Page 49 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
any legal or contractual reporting obligations that arise from the audit.
Efforts, Significant Factors, Preliminary Engagement Activities, and Knowledge Gained on Other
Engagements
Shortcut: C hanges in IPOD MRP
2
Changes in FRF: Significant changes in the financial reporting framework, such as changes in accounting
standards.
Changes in the legal and regulatory environment: Other significant relevant developments, such as changes
in the legal and regulatory environment affecting the entity.
Internal Controls: Evidence of management’s commitment to the design, implementation, and maintenance
of sound internal controls. Importance attached to internal control. Volume of transactions determining
reliance on internal control.
Professional skepticism: Manner in which engagement team members should maintain an
inquisitive/questioning mind and exercise professional skepticism and unpredictability.
Other Services: Discussion of matters that may affect the audit with firm personnel responsible for other
services to the entity.
Developments: Significant industry-specific developments and developments in the economic environment.
Significant business developments affecting the entity.

Materiality: Determination of materiality in accordance with SA 320.
Risk Assessment: Preliminary identification of areas with higher risk of material misstatement. Impact of
assessed risk of material misstatement at the overall financial statement level on direction, supervision, and
review.
Previous Audits: Results of previous audits including identified deficiencies and action taken to address them.
Nature, Timing and Extent of Resources
Selection: The selection of the engagement team and the assignment of audit work to the team members.
Budgeting: Engagement budgeting.

(CNO-APSE.240) Documenting the Audit Plan
Strategy Documentation: The auditor is required to document the overall audit strategy, which serves as a
record of key decisions necessary for proper audit planning and communication with the engagement team.
Plan Documentation: The auditor must document the audit plan. This documentation acts as a record of the
planned nature, timing, and extent of risk assessment procedures and additional audit procedures at the
assertion level. It also includes the use of standard audit programs and audit completion checklists, tailored to
the engagement circumstances.
Change Documentation: The auditor should document any significant changes to the audit strategy or plan,
along with the reasons for such changes. This documentation provides a record of the changes made, the
reasons behind them, and the final strategy and plan adopted. It also reflects the auditor's response to
significant changes occurring during the audit.

(CNO-APSE.260) Relationship between the Overall Audit Strategy and the Audit Plan
1A. Preparation: Generally, Audit strategy is prepared before the audit plan. Audit plan is more detailed than
the audit strategy.
1B. Interrelation: Audit strategy and audit plan are inter-related. Change in one lead to a change in the other.
2A. Example of Modification (Case: CA. Sam for Hitesh Ltd.): Materiality levels adjusted due to weaknesses
in internal controls. Deviation from audit strategy necessary, leading to a change in audit plan.
2B. Consideration: Overall audit strategy & plan should consider materiality. Must relate materiality to Risks
& procedures to be adopted.

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