Yes, I agree with this statement. As per NSA 300 planning, the auditor should plan the audit work so that the audit will be performed in an effective manner.
Matters to be considered the auditor in developing the overall audit plan include:
i) Knowledge of the business
General economic factors and industry conditions affecting the entity’s business.
Important characteristics of the entity, its business, its financial performance and its reporting requirements including changes since the date of the prior audit.
The general level of competence of management.
ii) Understanding the accounting and internal control systems
Accounting policies adopted and changes thereon.
Effect of new accounting or auditing pronouncements.
The auditor’s cumulative knowledge of the accounting and internal control systems and the relative emphasis expected to be placed on tests of control and substantive procedures.
iii) Risk and Materiality
The expected assessments of inherent and control risks and identification of significant audit areas.
The setting of materiality levels for audit purposes.
The possibility of material misstatement, including the experience of past periods, or fraud.
The identification of complex accounting areas including those involving accounting estimates.
iv) Nature, timing and Extent of Procedures
Possible change of emphasis on specific audit areas.
The effect of information technology on the audit.
The works of internal auditing and its expected effect on external audit procedures.
v) Coordination, Direction, Supervision and Review
The involvement of other auditors in the audit of components-branches, subsidiaries and divisions.
The involvement of experts.
The number of locations.
vi) Other Matters
The possibility that the going concern assumption may be subject to question.
Conditions requiring special attention, such as the existence of related parties.
The terms of engagement and any statutory responsibilities.
The nature and timing of reports or other communication with the entity that are expected under the engagement.