The auditor should develop and document an overall audit plan describing the expected scope and conduct of the audit. While the record of the overall audit plan will need to be sufficiently detailed to guide the development of the audit program, its precise form and content will vary depending on the size of the entity, the complexity of the audit and the specific methodology and technology used by the auditor.

Matters to be considered by the auditor in developing the overall audit plan include the following:

Knowledge of the Business

• General economic factors and industry conditions affecting the entity’s business.

• Important characteristics of the entity, its business, its financial performance and its reporting requirements including changes since the date of the prior audit.

• The general level of competence of management.

Understanding the Accounting and Internal Control Systems

• The accounting policies adopted by the entity and changes in those policies.

• The effect of new accounting or auditing pronouncements.

• The auditor’s cumulative knowledge of the accounting and internal control systems and the relative emphasis expected to be placed on tests of control and substantive procedures.

Risk and Materiality

• The expected assessments of inherent and control risks and the identification of significant audit areas.

• The setting of materiality levels for audit purposes.

• The possibility of material misstatement, including the experience of past periods, or fraud.

• The identification of complex accounting areas including those involving accounting estimates

Nature, Timing and Extent of Procedures

• Possible change of emphasis on specific audit areas.

• The effect of information technology on the audit.

• The work of internal auditing and its expected effect on external audit procedures.

Coordination, Direction, Supervision and Review

• The involvement of other auditors in the audit of components, for

example, subsidiaries, branches and divisions.

• The involvement of experts.

• The number of locations.

• Staffing requirements.

Other Matters

• The possibility that the going concern assumption may be subject to question.

• Conditions requiring special attention, such as the existence of related parties.

• The terms of the engagement and any statutory responsibilities.

• The nature and timing of reports or other communication with the entity that are expected under the engagement.