Article-Planning
ISA 300 planning should not be seen as discrete and seperate part of overall
audit. The nature and extend of planning depends on the size and complexity of
client, prev. experience of firm and any changes in circumstance occuring
during audit. Audit plan revised as audit progressed and should not be fixed.
Preliminary activities
ISA 300 req.
• Performing procedures regarding the continuance of the client relationship
and the specific audit engagement.
• Evaluating compliance with relevant ethical requirements, including
independence.
• Establishing an understanding of the terms of the engagement.
These are also included in ISA 220 and ISA 210, hence clearifying the fact
planning is wider than just obtaining business understanding and risk
assesments
ISA 300 states that audit planning activities includes:
• establish the overall audit strategy for the engagement
• develop an audit plan.
Audit strategy
It is the setting of scope, timing and direction of an audit (i.e., how audit
is to be conducted). ISA 300 requires to consider specfic matters when
establishing strategy. These are:
• Identify the characteristics of the engagement that define its scope (i.e.,
group audit vs owner-managed company leading to considerations of matters such
as financial reporting framework, relaince on component/internal auditors,
availability of data etc)
• Ascertain the reporting objectives of the engagement to plan the timing of
the audit and the nature of the communications required
(i.e., considerating
of additional reporting and communication requirements to comply with
corporate governance and industry regulations)
• Consider the factors that are significant in directing the audit team’s
efforts in the auditor’s professional judgment
(i.e., consider issues to do
with quality control, such as how resources are managed, directed and
supervised, reviwed)
• Consider the results of preliminary engagement activities and knowledge
gained on other engagements (i.e., initial assessments of materiality, risks
identified from preliminary activities such as fraud risks etc and reviews of
business plans or cash flow forecasts)
• Ascertain the nature, timing and extent of resources necessary to perform
the engagement
(i.e., considerating on the need for specialist in an audit,
the deadline, if tight than more staff needed, the risk, if high more
experienced staff.)
Audit plan
ISA 300 provides guidance on what should be included in the audit plan:
• the nature, timing and extent of planned risk assessment procedures
• the nature, timing and extent of planned further audit procedures at the
assertion level
• other planned audit procedures that are required to be carried out so that
the engagement complies with ISAs.
Changes to the audit strategy and audit plan
Any unexpected events, or changes in conditions, the auditor may need to
modify the overall audit strategy and audit plan and thereby the resulting
planned nature, timing and extent of further audit
procedures, based on the
revised consideration of assessed risks.
Doccumentation
ISA 300 requires that as well as the audit strategy and audit plan being
thoroughly documented, a record of significant changes made to the audit
strategy and audit plan is needed.
Direction, supervision and review
ISA 300 requires that the auditor shall plan the nature, timing and extent of
direction and supervision of engagement team members and the review of their
work.
Additional considerations in initial audit engagements
The final section of ISA 300 relates to initial audit engagements, and
requires the auditor to perform client and engagement acceptance procedures
(as also required by ISA 220), and also to communicate with the predecessor
auditor, where there has been a change of auditors, in compliance with
relevant ethical requirements.
The ISA recognises that for an initial audit
engagement, the auditor may need to expand the planning activities because the
auditor does not ordinarily have the previous experience with the entity that
is considered when planning recurring engagements.
ISA 300 planning should not be seen as discrete and seperate part of overall
audit. The nature and extend of planning depends on the size and complexity of
client, prev. experience of firm and any changes in circumstance occuring
during audit. Audit plan revised as audit progressed and should not be fixed.
Preliminary activities
ISA 300 req.
• Performing procedures regarding the continuance of the client relationship
and the specific audit engagement.
• Evaluating compliance with relevant ethical requirements, including
independence.
• Establishing an understanding of the terms of the engagement.
These are also included in ISA 220 and ISA 210, hence clearifying the fact
planning is wider than just obtaining business understanding and risk
assesments
ISA 300 states that audit planning activities includes:
• establish the overall audit strategy for the engagement
• develop an audit plan.
Audit strategy
It is the setting of scope, timing and direction of an audit (i.e., how audit
is to be conducted). ISA 300 requires to consider specfic matters when
establishing strategy. These are:
• Identify the characteristics of the engagement that define its scope (i.e.,
group audit vs owner-managed company leading to considerations of matters such
as financial reporting framework, relaince on component/internal auditors,
availability of data etc)
• Ascertain the reporting objectives of the engagement to plan the timing of
the audit and the nature of the communications required
(i.e., considerating
of additional reporting and communication requirements to comply with
corporate governance and industry regulations)
• Consider the factors that are significant in directing the audit team’s
efforts in the auditor’s professional judgment
(i.e., consider issues to do
with quality control, such as how resources are managed, directed and
supervised, reviwed)
• Consider the results of preliminary engagement activities and knowledge
gained on other engagements (i.e., initial assessments of materiality, risks
identified from preliminary activities such as fraud risks etc and reviews of
business plans or cash flow forecasts)
• Ascertain the nature, timing and extent of resources necessary to perform
the engagement
(i.e., considerating on the need for specialist in an audit,
the deadline, if tight than more staff needed, the risk, if high more
experienced staff.)
Audit plan
ISA 300 provides guidance on what should be included in the audit plan:
• the nature, timing and extent of planned risk assessment procedures
• the nature, timing and extent of planned further audit procedures at the
assertion level
• other planned audit procedures that are required to be carried out so that
the engagement complies with ISAs.
Changes to the audit strategy and audit plan
Any unexpected events, or changes in conditions, the auditor may need to
modify the overall audit strategy and audit plan and thereby the resulting
planned nature, timing and extent of further audit
procedures, based on the
revised consideration of assessed risks.
Doccumentation
ISA 300 requires that as well as the audit strategy and audit plan being
thoroughly documented, a record of significant changes made to the audit
strategy and audit plan is needed.
Direction, supervision and review
ISA 300 requires that the auditor shall plan the nature, timing and extent of
direction and supervision of engagement team members and the review of their
work.
Additional considerations in initial audit engagements
The final section of ISA 300 relates to initial audit engagements, and
requires the auditor to perform client and engagement acceptance procedures
(as also required by ISA 220), and also to communicate with the predecessor
auditor, where there has been a change of auditors, in compliance with
relevant ethical requirements.
The ISA recognises that for an initial audit
engagement, the auditor may need to expand the planning activities because the
auditor does not ordinarily have the previous experience with the entity that
is considered when planning recurring engagements.
