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CA Intermediate · Auditing and Ethics · Audit Strategy, Audit Planning and Audit Programme

Auditor Meera is planning the audit of Bharat Agro Ltd. for the year ending 31 March. The audit team has completed the audit of this client for four years. During planning, Meera decides to hold a discussion among the engagement team members about the susceptibility of the financial statements to material misstatement. Which statement is correct as per SA 300 and the related Standards?

The engagement partner and other key team members must be involved in planning the audit, including the engagement team discussion on susceptibility of the financial statements to material misstatement. The discussion is not optional, does not exclude the partner, and takes place during planning rather than after substantive procedures.

  1. AThe discussion is optional and needed only when fraud is suspected
  2. BThe engagement partner and other key team members should be involved in planning, including the team discussionCorrect
  3. CThe discussion must exclude the engagement partner to ensure independence of the team
  4. DThe discussion should be held only after substantive procedures are completed

Explanation

SA 300 requires that the engagement partner and other key members of the engagement team be involved in planning, including planning and participating in the team discussion. It is not optional and not restricted to suspected fraud. Holding it after substantive procedures would defeat its purpose of guiding risk assessment and planning.

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