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

Mehta & Associates, a firm of Chartered Accountants, has been appointed auditor of Shree Textiles Ltd. for the year ending 31 March. The engagement partner wants to prepare a document that sets out the expected scope, timing and direction of the audit and guides the development of the detailed audit plan. Which document does SA 300 require the auditor to establish for this purpose?

The auditor should establish an overall audit strategy. Under SA 300 it sets the scope, timing and direction of the audit and guides the development of the more detailed audit plan. The other documents belong to the completion or reporting stage, not to planning.

  1. AThe overall audit strategyCorrect
  2. BThe management representation letter
  3. CThe audit report draft
  4. DThe engagement completion memorandum

Explanation

SA 300 requires the auditor to establish an overall audit strategy that sets the scope, timing and direction of the audit and guides the detailed audit plan. A management representation letter is obtained near the end of the audit and a draft report and completion memorandum are completion-stage items, so none of them guides planning.

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