Compliance Management, Audit and Due Diligence · Audit Engagement

Planning the Audit and Audit Strategy under SA 300

Updated 11 October 2026 · Fact-checked

Planning an audit means setting the overall audit strategy and then developing a detailed audit plan, as SA 300 requires. The strategy fixes scope, timing, direction and resources. The plan turns it into procedures. You begin by checking client continuance, ethics and independence, and the engagement terms. Revise both when facts change.

Understand Planning the Audit and Audit Strategy

Planning is not a single step done before fieldwork. SA 300 says planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan. It continues through the audit, and you update it as new facts appear.

The overall audit strategy is the big picture. It sets the scope, the reporting objectives and timing, the factors that direct the team's effort, and the resources needed. The audit plan is more detailed. It sets out the procedures to be performed. Strategy comes first and the plan follows from it.

At the start of each engagement, the auditor does three things under SA 300. First, perform the SA 220 procedures on continuing the client relationship and the specific engagement. Second, evaluate compliance with ethical requirements, including independence. Third, establish an understanding of the terms of engagement as required by SA 210. If you skip these, planning rests on a weak base.

Good planning helps in several ways. You give proper attention to important areas. You spot and resolve problems on time. You organise the work so it is effective and efficient. You pick team members with the right capability for the anticipated risks. You can also direct, supervise and review their work, and coordinate with component auditors and experts.

The strategy also decides resources. These include who works on high-risk areas, how many people attend an inventory count, when work is done (interim stage or key cut-off dates), and how the team is briefed, supervised and reviewed. For an initial audit you may need to expand planning, because you lack prior experience with the entity.

Key rules to remember

Start-of-engagement activities (SA 300): Continuance procedures (SA 220) + Ethics and independence (SA 220) + Engagement terms (SA 210); Done at the beginning of the current audit engagement. Name all three in an answer.
Planning activities in setting the overall audit strategy: Scope + Reporting objectives and timing + Significant factors + Preliminary activities and other-engagement knowledge + Resources; Five items. The auditor identifies scope characteristics, ascertains reporting objectives, considers significant factors, considers preliminary results, and ascertains resources (nature, timing, extent).
Strategy and plan relationship: Overall audit strategy → Audit plan → Further audit procedures; Strategy is broad. The plan is detailed. Both are revised if conditions change.
Additional points for initial audits: Predecessor auditor arrangements + Major issues discussed with management + Opening balances (SA 510) + Firm's quality control procedures; Predecessor arrangements apply unless prohibited by law or regulation.

How to solve Planning the Audit and Audit Strategy questions

Use this order for any case or theory question on audit planning. It keeps your answer in the provision, analysis, conclusion form.

1Identify what is asked: strategy, plan, team, initial audit, or a change during the audit.
2State the rule from SA 300 (or SA 210/SA 220 where relevant) in plain words.
3Check the start-of-engagement activities: client continuance, ethics and independence, and engagement terms.
4Apply the facts to the strategy elements: scope, reporting and timing, significant factors, preliminary activities, resources.
5Link resources to risk: experienced staff for high-risk areas, budget hours, timing of work, supervision and review.
6Note any special feature in the facts, such as an initial audit, components, experts, or unexpected events.
7Conclude with a clear recommendation or answer, and mention documenting the strategy and plan and updating them if needed.

Quickest way: Three-block planning answer

When to use it: Use when time is short and the question asks you to explain or advise on planning.

Block 1: start-of-engagement checks (continuance, independence, SA 210 terms).
Block 2: strategy (scope, timing and reporting, key factors, resources), then the plan built from it.
Block 3: special points from the facts (initial audit, high-risk areas, changes) and the need to update planning.
Close with one line linking the conclusion to the facts.

Common mistakes in Planning the Audit and Audit Strategy

Treating the audit strategy and audit plan as the same thing.
Both appear in the same standard and sound alike.
Fix: Say the strategy is the broad direction and resource decision, and the plan is the detailed set of procedures that follows.
Saying planning is a one-time phase before fieldwork.
Students picture planning as the first stage of a checklist.
Fix: State that planning continues and may be modified when unexpected events, changed conditions or audit evidence differ from what was expected.
Leaving out the engagement-start activities.
Students jump straight to risk and procedures.
Fix: Open with continuance procedures, ethics and independence, and understanding of engagement terms under SA 210.
Assigning the team without linking it to risk.
Resource allocation is treated as an admin matter.
Fix: Show that experienced members go to higher-risk areas and more budgeted time goes to them.
Ignoring extra steps for an initial audit.
Students assume planning is identical for every client.
Fix: Mention predecessor auditor arrangements, major issues discussed with management, opening balances under SA 510, and firm quality control requirements.

Worked examples

Example 1

M/s Rao & Associates is appointed auditor of Sundaram Textiles Ltd for the first time. The engagement partner starts fieldwork immediately, saying planning can be done later. Advise on the planning requirements.

Show the solution

Rule: SA 300 requires the auditor, at the beginning of the engagement, to perform SA 220 continuance procedures, evaluate ethics and independence, and establish understanding of terms under SA 210.
Analysis: Starting fieldwork without these checks is wrong. Planning also involves setting an overall audit strategy and developing an audit plan before procedures are carried out.
Initial audit: planning may need to be expanded because there is no previous experience with the entity. The auditor may consider arrangements with the predecessor auditor (unless prohibited by law or regulation), major issues discussed with management at selection, opening balance procedures under SA 510, and any firm quality control procedures for initial audits.
Conclusion: the partner should complete the start-of-engagement activities, set the strategy, develop the plan, and then begin procedures.

Answer: Planning cannot be postponed. The firm should complete continuance, independence and engagement-terms checks, establish the strategy and plan, and cover the additional initial-audit matters, including SA 510 opening balances.

Example 2

During the audit of Kaveri Foods Ltd, substantive procedures give evidence that contradicts the earlier tests of controls. Explain what the auditor should do about the audit plan and how the team should be directed.

Show the solution

Rule: SA 300 recognises that unexpected events, changed conditions or audit evidence from procedures may require the auditor to modify the overall audit strategy and audit plan.
Analysis: Here, evidence from substantive procedures contradicts evidence from tests of controls. This is information that differs significantly from what was available at planning.
Action: revise the assessed risks, then change the planned nature, timing and extent of further audit procedures as needed.
Team: reconsider resource allocation. Put experienced members on the affected areas and adjust budgeted hours, and brief the team on the change.
Documentation: record the changes and the reasons in the audit file.

Answer: The auditor should revise the risk assessment and modify the strategy and plan, including the nature, timing and extent of further procedures. Adjust resources and team direction, and document the changes.

Exam tips

Write the three start-of-engagement activities by name. Examiners look for SA 220 and SA 210 links.
Use the word pair strategy then plan, and give one line on each difference.
In case questions, tie resources to risk and name the high-risk area from the facts.
Always mention that planning is revised during the audit when facts change.
Cite paragraph numbers only when sure. Plain-word rules are safe.

Practice questions from Audit Engagement

Planning the Audit and Audit Strategy in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Planning the Audit and Audit Strategy: frequently asked questions

What is the difference between audit strategy and audit plan?

The overall audit strategy sets scope, reporting and timing, key factors and resources. The audit plan is more detailed and sets out the procedures. The plan is developed after the strategy.

Is audit planning done only at the start?

No. SA 300 says the auditor may modify the strategy and plan if unexpected events, changed conditions or audit evidence require it. Planning is continuous.

Which activities must the auditor perform at the beginning of an engagement?

Perform SA 220 procedures on continuing the client relationship and the engagement, evaluate ethical requirements including independence, and establish an understanding of the terms under SA 210.

How does planning differ for an initial audit?

The purpose is the same, but you may need to expand planning. Consider predecessor auditor arrangements, major issues discussed with management, opening balances under SA 510, and firm quality control requirements.