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01 C2 Audit Strategy, Audit Planning
01 C2 Audit Strategy, Audit Planning
01 C2 Audit Strategy, Audit Planning
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Objective
The objective of the auditor is to plan the audit so that it will be performed in an effective manner.
Plans should be further developed and revised as necessary during the course of the audit.
Adequate planning benefits the audit of financial statements in several ways, including the following:
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study from updated notes with our videos. Many concepts are there which are missing in these notes, some are obsolete. We have discussed everything in our
video classes. www.neerajaroraclasses.com Amendments and updates will taught in classes and videos. Extra notes and charts will also be given.
As per SA 300 “Planning an Audit of Financial Statement” the audit plan shall be include a description of:
❖ The nature, timing and extent of planned risk assessment procedures, as determined under SA 315.
❖ The nature , timing and extent of planned further audit procedures at the assertion level, as determined under
SA 330.
❖ Other planned audit procedures that are required to be carried out so that the engagement complies with SAs.
● Planning of the auditor’s risk assessment procedures occurs early in the audit process.
● However, planning the nature, timing and extent of specific further audit procedures depends on the outcome of
those risk assessment procedures.
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study from updated notes with our videos. Many concepts are there which are missing in these notes, some are obsolete. We have discussed everything in our
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As per SA-315, “Identifying and Assessing the Risk of Material Misstatement through Understanding the Entity and Its
Environment”, the auditor shall obtain an understanding of the following:
1. Relevant industry, regulatory and other external factors including applicable financial reporting framework.
2. The nature of the entity, including:
a. Its operations;
b. Its ownership and governance structures;
c. The types of investments that the entity is making and plan to make: &
d. The way that the entity is structured and how it is financed.
3. The entity’s selection and application of accounting policies, including the reasons for changes thereto.
4. The entity’s objectives and strategies, and those related Business risks that may result in risks of material
Misstatement.
5. The measurement and review of the entity’s financial performance.
Planning is not a discrete phase of an audit, but rather a continual and iterative process that often begins shortly after
(or in connection with) the completion of the previous audit and continues until the completion of the current audit
engagement.
The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that
guides the development of the audit plan.
The nature and extent of planning activities will vary according to the size and complexity of the entity, the key
engagement team members’ previous experience with the entity, and changes in circumstances that occur during the
audit engagement.
The nature, timing and extent of the direction and supervision of engagement team members and review of their work
vary depending on many factors, including:
● The size and complexity of the entity.
● The area of the audit.
● The assessed risks of material misstatement
● The capabilities and competence of the individual team members performing the audit work.
The documentation of the overall audit strategy is a record of the key decisions considered necessary to properly plan
the audit and to communicate significant matters to the engagement team.
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These notes are incomplete without our videos. Study from these notes at your own risk. We keep on updating our books, notes and videos. You should always
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Audit Strategy
Audit strategy is concerned with
➔ designing optimised audit approaches
➔ that seek to achieve the necessary audit assurance
➔ at the lowest cost
➔ within the constraints of the information available.
Relationship between the overall audit strategy and the audit plan
● Change in audit strategy will lead to change in audit plan and vice versa
● Audit plan in prepared after audit strategy and is more detailed. Audit strategy gives less detail but it forms the
basis of the planning
● The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and
that guides the development of the audit plan
● Detailed audit plan would include the nature, timing and extent of the audit procedures so as to obtain sufficient
appropriate audit evidence.
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