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

M/s Rao & Associates is auditing Sundaram Textiles Ltd for the first time. The engagement partner wants the overall audit strategy to be documented. Which of the following is a matter that the overall audit strategy, as per SA 300, is meant to set out?

The overall audit strategy sets the scope, timing and direction of the audit and guides development of the more detailed audit plan. Detailed procedures for individual balances belong to the audit plan, and the opinion is formed only after evidence is obtained.

  1. AThe scope, timing and direction of the audit, which guide the development of the detailed audit planCorrect
  2. BThe nature, timing and extent of each individual audit procedure to be performed on every account balance
  3. CThe final opinion the auditor expects to express on the financial statements
  4. DThe fees to be charged and the billing schedule agreed with the management

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. The detailed nature, timing and extent of specific procedures belong to the audit plan, not the strategy, so option B is wrong. The opinion cannot be fixed in advance, and fees are not a content item of the strategy.

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