Part 2: Planning an audit
Part 3: Initial activities, Audit planning activities
Part 4: Documentation, Initial audit engagements – additional considerations
Read ISA 300 Summary Online ISA 300 Test4 Documentation
The auditor shall document
- Audit strategy; the decisions taken to make audit plan and communicate important matters to team members.
- Audit plan; the nature, timing and extent of audit procedures. This later aids the review how engagement was conducted. Often standard audit programs or checklists are used for this purpose.
- Significant changes made in the audit strategy and plan during the course of audit explaining with reasons of such changes. This explains why changes were made and appropriateness of such changes.
5 Initial audit engagements – Additional considerations
The purpose and objective of planning audit engagement is same either it is initial engagement or recurring engagement. However, in case of initial engagement as auditor lacks previous experience with the entity therefore auditor may extend the planning activities beyond the activities undertaken when recurring engagements are performed.
In case of initial audits, auditor is required to undertake following steps before any other activity is carried out:
- Perform client acceptance and specific audit engagement procedures. For example:
- Any major issues discussed with management regarding initial selection as auditor
- Audit procedures necessary to obtain audit evidence for opening balances.
- Communicate with outgoing auditor to comply with ethical requirements. This involves arrangements to be made with outgoing auditor if not prohibited by law. For example reviewing previous auditor’s working papers.
In addition to this, auditor may have to take additional steps to comply with firm’s quality control process pertaining to initial audit engagements.