AUDIT STRATEGY Meaning and
Definition
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An audit strategy refers to a well thought out and carefully planned approach followed by auditors to conduct an audit and achieve audit objectives effectively and efficiently. It is a comprehensive plan that outlines the scope of the audit, the timing and resources required, and the specific procedures to be implemented.
An audit strategy involves several key components. Firstly, it defines the audit objectives and scope, outlining the areas of focus, such as financial statements, internal controls, compliance with laws and regulations, or specific areas of concern. Secondly, it considers the inherent risks and issues related to the audited entity, including its industry, operations, and historical performance.
The strategy then establishes a systematic and structured plan, determining the methodologies, procedures, and activities necessary to address the identified risks and achieve the audit objectives. This may include sample testing, data analysis, interviews with key personnel, or inspection of documents and records.
Additionally, the audit strategy considers the resources required for the audit, such as personnel, technology, and time. It ensures that adequate staff with appropriate skills and expertise are assigned to the audit engagement and that they are equipped with the necessary tools and knowledge.
Lastly, the audit strategy includes provisions for reporting and communication. It outlines the format and content of audit reports, as well as the key stakeholders who need to be kept informed throughout the audit process.
Overall, an audit strategy serves as a blueprint for auditors, guiding them in planning, executing, and finalizing the audit, with the ultimate goal of providing reliable and accurate opinions on the audited entity's financial statements and systems.
Etymology of AUDIT STRATEGY
The word "audit" has its roots in the Latin word "audire", meaning "to hear". This is because in ancient times, audits were conducted by listening to an individual's financial records being read out loud. Over time, the meaning evolved to include investigating and examining records for accuracy and compliance.
The word "strategy" originates from the Greek word "strategos", which referred to a military general. It combines the two words "stratos", meaning "army", and "ago", meaning "to lead". Therefore, "strategy" originally denoted the art of leading an army.
The term "audit strategy" is a combination of these two words. It was likely coined to describe the approach, plan, or method used in conducting an audit. The strategy involves determining the scope, objectives, and procedures for the audit, as well as assessing risk and establishing priorities.
