Skip to content

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

Auditor Rohan is planning the audit of Himalaya Pharma Ltd. Mid-way through the audit, the client announces a major plant acquisition financed by a new term loan, which was not known at the time of planning. The audit plan did not consider this transaction. What is the most appropriate response under SA 300?

The auditor should update and change the overall audit strategy and audit plan as necessary during the audit to address the new acquisition and loan, and document the significant changes and reasons. Planning is a continual and iterative process, so the original plan is not fixed.

  1. AContinue with the original plan, since the plan once approved cannot be changed
  2. BUpdate and change the overall audit strategy and audit plan as necessary during the course of the audit, and document the significant changes and reasonsCorrect
  3. CResign from the engagement because the plan has been disturbed
  4. DIgnore the acquisition until the next year's audit planning

Explanation

SA 300 states that the auditor shall update and change the overall audit strategy and audit plan as necessary during the course of the audit. Significant changes and the reasons for them should be documented. Continuing with the old plan would leave the new risks unaddressed, and resignation is unwarranted.

Did you get it right without looking?

One question tells you little. A timed set on Audit Strategy, Audit Planning and Audit Programme shows your real accuracy, how long you take and where you lose marks.

Practise Audit Strategy, Audit Planning and Audit ProgrammeFree diagnostic mock

More Audit Strategy, Audit Planning and Audit Programme questions