On what basis does the auditor plan the nature timing and extent of direction and supervision of the engagement team members?
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ISA 300 Role and Timing of PlanningAdequate planning benefits the audit of financial statements in several ways, including the following:
ISA 300 ScopeISA 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. ISA 300 Effective date 15 December 2009ISA 300 ObjectiveThe objective of the auditor is to plan the audit so that it will be performed in an effective manner. ISA 300 Requirements
Amendments to this standard have been adopted by the PCAOB and approved by the U.S. Securities and Exchange Commission. The amendments affect the following provisions: paragraphs .01, .03–.05, .07–.15 (new), .A1, and .A2 (deleted); the headings after paragraph .06 and .13 (both new); and the title of Appendix A. The standard as amended will be effective for audits of financial statements for fiscal years ending on or after December 15, 2024. See
PCAOB Release No. 2022-002, SEC Release No. 34-95488.
View the standard as amended. Guidance on AS 1201: Staff Audit Practice Alerts
No. 6, No. 8, and
No. 10 Summary Table of Contents
Introduction.01 This standard establishes requirements regarding supervision of the audit engagement, including supervising the work of engagement team members. Objective.02 The objective of the auditor is to supervise the audit engagement, including supervising the work of engagement team members so that the work is performed as directed and supports the conclusions reached. Responsibility of the Engagement Partner for Supervision.03 The engagement partner1 is responsible for the engagement and its performance. Accordingly, the engagement partner is responsible for proper supervision of the work of engagement team members and for compliance with PCAOB standards, including standards regarding using the work of specialists,2 other auditors, 3 internal auditors,4 and others who are involved in testing controls.5 Paragraphs .05-.06 of this standard describe the nature and extent of supervisory activities necessary for proper supervision of engagement team members.6 .04 The engagement partner may seek assistance from appropriate engagement team members in fulfilling his or her responsibilities pursuant to this standard. Engagement team members who assist the engagement partner with supervision of the work of other engagement team members also should comply with the requirements in this standard with respect to the supervisory responsibilities assigned to them. Supervision of Engagement Team Members.05 The engagement partner and, as applicable, other engagement team members performing supervisory activities, should:
.06 To determine the extent of supervision necessary for engagement team members to perform their work as directed and form appropriate conclusions, the engagement partner and other engagement team members performing supervisory activities should take into account:
Appendix A - Definition.A1 For purposes of this standard, the term listed below is defined as follows: .A2 Engagement partner - The member of the engagement team with primary responsibility for the audit. Appendix B - [Reserved]Appendix C – Supervision of the Work of Auditor-Employed Specialists.C1 For engagements in which a specialist employed by the auditor's firm ("auditor-employed specialist") assists the auditor in obtaining or evaluating audit evidence with respect to a relevant assertion of a significant account or disclosure, this appendix describes supervisory activities to be performed in conjunction with supervising the work of an auditor-employed specialist in an audit. The requirements in this appendix supplement the requirements in paragraphs .05–.06 of this standard. Note: For purposes of this standard, a specialist is a person possessing special skill or knowledge in a particular field other than accounting or auditing. Because income taxes and information technology are specialized areas of accounting and auditing, this appendix does not apply to situations in which a person with specialized skill or knowledge in income taxes or information technology participates in the audit. Paragraphs .03–.06 of this standard apply in those situations. .C2 The necessary extent of supervision of an auditor-employed specialist depends on: (1) the significance of the specialist's work to the auditor's conclusion regarding the relevant assertion; (2) the risk of material misstatement of the relevant assertion; and (3) the knowledge, skill, and ability of the specialist. Informing the Auditor-Employed Specialist of Work to be Performed.C3 The engagement partner and, as applicable, other engagement team members performing supervisory activities should inform the specialist of the work to be performed, which includes establishing and documenting an understanding with the specialist regarding the following:
.C4 Pursuant to paragraph .05a(3) of this standard, the engagement partner and, as applicable, other engagement team members performing supervisory activities should inform the specialist about matters that could affect the specialist's work. This includes, as applicable, information about the company and its environment, the company's processes for developing the related accounting estimate, the company's use of specialists in developing the estimate, relevant requirements of the applicable financial reporting framework, possible accounting and auditing issues, and the need to apply professional skepticism.1 .C5 The engagement partner and, as applicable, other engagement team members performing supervisory activities should implement measures to determine that there is a proper coordination of the work of the specialist with the work of other relevant engagement team members to achieve a proper evaluation of the evidence obtained in reaching a conclusion about the relevant assertion. This includes:
Evaluating the Work of the Auditor-Employed Specialist.C6 The engagement partner and, as applicable, other engagement team members performing supervisory activities should review the report, or equivalent documentation, provided by the specialist pursuant to paragraph .C3d above and evaluate whether the specialist's work provides sufficient appropriate evidence, specifically whether:
.C7 If the specialist's findings or conclusions appear to contradict the relevant assertion or the specialist's work does not provide sufficient appropriate evidence, the engagement partner and, as applicable, other engagement team members performing supervisory activities should perform additional procedures, or request the specialist to perform additional procedures, as necessary to address the issue. Note: Examples of situations in which additional procedures ordinarily are necessary include: (1) the specialist's work was not performed in accordance with the auditor's instructions; (2) the specialist's report, or equivalent documentation, contains restrictions, disclaimers, or limitations that affect the auditor's use of the report or work; (3) the specialist's findings and conclusions are inconsistent with (i) the results of the work performed by the specialist, (ii) other evidence obtained by the auditor, or (iii) the auditor's understanding of the company and its environment; (4) the specialist lacks a reasonable basis for data or significant assumptions the specialist used; or (5) the methods used by the specialist were not appropriate. What is nature timing and extent of audit procedures?Nature relates to the type of test that will be performed (observation, confirmation, reconciliation). Timing refers to when the test will be performed (interim or at year-end). Extent relates to the amount of testing that will be performed (10 samples or 30 samples).
What is the basis for planning the audit?. 05 Planning the audit includes establishing the overall audit strategy for the engagement and developing an audit plan, which includes, in particular, planned risk assessment procedures and planned responses to the risks of material misstatement.
Who is responsible for the direction supervision and performance of the group audit engagement?11. The group engagement partner is responsible for the direction, supervision and performance of the group audit engagement in compliance with professional standards and regulatory and legal requirements, and whether the auditor's report that is issued is appropriate in the circumstances.
What is the primary basis of audit strategy it should be based on?The audit strategy is based on the following considerations: The scope of the engagement. The characteristics of the engagement. Reporting objectives.
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