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

While planning the audit of Kaveri Pharma Ltd, the audit team of CA Meena decides to use the work of the company's internal auditor and also to rely on an expert valuer engaged by management. Under SA 300 and related standards, which approach is correct at the planning stage?

Planning is continual and iterative, so the auditor updates the overall strategy and audit plan as necessary during the audit and documents significant changes and their reasons. It is not a fixed one-time exercise, and verbal planning without documentation does not satisfy SA 300.

  1. APlanning is a one-time exercise completed before fieldwork and the plan must not be altered later, to preserve independence
  2. BPlanning is a continual and iterative process, and the strategy and plan must be updated as necessary during the audit, with significant changes and reasons documentedCorrect
  3. CPlanning ends once the engagement letter is signed, and later changes need prior approval from the Audit Committee
  4. DPlanning need not be documented if the engagement partner has discussed it verbally with the team

Explanation

SA 300 says planning is not a discrete phase but a continual, iterative process, and the auditor must update the strategy and plan as necessary, documenting significant changes and reasons. The one-time and Audit Committee approval views are incorrect, and documentation of the strategy and plan is mandatory.

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