## Development of the Audit Plan

Once the Overall Audit Strategy is established, the auditor develops a more detailed Audit Plan to address the specific matters identified in the strategy.

### What the Audit Plan Must Include (SA 300)

The auditor shall develop an audit plan that includes:

Component	Description	Key Question
Nature	What type of audit procedure to perform	What?
Timing	When to perform it	When?
Extent	How much work should be done	How much?

This applies to both:

1. Risk Assessment Procedures (RAP) — performed early (SA 315)

2. Further Audit Procedures (FAP) — response to assessed risks (SA 330)

Tests of Controls
Substantive Procedures

### Types of Audit Procedures

Inquiry
Inspection
Observation
Recalculation
Re-performance
Analytical Procedures
External Confirmation

### Key Relationship: RAP → FAP

```

Risk Assessment Procedures (SA 315)

↓

Identify & Assess Risk (ROMM)

↓

Further Audit Procedures (SA 330)

↓

Tests of Controls + Substantive Procedures

```

> The Nature, Timing, and Extent of Further Audit Procedures depends entirely on the outcome of Risk Assessment Procedures.

### Other Matters Included in Audit Plan

Involvement of experts
Determination of materiality
Obtaining general understanding of legal and regulatory framework applicable to the entity
Analytical procedures to be performed as RAP

### Audit Plan vs Audit Strategy

Feature	Audit Strategy	Audit Plan
Level of detail	Broad, overall approach	Detailed, specific procedures
Focus	Scope, timing, direction	N, T, E of each audit procedure
Purpose	Guides development of plan	Implements the strategy
Relationship	Sets the 'what'	Describes the 'how'

Worked example

### Example 1

Scenario: The audit strategy for a manufacturing company identifies inventory as a high-risk area. How does this translate into the audit plan?

Answer:

Nature: Physical verification of inventory (Observation) + Recalculation of inventory valuation
Timing: Attend year-end stock count (not interim) because high risk warrants year-end testing
Extent: Full count coverage for all locations; select 100% of high-value items for test counts
Further Audit Procedure: Since internal controls over inventory are assessed as weak (from RAP), rely primarily on Substantive Procedures rather than Tests of Controls

⚠️ Common exam mistakes

Confusing Nature, Timing, Extent (NTE) — Nature is the TYPE of procedure (inquiry, observation etc.), not when or how much.
Planning Further Audit Procedures before completing Risk Assessment Procedures — FAP depends on RAP outcomes; you cannot plan FAP in isolation.
Thinking the audit plan is fixed once written — NTE of FAP must be revised if risk assessments change mid-audit.
Forgetting that planning for Risk Assessment Procedures happens in the early stage of the audit, while FAP planning depends on and follows RAP results.

Bare-Act text The Audit Plan · SA 300 – Planning an Audit of Financial Statements (ICAI) · click to expand

The auditor shall develop an audit plan that shall include a description of: (a) the nature and extent of planned risk assessment procedures, as determined under SA 315; (b) the nature, timing and extent of planned further audit procedures at the assertion level, as determined under SA 330; and (c) other planned audit procedures that are required to be carried out so that the engagement complies with SAs.

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Development of Audit Plan (SA 300)

Worked example

⚠️ Common exam mistakes