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

Meridian & Co, Chartered Accountants, have been appointed auditors of Kaveri Textiles Ltd. While preparing the overall audit strategy, the engagement partner decides on the nature, timing and extent of resources, including the use of experts and the number of team members for high-risk areas. Under SA 300, which of the following is primarily addressed by the overall audit strategy rather than the detailed audit plan?

The overall audit strategy sets the scope, timing and direction of the audit and guides the detailed audit plan, including resources to be deployed. Detailed procedures at assertion level and sample-level steps belong to the audit plan, not to the strategy under SA 300.

  1. AThe nature, timing and extent of planned further audit procedures at the assertion level
  2. BThe scope, timing and direction of the audit and the resources needed to perform itCorrect
  3. CThe specific risk assessment procedures for each class of transactions
  4. DThe detailed steps for each sample selection in tests of controls

Explanation

SA 300 says the overall audit strategy sets the scope, timing and direction of the audit and guides development of the more detailed audit plan. Resource allocation is part of the strategy. Option A describes content of the audit plan, which covers the nature, timing and extent of planned procedures, so it is not the primary function of the strategy.

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