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

Meridian Textiles Ltd. has appointed Sharma & Associates as statutory auditors. During planning, the engagement partner decides to prepare a document that sets out the expected scope, timing and direction of the audit, which will guide the development of the more detailed audit plan. Which document is the partner preparing?

The partner is preparing the overall audit strategy. Under SA 300 it sets out the scope, timing and direction of the audit and guides the more detailed audit plan, whereas a representation letter, audit report or engagement letter serves a different purpose.

  1. AAudit strategy (overall audit strategy)Correct
  2. BManagement representation letter
  3. CAudit report
  4. DEngagement letter for the next year

Explanation

Under SA 300, the overall audit strategy sets the scope, timing and direction of the audit and guides the development of the detailed audit plan. The representation letter is obtained from management later, the audit report is issued at the end, and an engagement letter records terms of engagement rather than the direction of the audit.

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