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

While planning the audit of Kaveri Foods Ltd., CA Rohan, the engagement partner, decides to hold a discussion among the key engagement team members about the susceptibility of the company's financial statements to material misstatement. A junior member asks whether Rohan must personally attend and who decides which team members take part. Under the Standards on Auditing, what is the correct position?

The engagement partner and other key team members must hold the discussion, and the engagement partner decides which matters are passed on to members who do not attend. This follows SA 315 and SA 300. It is not optional, and management has no role in choosing the participants.

  1. AThe engagement partner and key team members must discuss; the partner determines which matters are communicated to team members not attendingCorrect
  2. BOnly the junior staff discuss, since partners are barred from planning discussions
  3. CThe discussion is optional and needs no involvement of the engagement partner
  4. DThe management of the company decides who in the audit team attends the discussion

Explanation

SA 315 requires the engagement partner and other key team members to discuss the susceptibility of the entity's financial statements to material misstatement. The engagement partner determines which matters are to be communicated to team members not involved in the discussion. Making it optional or leaving it to management contradicts the Standard.

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