Chapter – 2 Audit strategy, Audit planning and Audit Programme

Planning an Audit

The process of preparing for an audit to ensure effective performance and achievement of audit objectives as per SA 200.

Risk Assessment

Procedures conducted to understand the entity and its environment, internal control, and identify risks of material misstatement at financial statement and assertion levels.

Preliminary Engagement Activities

Defined in SA 210 & SA 220, including procedures for client relationship continuance, ethical compliance evaluation, and understanding terms of engagement.

Audit Strategy

Sets the scope, timing, and direction of the audit, guiding the development of a detailed audit plan to achieve the overall audit objective.

Audit Plan

Detailed plan developed based on the audit strategy, specifying risk assessment procedures, further audit procedures, and other necessary audit procedures to comply with SAs.

Audit Programme

A series of verification procedures applied to financial statements to obtain evidence for expressing an informed opinion, ensuring systematic and controlled audit execution.

Advantages of Audit Programme

Provides clear instructions, total perspective of work, aids in assistant selection, systematic audit execution, serves as evidence of professional care.

Disadvantages of Audit Programme

May lead to mechanical work, rigidity, inefficiency, and hinder initiative in efficient assistants.