Chapter 10 reading guide

Question 1

What is the overall audit strategy? What 4 things should the auditor do when developing the strategy?

Answer 1

overall audit strategy is the high-level plan that sets the scope, timing, and direction of the audit, determining accounting framework, timelines, other key factors

1. incorporate understanding of the entity and its environment
2. assess overall financial statement level risks
3. set the scope, timing and resources
4. document the strategy

Question 2

What is the audit plan? How is it different from the audit strategy?

Answer 2

audit plan is a detailed outline fo the nature, timing, and extent of audit procedures that will be performed to gather audit evidence

will include:

1. Scope and timing of audit work
2. Identified risks of material misttatement
3. approach
4. materialy levels
5. planned audit procedures

audit plan is overall more in depth and covers more specific things, while audit strategy is just the bigger outline of things