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SA 300: Planning an Audit of FS - Coggle Diagram
SA 300: Planning an Audit of FS
Benefits of Audit Planning
Focus
Helps auditor to devote appropriate attention to important areas of audit
Pre-empt problems
Helps to identify and resolve potential problems on timely basis
Effectiveness & Efficiency
Helps to properly organise and manage the audit engagement
Team selection
Assisting in selection of ET members to respond to anticipated risks, and proper assignment of work
Direction, Supervision, Review & Coordination
Facilitating direction and supervision of ET, review of their work and coordination of work done by component auditors & experts
Features of Planning
Is a continuous process
Auditor may discuss elements of planning with the MGT
Involvement of Key ET Members
EP and others shall be
actively involved in planning and participating
in the discussion
Preliminary Engagement Activities
Establishing an understanding of terms of engagement (SA 210)
Evaluating compliance with ethical requirements incl. independence
Performing procedures as req. by SA 220 regarding continuance of client relationships
:star:
Considerations in establishing overall Audit Strategy
2. Components
Number and locations
Nature of control relationships
between parent & component
Extent to which components are audited
by other auditors
Nature of
business segments
Need for statutory audit of standalone FS
in addition to audit for CFS purpose
1. Framework
Financial Reporting Framework (
FRFW
)
Industry specific
reporting requirements
3. Other Work/Experience
Availability of work of IA
Entity's use of
service organisations
Expected use of AE obtained in previous audit
Effect of IT on AP
4. Reporting
Entity's timetable for reporting such as
interim and final
Ascertain reporting objectives
to plan the timing of audit and nature of communication required
5. Timing
Organisation of
meetings with MGT & TCWG
to discuss NTE of audit work
Expected type and timing of reports to be issued
and other communications
incl. AR, MRL, communication to TCWG
6. Communication
With auditors of components
Expected nature and timing
among ET members
Whether any other expected communications
w/ third parties
7. ROMM
Determination of
materiality
Preliminary identification of
areas with higher ROMM
Impact
of assessed ROMM
at overall FS level
on direction, supervision, review
Auditor's emphasis to exercise
professional skepticism
8. Prior Experience
Results of previous audits
that involved evaluating the operating effectiveness of IC, nature of deficiencies, and actions taken to address them
Consider factors significant in direction
of the team,
result of preliminary engagement
activities, and knowledge gained on other engagements
9. Internal Control
Evidence of
MGT commitment to DIM of IC
Volume of transactions
to determine reliance on IC
Importance attached to IC throughout the entity
11. NTE of Resources
Selection of ET and assignment of audit work
to appropriately experienced members as per ROMM
Engagement budgeting
10. Changes
Significant biz. developments
affecting the entity
Changes in IT and biz. processes
Changes in key MGT
Changes in regulations, FRFW
, new reporting requirements
Audit Strategy
Must establish an overall audit strategy that
Sets the scope, timing and direction of the audit, and
Which guides the development of audit plan.
Identify characteristics of engagement
Ascertain reporting objectives
Consider significant factors in direction
Evaluate results of preliminary engagement activities
Determine NTE of resources
Planning Activities — Audit Plan
Include fol. description
NTE of planned RAP as per SA 315
NTE of planned FAP at assertion level as per SA 330
Other planned AP that are necessary for compliance with SAs
Auditor must plan NTE of direction and supervision of ET members and review their work.
Additional Considerations in Initial Audit Engagements
Performing procedures required by SA 220 regarding acceptance of client relationships
Communicating with predecessor auditor
Unless prohibited by L&R, arrangements to be made with predecessor auditor
Any major issues discussed w/ MGT in connection w/ initial selection as auditor, the communication of these to TCWG and how they affect the overall audit strategy and audit plan
The audit procedures necessary to obtain SAAE regarding opening balances (SA 510)
Other procedures required by the firm's system of quality control for initial audit engagements