Skip to content

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

CA Priya is auditing Himalaya Foods Ltd for the second time. During planning she wants to reduce documentation of the audit plan because the previous year's file is available. Meanwhile, the audit team discovers during fieldwork that a major customer has gone into insolvency, making the earlier plan for receivables inadequate. Which course of action is correct under SA 300?

She should update the overall audit strategy and plan as the insolvency changes the risk on receivables, and document the significant changes and the reasons for them. Planning is continuous, and both strategy and plan, along with any changes, must be recorded in the audit documentation.

  1. AContinue with the original plan to maintain consistency with the prior year and note the insolvency only in the final report
  2. BDocument the audit plan only after the audit is complete, since planning documents are not mandatory
  3. CUpdate and change the overall audit strategy and audit plan as necessary during the audit, and document the significant changes and the reasons for themCorrect
  4. DRevise the plan orally without any documentation, as only the strategy needs to be documented

Explanation

SA 300 requires the auditor to update and change the overall strategy and audit plan as necessary during the audit, and to document the strategy, the plan and any significant changes made with reasons. Sticking to the old plan ignores the new risk, and documentation cannot be deferred or omitted. Documenting only the strategy is incomplete, since the plan and changes must also be recorded.

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