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ISA 300, Planning an audit of financial statements
The objective of the auditor, per ISA 300 Planning an audit of financial statements is to plan the audit work so that the audit will be performed in an effective manner. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on ISA 300 revised IFAC, the ISA 300 summary. These MCQ on SA 300 are useful for Professional accountancy exams, Competitive exams and Business management exams.
- The objective of the auditor, per ISA 300 Planning an audit of financial statements is to plan the audit work so that the audit will be performed in an effective manner.
- True
- False
- Adequate planning benefits the audit by:
- helping the auditor to devote appropriate attention to important areas of the audit
- helping the auditor organise and manage the audit engagement so that it is performed in an effective and efficient manner
- helping the auditor to identify and resolve potential problems on a timely basis
- assisting in the selection of staff with appropriate experience to respond to anticipated risk and the proper assignment of work to them
- All of the above
- ISA 300 requires the auditor to:
- performing procedures regarding the continuance of the client relationship, specific audit engagement, evaluating compliance with relevant ethical requirements and independence, in accordance with ISA 220
- establish an overall strategy for the audit that sets the scope, timing and direction of the audit and that guides the development of the audit plan
- establish an understanding of the terms of the engagement as required by ISA 210
- develop an audit plan which includes a description of the nature, timing and extent of planned risk assessment procedures and planned further audit procedures
- All of the above
- The procedures required by ISA 220 Quality Control for an Audit of Financial Statements regarding the continuance of the client relationship and the specific audit engagement will involve establishing whether the auditor:
- is competent to perform the engagement and has the capabilities, including time and resources, to do so
- can comply with relevant ethical requirements
- has considered the integrity of the client, and does not have information that would lead it to conclude that the client lacks integrity
- All of the above
- The auditor shall include in the audit documentation:
- The overall audit strategy
- The audit plan
- Any significant changes made during the audit engagement to the overall strategy or the audit plan along with reasons thereof
- All of the above
- 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. The establishment of the overall audit strategy involves:
- Ascertaining the reporting objectives of the engagement, such as reporting deadlines and the nature of communications required.
- Determining the characteristics of the engagement that define its scope.
- Considering important factors which will determine the focus of the audit team’s efforts, such as materiality thresholds, high risk areas of the audit etc.
- All of the above
- Once the overall audit strategy has been established the auditor can develop the more detailed audit plan. The audit plan will set out:
- the procedures to be used in order to assess the risk of misstatement in the entity’s accounting records/financial statements
- planned further audit procedures for each material audit area.
- Both A&B
- None
- The audit plan should include specific descriptions of:
- The nature, timing and extent of risk assessment procedures.
- The nature, timing and extent of further audit procedures, i.e. What audit procedures are to be carried out, who should do them, how much work should be done
- Both A&B
- None
- Audit programmes are sets of instructions to the audit team, specifying the audit procedures that should be performed in each area of the audit.
- True
- False
- The Preliminary engagement activities stated in ISA 300 are:
- Perform procedures regarding the continuance of the client engagement.
- Evaluating compliance with ethical requirements.
- Ensuring there are no misunderstandings with the client as to the terms of the engagement.
- All of the above
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