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

CA Anil is the engagement partner for Deccan Cements Ltd. At the start of planning, he wants the engagement team members to discuss the susceptibility of the financial statements to material misstatement and how the entity's fraud risks may arise. Which statement best describes the correct audit approach?

The engagement partner and key team members should discuss the entity's susceptibility to material misstatement during planning, and the partner decides what to communicate to members not present. Restricting the assessment to the partner alone or delaying it until after fieldwork would not meet the Standards.

  1. AOnly the engagement partner should assess fraud risk privately so junior staff are not influenced
  2. BThe engagement partner and key team members should hold a discussion on the entity's susceptibility to material misstatement, and the engagement partner decides which matters to communicate to team members not presentCorrect
  3. CThe discussion should be held only after fieldwork ends so that actual errors can be considered
  4. DDiscussion among team members is prohibited as it compromises confidentiality

Explanation

SA 315 requires the engagement partner and other key team members to discuss the susceptibility of the entity's financial statements to material misstatement, and the engagement partner determines which matters are communicated to members not involved. A private assessment, a post-fieldwork discussion or a ban on discussion all conflict with this requirement.

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