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

CA Rohit is appointed as auditor of Sundaram Retail Ltd. for the first time, replacing the predecessor auditor. Which of the following is a planning activity specific to an initial audit engagement under SA 300?

In an initial audit the auditor should communicate with the predecessor auditor as ethical requirements demand and plan procedures on opening balances. Opening balances cannot be ignored merely because the prior year was audited, and engagement acceptance is not delegated to management.

  1. ACommunicating with the predecessor auditor, as required by ethical requirements, and planning procedures for opening balancesCorrect
  2. BSkipping any verification of opening balances since the prior year was audited
  3. CUsing the prior year's audit programme without modification
  4. DDelegating acceptance of the engagement to the client's management

Explanation

For an initial audit, SA 300 requires activities such as communicating with the predecessor auditor where required by ethical requirements, and SA 510 requires procedures on opening balances. Opening balances cannot be ignored, a prior year programme from another firm is not available to be used unmodified, and acceptance is the auditor's decision.

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