CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Planning, Strategy and Execution

CA Sunita is planning the audit of Konkan Energy Ltd, which values complex unlisted derivative holdings through internal models. While planning, she sees that the team lacks the skills to evaluate the valuation models. The engagement partner must be satisfied about the team's capabilities. Which conclusion is most consistent with SA 540 and SA 300 planning requirements?

She should ascertain the resources needed, including involvement of people with specialised skills or knowledge where necessary, and ensure the team and any experts collectively have the capabilities, competence and time. Skills needs may also emerge during the audit, and responsibility cannot be passed to management's team.

1. AIgnore the matter, since specialised skills are only a concern during the reporting phase
2. BAscertain the nature, timing and extent of resources needed, which may include involving those with specialised skills or knowledge, and ensure the team collectively has appropriate capabilities, competence and timeCorrect
3. CAsk management's valuation team to perform the evaluation, thereby transferring responsibility for the opinion
4. DReduce the scope of the audit on the derivatives since the model is proprietary