Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Planning, materiality and assessing the risk of material misstatement

Harbour Freight Co is a new audit client of Delta & Co. The audit senior is drafting the overall audit strategy. Which of the following is the matter most appropriately included in the overall audit strategy under ISA 300 rather than in the detailed audit plan?

The overall audit strategy covers the scope, timing and direction of the audit, such as reporting objectives and required communications. Specific procedures, sample sizes and tests on individual balances belong in the more detailed audit plan, not in the strategy.

  1. AThe scope of the audit, reporting objectives and the timing of the audit, including the nature of communications requiredCorrect
  2. BThe nature, timing and extent of each planned further audit procedure on trade receivables
  3. CThe specific sample sizes to be selected for testing purchase invoices
  4. DThe individual risk assessment procedures to be performed on each journal entry

Explanation

ISA 300 says the overall audit strategy sets the scope, timing and direction of the audit, including reporting objectives and communications. The detailed audit plan covers the specific nature, timing and extent of risk assessment and further procedures. Sample sizes and procedures per balance belong in the plan, so those options are wrong.

Did you get it right without looking?

One question tells you little. A timed set on Planning, materiality and assessing the risk of material misstatement shows your real accuracy, how long you take and where you lose marks.

Practise Planning, materiality and assessing the risk of material misstatementFree diagnostic mock

More Planning, materiality and assessing the risk of material misstatement questions