Annual Audit Manual
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4041 Planning sign-off
Dec-2023
In This Section
CAS Guidance
Timely review of documentation by the engagement partner at appropriate stages throughout the audit engagement enables significant matters to be resolved to the engagement partner's satisfaction on or before the date of the auditor's report. The engagement partner need not review all audit documentation (CAS 220.A91).
Indicators that the engagement partner may not have been sufficiently and appropriately involved include, for Example (CAS 220.A115):
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Lack of timely review by the engagement partner of the audit engagement planning, including reviewing the assessment of risks of material misstatement and the design of those responses to those risks.
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Evidence that those to whom tasks, actions or procedures have been assigned were not adequately informed about the nature of their responsibilities and authority, the scope of the work being assigned and the objectives thereof; and were not provided other necessary instructions and relevant information.
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A lack of evidence of the engagement partner's direction and supervision of the other members of the engagement team and the review of their work.
OAG Guidance
Sign-off of planning takes place when the engagement leader and team manager are satisfied that a sufficient understanding of the entity and its environment, including internal control, has been obtained in order to identify and to assess the risks of material misstatement and design further audit procedures, comprising our planned testing of controls for operating effectiveness and substantive testing. Ordinarily, we will have performed the risk assessment procedures set out in CAS 315, including
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understanding the entity and its environment, (including how the entity has integrated IT into its business model), the applicable financial reporting framework, and the entity's system of internal control (including identifying risks arising from the use of IT);
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identifying the risks of material misstatements at the financial statement and assertion levels, determining significant FSLIs and the associated relevant assertions;
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evaluating design and implementation of controls in the control activities component including ITGCs;
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assessing inherent risk (i.e., normal, elevated or significant) and control risk as documented by our determination of expected controls reliance (i.e., none, partial or high);.
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performing overall evaluation of risk assessment activities by evaluating whether the audit evidence obtained from risk assessment procedures provides an appropriate basis for the identification and assessment of the risks of material misstatement;
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documenting planning activities procedures and the Audit Planning Template.
It is not practical to define a single point in time when planning will be signed off as it will depend on whether it is an initial audit, which typically requires more time to develop the audit strategy and plan, or a recurring audit engagement where our planning may take less time if there are limited changes since the prior year audit.
The engagement leader applies judgment in determining when planning sign-off occurs. While planning sign-off would generally occur during an early planning phase of the engagement, in order to facilitate a well-planned and resourced engagement, there may be circumstances when delaying the sign-off may be prudent (e.g., when we are aware of upcoming significant changes at the entity that will significantly impact the audit strategy and plan).
OAG Policy
The engagement leader shall review and approve the audit risk assessment and the audit plan and any subsequent changes, on a timely basis. [Apr‑2015]
OAG Guidance
Engagement leader planning sign-off
In addition to signing the planning sign-off procedure, the engagement leader considers if the file evidences their involvement in providing direction to and supervision of the team as required by CAS 220.30. The engagement leader's sign-off of planning requires the engagement leader to address the affirmations within the planning sign-off procedures. Some of the affirmations include explicit references to procedures where the engagement leader's involvement is documented. These referenced procedures include documentation of the engagement leader's involvement in the work because their involvement in specific procedures is required by CAS 220, and these procedures serve to provide documentation of this involvement. Even though the engagement leader may not be required to review these procedures it may be prudent to do so to further evidence their involvement in the audit documentation. The engagement leader uses their judgment on whether to mark those procedures, or any other procedures, as reviewed. For example, the engagement leader may add to the planning sign-off procedure comments on review activities performed before signing off or conclude that records of team discussions attended will be sufficient.
Related Guidance
For further guidance on engagement leader review, see OAG Audit 3062.
OAG Guidance
If a quality reviewer has been appointed, ensure the procedure “Quality Reviewer—Planning sign-off” within the program “Quality Reviewer" in the Annual Audit Procedures—Supplement cabinet is completed including the Quality Reviewer Checklist and Sign-off (CSQM 2) Checklist.
Evidence of the review performed by the engagement quality reviewer needs to be documented at appropriate points in time during the audit. In addition to signing the planning sign-off procedure, the quality reviewer considers if the file appropriately evidences his/her involvement in the audit. The quality reviewer may add to the planning sign-off procedure comments on review activities performed before signing off.
Related Guidance
For further guidance on quality reviewer review, see OAG Audit 3063.