Document ID: chunk:federal_register_of_legislation:F2023C01129:reg:11:p8
Version: federal_register_of_legislation:F2023C01129
Segment Type: reg
Provision Reference: reg 11 (pt 8/12)
Character Range: 28803–31741

audit strategy is a record of the key decisions in managing quality at the engagement level and a means to communicate significant matters to the engagement team.  For example, the auditor may summarise the overall audit strategy in the form of a memorandum that contains key decisions regarding the overall scope, timing and conduct of the audit.

A20.         The documentation of the audit plan is a record of the planned nature, timing and extent of risk assessment procedures and further audit procedures at the assertion level in response to the assessed risks.  It also serves as a record of the proper planning of the audit procedures that can be reviewed and approved prior to their performance.  The auditor may use standard audit programs or audit completion checklists, tailored as needed to reflect the particular engagement circumstances.

A21.         A record of the significant changes to the overall audit strategy and the audit plan, and resulting changes to the planned nature, timing and extent of audit procedures, explains why the significant changes were made, and the overall strategy and audit plan finally adopted for the audit.  It also reflects the appropriate response to the significant changes occurring during the audit.

A22.         Documentation of the direction and supervision of engagement team members and the review of their work in accordance with ASA 220 may also provide a record of significant changes to the planned nature, timing and extent of the direction, supervision and review.

Considerations Specific to Smaller Entities

A23.         As discussed in paragraph A11, a suitable, brief memorandum may serve as the documented strategy for the audit of a smaller entity.  For the audit plan, standard audit programs or checklists (see paragraph A17) drawn up on the assumption of few controls[14], as is likely to be the case in a smaller entity, may be used provided that they are tailored to the circumstances of the engagement, including the auditor's risk assessments.

Additional Considerations in Initial Audit Engagements (Ref: Para. 13)

A24.         The purpose and objective of planning the audit are the same whether the audit is an initial or recurring engagement.  However, for an initial audit, the auditor may need to expand the planning activities because the auditor does not ordinarily have the previous experience with the entity that is considered when planning recurring engagements.  For an initial audit engagement, additional matters the auditor may consider in establishing the overall audit strategy and audit plan include the following:

           * Unless prohibited by law or regulation, arrangements to be made with the predecessor auditor, for example, to review the predecessor auditor's working papers.

           * Any major issues (including the application of accounting principles or of auditing and reporting standards) discussed with management in