Midway through the audit of Neelgiri Tea Ltd., the audit team learns that a major subsidiary has been sold. The engagement partner says the audit plan, once approved, cannot be changed. Under SA 300:

Correct answer: A) Planning is a continual and iterative process; the strategy and plan must be updated as necessary and significant changes, with reasons, documented

Explanation

SA 300 states that planning is not a discrete phase but a continual and iterative process. The auditor shall update and change the overall audit strategy and audit plan as necessary during the audit, and document significant changes and the reasons for them. Management approval is not required to change the auditor's plan.