Title Chapter 2 Question Bank V1.pdf ✅

Planning 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, certain matters. Discuss those matters. MTP–April24MTP–April 24MTP–April24 Ans.: Planning – a continuous process: Planning is not a discrete phase of an audit but rather a continuous process. It 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: • 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. 2.2 – Audit Strategy Q.7 CA Shubhendu is statutory auditor of a social media company. Due to change in information technology regulations by government, it has become mandatory for such companies to constitute “grievance redressal mechanism” for users of social media platform of the company. Failure to comply with regulations can potentially lead to civil and criminal liabilities against the company. Is above factor to be considered by auditor while framing audit strategy? Ans.: Consideration of Changes in Law while establishing Audit Strategy: • As per SA 300 “Planning an Audit of F.S.” auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and guides the development of the audit plan. • Changes in laws and regulations affecting the company is a factor to be considered while establishing overall audit strategy. • There has been change in information technology regulations applicable to the company. Noncompliance of the same can have implications in form of civil and criminal liabilities. Conclusion: Matter concerning changes in laws and regulations is to be considered by auditor while establishing overall audit strategy.