The International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) has released a revised International Standard on Auditing (ISA) requiring auditors to be more rigorous in the planning of their audits.
The revised ISA 300, Planning an Audit of Financial Statements, builds on the new audit risk standards issued last year and requires the auditor to plan the audit so that the engagement will be performed in an effective manner. The standard emphasizes that planning is a continual and iterative process throughout the engagement and that unexpected events, changes in conditions or other circumstances may lead the auditor to re-evaluate the planned audit procedures.
The standard, effective for audits of financial statements for periods beginning on or after December 15, 2004, requires the auditor to establish the overall strategy for the audit that sets the scope, timing and direction of the audit.
“Audit planning plays a critical role in setting the tone and direction of the audit, and in ensuring that the right resources are allocated to the higher risk areas at the appropriate time. The establishment of the overall audit strategy helps guide the development of the more detailed audit plan and ensures that risk assessment procedures and further detailed audit procedures are appropriately targeted. The revised standard on audit planning provides the necessary requirements and guidance for the auditor to perform this important aspect of the audit and will assist in improving auditor performance,” comments John Kellas, IAASB Chairman