure. The president and the controller of the budget receive the requests and applications from the auditor general which includes the description of the services to be offered and the estimated cost.