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

Tapti Engineering Ltd. has a March year-end. Its auditors, Iyer & Co., discuss the audit with the client's audit committee chairman before finalising the plan. The chairman asks to see the detailed audit programme so that the committee can approve every test the auditor will perform. Which is the correct audit response under SA 300?

The auditor may discuss elements of planning with those charged with governance but stays responsible for the overall strategy and audit plan. Detailed procedures should not be disclosed in a way that compromises effectiveness. Giving the committee or management power to approve or alter tests would undermine the auditor's independent judgement.

  1. AHand over the detailed programme and agree that no test will be altered without the committee's approval
  2. BDiscuss elements of planning with those charged with governance, but remain responsible for the audit strategy and plan and not disclose detailed procedures that would compromise audit effectivenessCorrect
  3. CRefuse any discussion with the committee since planning is purely internal to the auditor
  4. DAllow the management to add or delete procedures as it considers appropriate

Explanation

SA 300 permits the auditor to discuss elements of planning with those charged with governance and management to enhance effectiveness and coordination. However, the auditor remains responsible for the overall strategy and plan, and detailed procedures should not be disclosed in a way that makes them too predictable and compromises effectiveness. Giving the committee approval rights over tests would impair independence of judgement.

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