Audit Strategy, Audit Planning and Audit Programme
Domain 2 tests the distinction between the overall audit strategy and the audit plan under SA 300, the use of materiality under SA 320, and the practical design of a written audit programme.
Strategy first, then plan
The overall audit strategy sets the big picture before detailed work: characteristics of the engagement (reporting framework, size, industry), reporting objectives and timing, significant factors such as high-risk areas, and the nature and extent of resources such as staff, specialists and branch coverage. The audit plan then converts strategy into the nature, timing and extent of procedures at assertion level. Planning is iterative and continues throughout the audit; materiality is revised if new information emerges.
Direction, supervision, review
SA 300 requires the engagement partner to be involved in planning, to direct and supervise the team, and to review work. Planning is not a formality completed once at the start.
Audit programme
An audit programme is a written, tailored list of procedures with who performs them, when, and the evidence to be obtained. It supports supervision, consistency and documentation, but cannot replace professional judgement, and must be modified if risks change.
Worked example
A bank audit with 40 branches and a 30-day reporting window. Strategy: allocate teams to the 15 high-deposit branches, plan reliance on concurrent audit, fix the LFAR deadline. Plan: specific steps such as counting cash with the treasurer, verifying SLR securities with the custodian, testing interest computation on 30 advances. Programme: the checklist each branch team signs off. Reasoning: strategy decides where and with what resources; the plan decides what procedures; the programme records who does what.
Traps
- Swapping 'strategy' and 'plan' in definitions.
- Assuming one standard programme fits every client.
- Treating materiality as a one-time calculation rather than revisable.