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    SA 300 - Planning an Audit of Financial Statements


    1. This Standard on Auditing(SA) deals with auditor’s responsibility to plan an audit of financial statements
    2. It is framed in the context of recurring audits
    3. Additional considerations in initial audit engagements are separately identified 

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

    Effective Date: This SA is effective for audits of financial statements for periods beginning on or after 1st April 2008. 


    1. Involvement of Key Engagement Team Members, 
    1. Preliminary Engagement Activities,
    2. Planning Activities,
    3. Documentation, and
    4. Additional Considerations in Initial Audit Engagements. 
    1. Involvement of Key Engagement Team Members: The involvement of engagement member and other key members of the engagement team in planning the audit 

    To be involved in planning 

    Participate in discussion with audit team üBenefitof their experience and insight üIncreases effectiveness and efficiency of planning 

    SA315 also contains a requirement for discussion with the audit team as to the susceptibility of the financial statements of the entity to material misstatements. 

    Revised SA240 also contains a requirement for discussion among audit team as to susceptibility of the financial statements to fraud 

    1. Preliminary Engagement Activities: 

    Perform procedures required under SA 220, “Quality Control for an Audit of Financial Statements” regarding the continuance of the client relationship and the specific audit engagement


    Evaluate compliance with ethical requirements, including independence, as required by SA 220 and

    Establish an understanding of the terms of the engagement as per SA 210, “Agreeing the Terms of Audit Engagement”

     Planning Activities: Nature and extent of planning activitiesvary according to

    Sizeand complexity of the entity üKeyengagement team member’s previous experience üChanges in circumstances Planning Activities include: 

    Establish an overall audit strategy 

    Developing audit plan 

    Considerations in developing an audit strategy 

    Determine the characteristics of the engagement üKnowledge of the business

    Understanding of the accounting and internal control systems

    Riskand materiality

    Nature, timing and extent of procedures

    Coordination, direction, supervision and review

    Contents of audit plan

    Audit plan is more detailed than the overall strategy which includes : 

    Nature, timing & extent of risk assessment procedures üNature, timing & extent of planned further audit procedures at assertion level üOtherprocedures required to comply with Sas 

    Need to update audit plan 

    Unexpected events, 

    Changes in circumstances,

    Auditevidence obtained from the results of audit procedures, and

    Information comes to the auditor’s attention that differs significantly from the information available when the auditor planned the audit procedures 

    1. Documentation: The auditor shall documen 

    Theoverall audit strategy, 

    Theaudit plan, and

    Anysignificant changes made during the audit engagement to the overall audit strategy or the audit plan, and the reasons for such changes. 

    1. Additional Considerations in Initial Audit Engagements: Before starting initial audit engagement: 

    Perform procedures required under revised SA220–client acceptance üCommunicating with predecessor auditor. 


    Attention is devoted to major areas 

    Assistsin selection of engagement team

    Assistsin proper assignment of work to assistants

    Potential problems are identified and resolved

    Workis performed in an efficient, effective and timely manner 

    Direction, Supervision and Review: 

    The nature, timing and extent of the direction and supervision of engagement team members and review of their work vary depending on many factors, including: 

    Thesizeand complexity of the entity 

    Thearea of the audit.

    Theassessed risks of material misstatement

    Thecapabilities and competence of the individual team members performing the audit work. 

    Considerations Specific to Smaller Entities:

    When an audit is carried out entirely by the engagement partner, questions of direction and supervision of engagement team members and review of their work do not arise. In such cases, the engagement partner, having personally conducted all aspects of the work, will be aware of all material issues. 

    Forming an objective view on the appropriateness of the judgments made in the course of the audit can present practical problems when the same individual also performs the entire audit. When particularly complex or unusual issues are involved, and the audit is performed by a sole practitioner, it may be desirable to consult with other suitably-experienced auditors or the auditor’s professional body. 

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