Planning an audit of financial statements

ISA 300 Role and Timing of Planning

Adequate planning benefits the audit of financial statements in several ways, including the following:

• Helping the auditor to devote appropriate attention to important areas of the audit.
• Helping the auditor identify and resolve potential problems on a timely basis;
• Helping the auditor properly organize and manage the audit engagement so that it is performed in an effective and efficient manner
• Assisting in the selection of engagement team members with appropriate levels of capabilities and competence to respond to anticipated risks, and the proper assignment of work to them;
• Facilitating the direction and supervision of engagement team members and the review of their work;
• Assisting, where applicable, in coordination of work done by auditors of components and experts.

ISA 300 Scope

ISA 300 deals with the auditor’s responsibility to plan an audit of financial. ISA 300 is written in the context of recurring audits. Additional considerations in an initial audit engagement are separately identified.

ISA 300 Effective date 15 December 2009

ISA 300 Objective

The objective of the auditor is to plan the audit so that it will be performed in an effective manner.

ISA 300 Requirements

• ISA 300 requires to get engagement partner and other key members of the engagement team to get involve in
  • Planning
  • Discussion
• ISA 300 requires under take the following activities at the beginning of the current audit engagement;
  • Perform requirements of ISA 220
  • Establishing and understanding terms of engagement in accordance with ISA 210
• ISA 300 Require to establish overall audit strategy
  • Identify the characteristics of the engagement that define its scope;
  • Ascertain the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required;
  • Consider the factors that, in the auditor’s professional judgement, are significant in directing the engagement team’s efforts;
  • Consider the results of preliminary engagement activities and, where applicable, whether knowledge gained on other engagements performed by the engagement partner for the entity is relevant; and
  • Ascertain the nature, timing and extent of resources necessary to perform the engagement.
• ISA 300 requires to develop audit plan that involve;
  • The nature, timing and extent of planned risk assessment procedures, as determined under ISA 315;
  • The nature, timing and extent of planned further audit procedures at the assertion level, as determined under ISA 330; and
  • Other planned audit procedures that are required to be carried out so that the engagement complies with ISAs
• ISA 300 requires to plan the nature, timing and extent of direction and supervision.
• ISA 300 requires to document the strategy, plan and any significant changes.
• ISA 300 requires that in respect of Initial Audit Engagement;
  • Performing procedures required by ISA 220 regarding the acceptance of the client relationship and the specific audit engagement; and
  •  Communicating with the predecessor auditor, where there has been a change of auditors, in compliance with relevant ethical requirements.