SA 300 (Revised): Planning an Audit of Financial Statements

This Standard deals with the auditor’s responsibility to plan an audit of financial statements. Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan. Once the overall audit strategy has been established, an audit plan can be developed to address various matters identified in the overall audit strategy, considering the need to achieve the audit objectives through efficient use of auditor’s resources. The auditor should consider various matters in developing the overall plan like: terms of engagement; nature and timing of reports; applicable legal or statutory requirements; accounting policies adopted by the client; identification of significant audit areas; setting of materiality levels, etc. the auditor should obtain a level of knowledge of client’s business that will enable them to identify events, transactions and practices that, in their judgment, may have a significant effect on financial information. Audit plan is more detailed than overall audit strategy that includes the nature, timing and extent of audit procedures to be performed by engagement team members. In Audit planning, the auditor should involve engagement partner and other key members of engagement team also.