Page 45 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

03 AUDIT PLANNING, STRATEGY &

EXECUTION

Case Study – CA B
Chartered Accountant's New Venture: CA B, a newly qualified chartered accountant, has set up his own
auditing practice and accepted an audit of a fintech company.
Company Profile: The company heavily relies on big data and AI, is planning to use blockchain technology,
and participates in a regulatory sandbox for live testing of new products and services.
SA 620 Need for IT Expertise: CA B considers involving an IT specialist to understand the company's IT
controls and laws due to its tech-heavy operations. He wonders if this would share his auditing responsibility
and if a formal agreement with the expert is necessary. (A factor to be considered while formulating audit
strategy.)
Confidentiality Concerns: CA B is concerned about the potential violation of the confidentiality principle of
professional ethics if the IT expert gains access to the company's sensitive data.
SA 300 Understanding the Business: As the company and its business are new to him, CA B is keen on
understanding the fintech sector's regulatory requirements, revenue recognition practices, and the role of RBI
and Ministry of Electronics and Information technology (MeitY) under the Digital India programme. He also
learns about the "Ombudsman scheme for digital transactions".". Would such knowledge be helpful to him in
understanding about the company as far as audit was concerned?
SA 610 Internal Audit Department: The company has an internal audit department, which is understaffed
and headed by a non-tech-savvy retired banker. CA B is unsure whether to rely on the work performed by the
internal auditor?

Initial Portion of this Chapter covers concepts from SA 300

(CNO-APSE.020) Commencing an Audit
SA 200: The SA 200 standard emphasizes that auditors must achieve the objectives in relevant Standards on
Auditing (SAs) to achieve the overall objectives of an audit.
Planning: Without careful planning, the overall objective of the audit may not be met. Audit planning is
necessary for conducting an effective, efficient, and timely audit.

(CNO-APSE.040) Benefits/Advantages of Planning in an Audit of Financial Statements
Shortcut: DISCO Plan
Direction and supervision: Direction and supervision of the engagement team.
Important areas: Attention to important areas.
Selection: Proper selection of the engagement team.
Coordination: Easy coordination in work done by auditors of components and experts.
Organisation: Proper organisation and management of audit engagement.
Potential Problems: Timely resolution of potential problems.

(CNO-APSE.060) Nature and Extent of Planning
So far as the nature of planning is concerned, it would vary according to-
1A. Size and Complexity: Larger and more complex organizations necessitate more planning activities
compared to smaller entities.
1B. Changes: Changes in circumstances can lead to variations in planning activities.

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