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Microlesson · 5-min read

Planning as a Continuous Process and Benefits of Audit Planning

## Planning as a Continuous / Repetitive Process

Audit planning is not a separate, one-time phase at the start of the audit. It is a repetitive, iterative process that:

  • Begins with completion of the previous audit engagement
  • Continues throughout the entire current audit engagement
  • Ends at the completion of the current audit

### When Does the Auditor Update the Plan?

The auditor must update the audit strategy and audit plan when:

  • Unexpected events occur
  • Conditions change during the audit
  • New audit evidence is obtained from audit procedures

This may also cause changes in the Nature, Timing, and Extent of Further Audit Procedures based on revised risk assessments.

> Example: If new evidence reveals management has been overriding internal controls (not known at planning stage), the auditor must revise the audit plan to increase substantive testing.

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## Benefits of Audit Planning

#Benefit
iDevote appropriate attention to important areas of the audit
iiIdentify and resolve potential problems on a timely basis
iiiProperly organise the audit to be conducted effectively and efficiently
ivHelps in selection of engagement team members with appropriate capabilities
vFacilitates direction, supervision, and review of team members' work
viHelps in coordination of work done by auditors of components and experts

Worked example

### Example 1

Scenario: An auditor planned the audit of a retail company in October (interim stage). In December, the company acquires a new subsidiary. How does the iterative nature of planning apply?

Answer: The original audit strategy did not include the subsidiary. Upon learning of the acquisition, the auditor must:

1. Update the audit strategy to expand scope to include the subsidiary's financials.

2. Revise the audit plan — add procedures to assess the acquisition accounting, goodwill recognition, and consolidation entries.

3. Consider whether specialist knowledge (e.g., a valuation expert) is needed.

This illustrates planning as a continuous process, not a one-time event.

⚠️ Common exam mistakes

  • Treating planning as a box to tick at the start of the audit — planning continues right through to completion.
  • Not revisiting the audit plan when new evidence or unexpected events arise mid-audit, leading to audit procedures that no longer match actual risk.
  • Thinking 'planning begins with the current engagement' — SA 300 clarifies it begins at completion of the PREVIOUS audit (carried-forward knowledge informs next year's plan).
Reference:
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