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CS Professional · Compliance Management, Audit and Due Diligence · Audit Engagement

Meridian Textiles Ltd invites CA Rohan Iyer to be its auditor. Before he starts any significant audit work for the year, which activity does SA 300 require him to carry out at the beginning of the current audit engagement?

At the start of the engagement the auditor must evaluate compliance with ethical requirements, including independence, as required by SA 220. This is one of the preliminary activities in SA 300, alongside client continuance procedures and agreeing engagement terms, and it precedes reporting-stage work.

  1. AEvaluating compliance with ethical requirements, including independence, as required by SA 220Correct
  2. BIssuing the draft auditor's report on the financial statements
  3. CFinalising the materiality threshold for the performance audit
  4. DObtaining the management representation letter for year end

Explanation

SA 300 requires the auditor, at the beginning of the current engagement, to perform client continuance procedures under SA 220, evaluate compliance with ethical requirements including independence, and establish an understanding of the engagement terms under SA 210. A draft report, materiality finalisation and representation letters come later in the audit process.

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