ISA 300 (REDRAFTED) PLANNING AN AUDIT OF FINANCIAL STATEMENTS
Audits of financial statements need to be planned in such a way to allow an effective audit to be performed. An efficient and effective audit can only be undertaken if adequate planning has taken place which involves establishing the overall audit strategy and developing the actual audit plan.
The objective of ISA 300 is to establish the overall audit strategy and to develop an audit plan to reduce audit risk to an acceptably low level. The planning of the audit shall involve the engagement partner and other key members of the audit team who shall all be involved in both the audit planning and discussions amongst the engagement team [ISA300.5].
PRELIMINARY ENGAGEMENT ACTIVITIES
When the auditor engages a new audit client, ISA 300 stipulates certain procedures which are to be carried out:
- Perform procedures required by ISA 220 regarding the continuance of the client re-lationship and the specific audit engagement [ISA300.6(a)].
- Evaluating compliance with relevant ethical requirements, including independence, in accordance with ISA 220 [ISA300.6(b)].
- Establishing an understanding of the terms of the engagement, as required by ISA 210 [ISA300.6(c)].
By performing the above procedures, the auditor is ensuring that independence is maintained to perform the audit, as well as that there are adequate resources and technical competences available to perform an efficient audit. Undertaking the above procedures also allows ...