ISA 300 | Definition | Objective | Requirements | Documentation

ISA 300

ISA 300 – The Role and Timing of Planning

Under ISA 300 – Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan. Benefits of planning are:

  • Helping the auditor to devote appropriate attention to important areas of the audit.
  • Helps the auditor identify and resolve potential problems on a timely basis.
  • It will help the auditor properly organize and manage the audit engagement so that it is performed in an effective and efficient manner.
  • Assisting in the selection of engagement team members with appropriate levels of capabilities and competence to respond to anticipated risks, and the proper assignment of work to them.
  • Facilitating the direction and supervision of engagement team members and the review of their work.
  • Assisting, where applicable, in the coordination of work done by auditors of components and experts.

Objective

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

ISA 300 Requirements

Involvement of Key Engagement Team Member

The engagement partner and other key members of the engagement team shall be involved in planning the audit, including planning and participating in the discussion among engagement team members.

Preliminary Engagement Activities

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

  • Performing procedures required by ISA 220 regarding the continuance of the client relationship and the specific audit engagement;
  • Evaluating compliance with relevant ethical requirements, including independence, in accordance with ISA 220;
  • Establishing an understanding of the terms of the engagement, as required by ISA 210.

Planning Activities

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.

Establishing overall Strategy:

In establishing the overall audit strategy, the auditor shall:

  1. Identify the characteristics of the engagement that define its scope;
  2. Ascertain the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required;
  3. Consider the factors that, in the auditor’s professional judgment, are significant in directing the engagement team’s efforts;
  4. 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; and
  5. Ascertain the nature, timing, and extent of resources necessary to perform the engagement.

However, 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 ISA 315.
  2. The nature, timing, and extent of planned further audit procedures at the assertion level, as determined under ISA 330.
  3. Other planned audit procedures that are required to be carried out so that the engagement complies with International Standards on Auditing.

Therefore, The auditor shall update and change the overall audit strategy and the audit plan as necessary during the course of the audit.
Hence, The auditor shall plan the nature, timing, and extent of direction and supervision of engagement team members and the review of their work.

Documentation

The auditor shall include in the audit documentation:

  1. The overall audit strategy;
  2. The audit plan; and
  3. Any significant changes made during the audit engagement to the overall audit strategy or the audit plan, and the reasons for such changes.

Additional Considerations in Initial Audit Engagements

The auditor shall undertake the following activities prior to starting an initial audit:

  1. The Performing procedures required by ISA 220 regarding the acceptance of the client relationship and the specific audit engagement; and
  2. Communicating with the predecessor auditor, where there has been a change of auditors, in compliance with relevant ethical requirements.

You may like to know what is Economics?

 

Summary
ISA 300
Article Name
ISA 300
Description
Objective: The objective of the auditor is to plan the audit so that it will be performed in an effective manner. Under ISA 300 - Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan.
Author
Publisher Name
AC
Publisher Logo