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CA Intermediate · Auditing and Ethics · Audit Strategy, Audit Planning and Audit Programme

Ananya & Co., Chartered Accountants, are appointed auditors of Kaveri Textiles Ltd. for the first time. The audit partner wants to finalise the overall audit strategy. Which of the following is a matter the auditor should record while establishing the overall audit strategy under SA 300?

The auditor should record the engagement characteristics defining scope, such as the financial reporting framework and reporting objectives. Detailed procedures for assertions belong to the audit plan, while going concern conclusions and representation letters arise later at completion, so they are not part of the overall strategy.

  1. AThe characteristics of the engagement that define its scope, such as the financial reporting framework and reporting objectivesCorrect
  2. BThe detailed nature, timing and extent of each further audit procedure for every assertion
  3. CThe final conclusions on the going concern assumption
  4. DThe text of the management representation letter to be obtained at the end of the audit

Explanation

SA 300 requires the overall audit strategy to set the scope, timing and direction of the audit, starting with engagement characteristics such as the applicable framework and reporting objectives. Detailed procedures for each assertion belong to the audit plan, not the strategy. Going concern conclusions and the representation letter come at the completion stage.

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