SA 300- Planning an Audit of Financial Statements(Effective 01/04/2009)

The objective of the auditor is to plan the audit so that it will be performed in an effective manner

The auditor shall undertake the following activities at the beginning of the current audit engagement:

1. Performing procedures required by SA 220, “Quality Control for an Audit of Financial Statements” regarding the continuance of the client relationship and the specific audit engagement;
2. Evaluating compliance with ethical requirements, including independence, as required by SA 220; and
3. Establishing an understanding of the terms of the engagement, as required by SA 210.

1. The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan.
2. In establishing the overall audit strategy, the auditor shall:

• Identify the characteristics of the engagement that define its scope(Eg:- AFRFW, Need to audit Standalone FS);
• Ascertain the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required(Communication with component audtors, Requirements of companies act,CARO 2020 etc);
• Consider the factors that, in the auditor’s professional judgment, are significant in directing the engagement team’s efforts(More Transactions – Test Internal controls, Acquisitions or merger – Detail verification of same);
• Consider the results of preliminary engagement activities and, where applicable, whether knowledge gained on other engagements performed by the engagement partner for the entity is relevant; (Eg:- network firm providing tax litigation service to client, Recuring audits) and
• Ascertain the nature, timing and extent of resources necessary to perform the engagement.(Eg:- People experienced in Derivatives, telecom industry etc. Entity having many locations)

The auditor shall develop an audit plan that shall include a description of:

1. The nature, timing and extent of planned risk assessment procedures, as determined under SA 315 “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment”.
2. The nature, timing and extent of planned further audit procedures at the assertion level, as determined under SA 330 “The Auditor’s Responses to Assessed Risks”.
3. Other planned audit procedures that are required to be carried out so that the engagement complies with SAs.

Note:-

1. The engagement partner and other key members of the engagement team shall be involved in planning the audit
2. The auditor shall update and change the overall audit strategy and the audit plan as necessary during the course of the audit

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