# Supervision, Review and Documentation of Audit Planning

## Supervision and Review of Engagement Team Members

The auditor must plan the nature, timing and extent (NTE) of direction, supervision, and review of engagement team members' work.

Factors that affect the level of supervision required — Mnemonic: CARS

Letter	Factor
C	Capabilities and competence of individual team members performing the work
A	Area of the audit being performed
R	Risks of material misstatement (assessed)
S	Size and complexity of the entity

> Example: A junior assistant with limited experience (C = low) working on a high-risk area (R = high) in a complex entity (S = large) → intensive supervision required.

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## Documentation of Audit Planning

Documentation of planning serves as a record for review and as evidence of proper professional conduct.

### 1. Documentation of Overall Audit Strategy

Records the key decisions necessary to properly plan the audit
Communicates significant matters to the engagement team

### 2. Documentation of the Audit Plan

Records the planned NTE of risk assessment procedures
Records further audit procedures at the assertion level
Serves as a basis for review and approval before procedures are performed
Auditor may use standard audit programmes or completion checklists — but these must be tailored to the specific engagement circumstances

### 3. Record of Significant Changes

When the strategy or plan is modified during the audit, documentation must:

Identify the significant changes made to the strategy or plan
Explain why the changes were made
Reflect the appropriate response to significant events that occurred during the audit

> The final documentation reflects both the original plan and the reasoning behind any changes — not just the end state.

Worked example

### Example 1

Documenting a Mid-Audit Change: During the audit of PQR Ltd., the engagement manager discovers that the client changed its depreciation method partway through the year — not communicated to the auditor at planning stage.

Original plan: Standard substantive procedures for fixed assets (low risk, prior year no issues)
Trigger for change: Discovery during property, plant & equipment walkthrough
Documentation: (1) Original strategy and plan; (2) Trigger event — undisclosed accounting policy change; (3) Revised procedures — extended testing of depreciation calculations under both methods, disclosure review; (4) Explanation — material impact on profit requires additional assurance
Result: Updated plan on file demonstrates the auditor responded appropriately to new information

### Example 2

CARS Applied — Team Assignment: An audit firm is staffing the tax provisions area for a large multi-entity group.

C: The assigned staff member is a second-year trainee with no deferred tax experience
A: Tax provisions involve technical Ind AS 12 judgements
R: Assessed risk of material misstatement is medium-high (complex temporary differences)
S: Large, listed group with 12 subsidiaries
Decision: Assign a senior manager to review all working papers in this area; schedule a mid-field briefing session with the trainee before work commences

⚠️ Common exam mistakes

Not documenting significant changes to the audit plan — retaining only the final version without any record of what changed and why.
Using a standard audit programme without tailoring it — documentation must reflect the specific engagement circumstances, not generic templates.
Confusing CARS factors — students often list generic risk factors instead of the four specific dimensions: Competence (of team member), Area (of audit), Risk (of material misstatement), Size/complexity (of entity).
Treating planning documentation as a one-time exercise — documentation must be updated whenever significant changes are made during the engagement.

Reference:

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Supervision of Engagement Team and Documentation of Planning

Worked example

⚠️ Common exam mistakes