6.5 Relationship between audit strategy and audit plan

The audit strategy and audit plan are closely related and work together to guide the overall conduct of the audit engagement. Here’s an explanation of the relationship between the two:

Audit Strategy: The audit strategy sets the overall direction and approach for the audit engagement. It outlines the high-level decisions and considerations that shape the entire audit process. The audit strategy is developed at the beginning of the audit and provides a framework for the subsequent steps, including the development of the audit plan.
Audit Plan: The audit plan is a more detailed and specific document that operationalizes the audit strategy. It lays out the specific procedures, tasks, and timelines for the audit engagement. The audit plan is typically developed after the audit strategy and is based on the findings of the preliminary risk assessment and understanding of the client’s business.

The relationship between the audit strategy and audit plan can be described as follows:

The audit strategy guides the development of the audit plan: The decisions and considerations outlined in the audit strategy inform the development of the audit plan. The objectives, scope, approach, and resources identified in the audit strategy shape the specific procedures and tasks detailed in the audit plan.
The audit plan aligns with the audit strategy: The audit plan is designed to align with the objectives and approach set out in the audit strategy. The specific procedures and tasks in the audit plan are designed to address the risks identified in the audit strategy and achieve the audit objectives.
The audit plan provides the implementation details: While the audit strategy provides the overall direction, the audit plan provides the specifics of how the audit will be executed. It includes details such as the timing of procedures, the allocation of resources, the specific accounts or areas to be tested, and the techniques or tools to be used.
Flexibility and iterative nature: The audit plan may be subject to adjustments and modifications as the audit progresses and new information becomes available. Changes to the audit plan may be necessary to address emerging risks or to accommodate unforeseen circumstances. However, any changes to the audit plan should be consistent with the overall audit strategy.