ISA 300 Summary Planning an

audit of financial statements

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.

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.

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

Requirements
ISA 300 requires to get engagement partner and other key members of
the engagement team to get involve in

> Planning
> Discussion

ISA 300 require 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 require 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
Other planned audit procedures that are required to be carried out so that the engagement complies wit
ISA 300 require to plan the nature, timing and extent of direction and supervision.
ISA 300 require to document the strategy, plan and any significant changes.
ISA 300 require that In respect of Initial Audit Engagement;
Performing procedures required by ISA 220 regarding the acceptance of the client relationship and the
Communicating with the predecessor auditor, where there has been a change of auditors, in compli
requirements.
mined under ISA 315;
on level, as determined under ISA 330; and
ngagement complies with ISAs

ent relationship and the specific audit engagement; and

ge of auditors, in compliance with relevant ethical
ISA 510 Initial audit engagement – definition

An engagement in which either:

The financial statements for the prior period were not audited; or
The financial statements for the prior period were audited by a predecessor auditor.

Scope

ISA 510 deals with the auditor’s responsibilities relating to opening balances in an
initial audit engagement;
In addition to financial statement amounts, opening balances include matters
requiring disclosure that existed at the beginning of the period, such as
contingencies and commitments;
When the financial statements include comparative financial information, the
requirements and guidance in ISA 7101 also apply. ISA 3002 includes additional
requirements and guidance regarding activities prior to starting an initial audit.

Objective

In conducting an initial audit engagement, the objective of the auditor with respect
to opening balances is to obtain sufficient appropriate audit evidence about whether:

Opening balances contain misstatements that materially affect the current period’s
financial statements; and
Appropriate accounting policies reflected in the opening balances have been
consistently applied in the current period’s financial statements, or changes thereto
are appropriately accounted for and adequately presented and disclosed in
accordance with the applicable financial reporting framework.

Requirements

Read the most recent financial statement and report thereon.

Determine weather the prior period’s closing balances have been correctly brought forward to the curre
Determine where restatement in opening balance is required , they are restated.
Determining whether the opening balances reflect the application of appropriate accounting policies.
Review the predecessor auditor’s working papers to obtain evidence regarding the opening balances.
Evaluating whether audit procedures performed in the current period provide evidence relevant to the o
If misstatement detected communicate to those changed with governance.

Relevant Information in the Predecessor Auditor’s Report If the prior period’s

financial statements were audited by a predecessor auditor and there was a
modification to the opinion, the auditor shall evaluate the effect of the matter giving
rise to the modification in assessing the risks of material misstatement in the current
period’s financial statements in accordance with ISA 315 (Revised) Audit
Conclusions and Reporting
If unable to obtain evidence regarding opening balances, express qualified or disclaim opinion
If the auditor concludes that the opening balances contain a misstatement that
materially affects the current period’s financial statements, and the effect of the
misstatement is not appropriately accounted for or not adequately presented or
disclosed, the auditor shall express a qualified opinion or an adverse opinion.

If accounting policies not consistently applied express qualified or adverse opinion.

Modification to the Opinion in the Predecessor Auditor’s Report

If the predecessor auditor’s opinion regarding the prior period’s financial statements
included a modification to the auditor’s opinion that remains relevant and material
to the current period’s financial statements, the auditor shall modify the auditor’s
opinion on the current period’s financial statements.
 rought forward to the current period.

priate accounting policies.

ng the opening balances.
de evidence relevant to the opening balances
or disclaim opinion