Requirements

Includes: Involvement of Key Engagement Team Members, Preliminary Engagement Activities, Planning Activities, Documentation, Additional Considerations in Initial Audit Engagements

Involvement of Key Engagement Team Members

5

The engagement partner and other key members of the engagement team shall be involved in planning the audit, including planning and participating in the discussion among engagement team members.  (Ref: Para. A4)

Preliminary Engagement Activities

6

The auditor shall undertake the following activities at the beginning of the current audit engagement: 

  1. Performing procedures required by ASA 220 regarding the continuance of the client relationship and the specific audit engagement; [1]
  2. Evaluating compliance with relevant ethical requirements, including independence, in accordance with ASA 220; [2] and
  3. Establishing an understanding of the terms of the engagement, as required by ASA 210. [3]  (Ref: Para. A5‑A7)

Planning Activities

7

The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan.

8

In establishing the overall audit strategy, the auditor shall: 

  1. Identify the characteristics of the engagement that define its scope; 
  2. Ascertain the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required; 
  3. Consider the factors that, in the auditor’s professional judgement, are significant in directing the engagement team’s efforts; 
  4. 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 
  5. Ascertain the nature, timing and extent of resources necessary to perform the engagement.  (Ref: Para. A8‑A11)

9

The auditor shall develop an audit plan that shall include a description of: 

  1. The nature, timing and extent of planned risk assessment procedures, as determined under ASA 315.[4] 
  2. The nature, timing and extent of planned further audit procedures at the assertion level, as determined under ASA 330.[5] 
  3. Other planned audit procedures that are required to be carried out so that the engagement complies with the Australian Auditing Standards.  (Ref: Para. A12‑A14)

10

The auditor shall update and change the overall audit strategy and the audit plan as necessary during the course of the audit.  (Ref: Para. A15)

11

The auditor shall plan the nature, timing and extent of direction and supervision of engagement team members and the review of their work.  (Ref: Para. A15‑A17)

Documentation

12

The auditor shall include in the audit documentation:[6] 

  1. The overall audit strategy; 
  2. The audit plan; and 
  3. Any significant changes made during the audit engagement to the overall audit strategy or the audit plan, and the reasons for such changes.  (Ref: Para. A18‑A21)

Additional Considerations in Initial Audit Engagements

13

The auditor shall undertake the following activities prior to starting an initial audit: 

  1. Performing procedures required by ASA 220 regarding the acceptance of the client relationship and the specific audit engagement;[7] and 
  2. Communicating with the predecessor auditor, where there has been a change of auditors, in compliance with relevant ethical requirements.  (Ref: Para. A22)

1

See ASA 220 Quality Control for an Audit of a Financial Report and Other Historical Financial Information, paragraphs 12‑13.

2

See ASA 220, paragraphs 9‑11.

3

See ASA 210 Agreeing the Terms of Audit Engagements, paragraphs 9‑13.

4

See ASA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.

5

See ASA 330 The Auditor’s Responses to Assessed Risks.

6

See ASA 230 Audit Documentation, paragraphs 8‑11 and paragraph A6.

7

See ASA 220, paragraphs 12‑13.