Annual Audit Manual

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4001 Introduction
Apr-2018

In This Section

Role and timing of planning

4000 series of topics

CAS Objective

The objective of the auditor is to plan the audit so that it will be performed in an effective manner (CAS 300.4).

Role and timing of planning

CAS Requirement

Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan. Quality management at the engagement level in accordance with CAS 220, in conjunction with adequate planning in accordance with this CAS, benefits the audit of financial statements in several ways, including the following (CAS 300.2):

  • 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. 

CAS Guidance

The Overall audit strategy sets the scope, timing and direction of the audit, and guides the development of the more detailed audit plan (CAS Glossary).

The nature and extent of planning activities will vary according to the size and complexity of the entity, the key engagement team members’ previous experience with the entity, and changes in circumstances that occur during the audit engagement. In planning the audit, the auditor may use project management techniques and tools. CAS 220 describes how such techniques and tools may support the engagement team in managing the quality of the engagement (CAS 300.A2).

Planning is not a discrete phase of an audit, but rather a continual and iterative process that often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit engagement. Planning, however, includes consideration of the timing of certain activities and audit procedures that need to be completed prior to the performance of further audit procedures. For example, planning includes the need to consider, prior to the auditor’s identification and assessment of the risks of material misstatement, such matters as (CAS 300.A3):

  • The analytical procedures to be applied as risk assessment procedures

  • Obtaining a general understanding of the legal and regulatory framework applicable to the entity and how the entity is complying with that framework

  • The determination of materiality

  • The involvement of experts

  • The performance of other risk assessment procedures

The auditor may decide to discuss elements of planning with the entity’s management to help the auditor manage and achieve quality at the engagement level (for example, to coordinate some of the planned audit procedures with the work of the entity’s personnel). Although these discussions often occur, the overall audit strategy and the audit plan remain the auditor’s responsibility. When discussing matters included in the overall audit strategy or audit plan, care is required in order not to compromise the effectiveness of the audit. For example, discussing the nature and timing of detailed audit procedures with management may compromise the effectiveness of the audit by making the audit procedures too predictable (CAS 300.A4).

4000 series of topics

OAG Guidance

This section of OAG Audit explains:

  • The CAS requirements in relation to team planning meetings, including required discussions and documentation (OAG Audit 4010)

  • The CAS requirements in relation to the audit strategy (OAG Audit 4020) and plan (OAG Audit 4030), including documentation in the audit file

  • The process for planning sign-off (OAG Audit 4040) and the CAS requirements and documentation of changes made to the strategy and plan after the date of planning sign-off (OAG Audit 4050)