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

CA Tanvi is the auditor of Sundaram Pharma Ltd. for the second year. She plans to rely on the prior year's working papers to shortcut planning. Which of the following is the correct position under SA 300 regarding initial activities and continuing engagements, and the form of planning documentation?

She must perform continuance and ethical compliance procedures, including independence evaluation, at the start of the current audit, and document the overall audit strategy, audit plan and significant changes. SA 300 applies these requirements to recurring engagements as well as first-year ones.

  1. AShe should perform procedures on continuance of the client relationship and ethical compliance at the start of the current audit, and document the overall audit strategy, the audit plan and significant changes made during the auditCorrect
  2. BContinuance and ethics procedures are required only for first-year audits, so she may skip them
  3. COnly the audit plan need be documented; the overall audit strategy is optional for recurring engagements
  4. DShe need document nothing, because prior year working papers are sufficient

Explanation

SA 300 lists preliminary activities, including performing procedures on continuance of the client relationship and evaluating compliance with ethical requirements including independence, at the beginning of the current audit engagement, for continuing as well as new engagements. It also requires documentation of the overall audit strategy, the audit plan, and any significant changes. Skipping these for a recurring client is wrong.

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