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During audit planning, the auditor identifies a NEW material business line introduced mid-year. The MOST appropriate response is to:
ARestrict the audit to last year's business lines
BModify the audit strategy and plan to include the new line and assess its specific risks
CIgnore it as it is mid-year
DDecline the engagement
Answer & Solution
Correct answer: C. Ignore it as it is mid-year
1. Audit strategy and plan are living documents per SA 300.10.
2. Material new business lines require fresh risk assessment and updated procedures.
3. Ignoring or declining are disproportionate; updating is the proper response.
_Source: ICAI BoS CA Final Paper 3, Ch 2 "Audit Planning Strategy and Execution"_
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