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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

During an audit of Narmada Foods Ltd, substantive procedures on sales return results that contradict earlier tests of controls concluding that controls were effective. What does SA 300 indicate the auditor may need to do?

The auditor may need to modify the overall audit strategy and audit plan, and so the nature, timing and extent of further procedures, based on revised risk assessment. SA 300 gives contradictory substantive and control-test evidence as an example of such a change.

  1. AIgnore the substantive results as the control tests were done earlier
  2. BModify the overall audit strategy and audit plan, and the planned nature, timing and extent of further procedures, based on revised risk assessmentCorrect
  3. CKeep the plan unchanged and only mention the matter in the management letter
  4. DStop the audit until management corrects the controls

Explanation

SA 300 says that unexpected events or audit evidence from procedures may require modifying the strategy and plan, and gives the example of substantive evidence contradicting control-test evidence. Leaving the plan unchanged ignores the revised risk.

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