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

While planning the audit of Bharat Agro Ltd., the engagement partner notes that the company's data entry is largely automated through a newly implemented ERP. The auditor decides to involve an IT specialist and plans to evaluate general IT controls before deciding on the extent of substantive procedures. Under SA 300, this decision is best described as part of which planning activity?

This is part of determining the nature, timing and extent of resources, including the use of experts, within the overall audit strategy. SA 300 requires the auditor to plan resources for areas such as complex IT environments, whereas reporting, representations and completion memoranda belong to later audit stages.

  1. ADetermining the nature, timing and extent of resources, including use of experts, as part of the overall audit strategyCorrect
  2. BDrafting the audit report modification paragraph
  3. CObtaining management representation on subsequent events
  4. DIssuing the engagement completion memorandum

Explanation

Under SA 300, the overall audit strategy includes deciding on the nature, timing and extent of resources needed, such as team composition and the use of experts like IT specialists for areas of high risk. Reporting modifications, representations and completion memoranda belong to later stages of the audit, not planning. Hence the first option is correct.

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