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

While auditing Kaveri Textiles Ltd, CA Meera completes her risk assessment procedures early in the audit. She has finalised the overall audit strategy but has not yet planned the specific further audit procedures for trade receivables, because these depend on the risks the assessment identifies. Meanwhile, she wants to begin inventory observation. Which statement best reflects SA 300?

The auditor may start some further audit procedures, such as inventory observation, before planning all remaining ones. Planning specific procedures depends on risk assessment outcomes and develops over the audit. The audit plan is more detailed than the overall strategy, and no full upfront completion is required.

  1. AShe must complete the entire audit plan for all areas before starting any further audit procedure
  2. BPlanning of specific further procedures depends on risk assessment outcomes, and she may begin some further procedures before planning all remaining onesCorrect
  3. CShe cannot start inventory observation until the audit plan is signed off by those charged with governance
  4. DThe audit plan is less detailed than the overall audit strategy, so it can be prepared after the audit work is completed

Explanation

Under SA 300, planning the nature, timing and extent of specific further audit procedures depends on the outcome of risk assessment procedures, and the auditor may begin further procedures for some classes of transactions, balances and disclosures before planning all remaining ones. Option A is wrong because planning is iterative. Option D reverses the relationship, since the audit plan is more detailed than the strategy.

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