Audit Strategy and Audit Plan – SA 300 etc.
NFRA AUDITOR - AC INTERACTION SERIES 2
Development of an effective Audit Strategy and Audit Plan is a critical starting phase of a financial statement audit. Timely preparation, communication with the AC/ TCWG, and appropriate revisions during the audit enhance the effectiveness and efficiency of the engagement.
The need:
Section 177 of the CA 2013 and Schedule II Part C of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”) , inter alia, require the AC to review and monitor the auditor's performance, independence, and effectiveness of audit process.
The directive:
Audit Strategy vs. Audit Planning
- A high-level exercise
- To set the overall scope, timing and direction of audit
- To guide the preparation of detailed audit plan
Audit Strategy
Audit Planning
- A comprehensive and detailed exercise
- Performing overall analytical procedures
- Determination of overall materiality
- Performing the risk assessment procedures
- Designing appropriate audit procedures to address the risks identified and assessed
- Communication protocols, schedule and timing
- Independence of the team
- Nature, scope and reporting framework
- Engagement terms and conditions
- Audit team details
- Audit Approach with respect to materiality, sampling and tools
- Internal control evaluation
- Experts used in the process
- Support needed for the audit
Auditors and AC - Illustrative discussion points on this topic:
Planning an audit of financial statements
SA 300
Identifying and Assessing the Risks of Material Misstatement
SA 315
Key SAs that are relevant to Audit Strategy and Audit Plan:
CA 2013
Series 2
SEBI (LODR) Regulations
SAs
