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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

Anita & Co. are appointed for the first time as auditors of Narmada Cements Ltd. Which additional planning consideration is relevant specifically to this initial audit?

The auditor may arrange, unless prohibited by law or regulation, to review the predecessor auditor's working papers. Initial audits need expanded planning, including procedures on opening balances, because the auditor lacks previous experience with the entity.

  1. AArranging, unless prohibited by law, to review the predecessor auditor's working papersCorrect
  2. BSkipping procedures on opening balances since they were audited earlier
  3. CAvoiding discussion of major issues with those charged with governance
  4. DReducing planning because the objective of planning differs for initial audits

Explanation

SA 300 notes that the purpose of planning is the same for initial and recurring audits, but initial audits may need expanded planning, including arrangements with the predecessor auditor to review working papers (unless prohibited) and procedures for opening balances. Skipping opening balances is wrong.

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