AAF8
Syllabus B. Planning And Risk Assessment B6. Audit planning and documentation

B6c. Audit Strategy vs Audit Plan 3 / 7

Syllabus B6c)

Explain and describe the relationship between the overall audit strategy and the audit plan.

Whilst the strategy sets out the overall approach, the plan fills in the operational details

Both strategy and plan need to be fully documented

The Audit Strategy document should identify the main characteristics of the engagement which define its scope

  1. If the accounts have been prepared in accordance with IFRS

  2. How much audit evidence obtained in previous audits will be used

  3. Whether computer-assisted audit techniques will be used

  4. The availability of key personnel

The document should understand the reporting objective

In order to plan the timing of the audit

Things to include are...

  • The audit timetable for reporting and whether there will be an interim as well as final audit

  • Organisation of meetings with management to discuss any audit issues arising

  • Location of Inventory counts

  • The timings of the audit team meetings and review of work performed

The document should show the factors directing the audit team's effort

such as:

  • Materiality levels

  • Using professional skepticism in gathering and evaluating audit
    evidence

It should consider the knowledge from prelim planning & other areas

such as:

  1. Results of previous audits and any tests of internal controls

  2. Evidence of management’s commitment to the design, implementation and maintenance of sound internal control

  3. Volume of transactions, which may determine whether it is more efficient for the audit team to rely on internal control