Page 40 - CA Inter Audit PARAM

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o O-The performance of other risk assessment procedures.
o L-Obtaining a general understanding of the legal and regulatory framework applicable
to the entity and how the entity is comply in g with that framework.
o E-The involvement of experts.

QNO— Whether involving experts fall in domain of planning ? New Course – (SM25)
C2OC.045 Bhaskar CNO - C2OC.040
MG & Co, a firm of auditors, having a standing of 30 years is appointed as a statutory auditor of
company engaged in manufacturing of defence equipment. Due to opening of defence sector by
government to private players in recent times, many new companies have entered the fray to
manufacture sophisticated defence equipment. Considering technical and complex nature of
operations, the auditors recognize that involvement of experts in the audit is required. Does
consideration for involvement of experts by auditors fall in the domain of planning audit?
Answer Planning includes the need to consider such matters as:
• Obtaining a general understanding of the legal and regulatory framework applicable to the entity
and how the entity is complying with that framework.
• The determination of materiality.
• The analytical procedures to be applied as risk assessment procedures.
• The performance of other risk assessment procedures.
• The involvement of experts.

Consideration for involvement of experts by auditors falls within domain of planning. While planning an
audit, auditor would have to consider whether involvement of experts is necessary. In the stated case,
company is involved in technical and complex operations. Therefore, while planning an audit, auditors
would have to consider whether involvement of expert is necessary.

QNO Overall Audit Strategy -- Sharing with Management Old Course -- (SM17)
C2OC.060 Bhaskar CNO C2OC.060
W, the auditor of SKM Ltd asks its finance and audit head to prepare audit strategy for conducting audit
of SKM Ltd. W also insist him to draw detailed audit procedures also. On the request of auditor W,
complete audit strategy as well as audit procedures are prepared by finance head of the company.
Subsequently, auditor realizes that effectiveness of the audit is compromised, and it was his
responsibility to prepare the overall audit strategy. Comment.
Answer ➢ Discussing Elements of Planning with Management
The auditor may decide to discuss elements of planning with the entity’s management to
facilitatethe conduct and management of the audit engagement.For example - to coordinate
some of the planned audit procedures with the work of the entity's personnel.

➢ Ultimate Responsibility of Auditor:
Although these discussions of ten occur but the overallaudit strategy and the audit plan
remainthe auditor's responsibility. When discussing matters about the overall audit strategyor
audit plan, careis required in order not to compromise the effectiveness of the audit to be taken
to see there is no compromise in the effectiveness of the audit. For Example - discussing the
nature and timing of detailed audit procedures with management may compromise the
effectiveness of the audit by making the audit procedures too predictable.

➢ Involvement of Engagement Partner & Other Key Members
The engagement partner and other key membersof the engagement team shall be involved in
planning the audit. The involvement of the engagement partner and other key members of the
engagement team in planning the audit Rawson their experience thereby enhancing the
effectiveness and efficiency of the planning process.

Hence in the above case approach of W was wrong and he should have prepared overall audit
strategy and detailed audit procedures.

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