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

While auditing Kaveri Textiles Ltd, CA Meena completes her risk assessment procedures and finalises the overall audit strategy. She has not yet designed the specific further audit procedures for trade receivables, but she starts the inventory observation planned for an early date. A junior asks whether she may start some further procedures before every remaining procedure is planned. What is the correct position under SA 300?

The auditor may begin further audit procedures for some classes of transactions, account balances and disclosures before all remaining procedures are planned. SA 300 treats the audit plan as developing through the audit, since specific further procedures depend on risk assessment outcomes.

  1. AShe may not start any further procedure until the audit plan is fully documented for all areas
  2. BShe may start further procedures for some classes of transactions or balances before planning all remaining further procedures, as planning develops over the course of the auditCorrect
  3. CShe may start only if the audit committee approves the early start in writing
  4. DShe may start only after the overall audit strategy has been replaced by a detailed audit plan

Explanation

SA 300 explains that planning of specific further procedures depends on the outcome of risk assessment and develops over the course of the audit. The auditor may begin execution of further procedures for some classes of transactions, balances and disclosures before planning all remaining ones. Option 0 is wrong because full prior planning is not required.

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