Explain and describe the relationship between the overall audit strategy and the audit plan

The overall audit strategy and the audit plan are two key components of the audit process, and they are closely related.

1. Overall Audit Strategy: This is the initial step in the audit process. It sets the direction for the entire audit and helps the auditor to determine the resources needed to perform the audit. The overall audit strategy is developed by considering the characteristics of the entity, its environment, and its internal control system. It also considers the reporting objectives of the engagement, the timing of the audit, and the nature of the communications required.

2. Audit Plan: The audit plan is a detailed approach of the nature, timing, and extent of procedures to be performed by audit staff. It is developed based on the overall audit strategy. The audit plan includes a detailed list of the audit procedures that the audit team needs to implement to gather sufficient appropriate evidence for each material account balance or class of transactions.

The relationship between the overall audit strategy and the audit plan is that the strategy acts as a guide for the development of the audit plan. The overall audit strategy outlines the scope, timing, and direction of the audit, and the audit plan translates this into a more detailed, step-by-step plan of action for the audit team.

In other words, the overall audit strategy provides the big picture of how the audit should proceed, while the audit plan provides the specific steps to be taken to execute the strategy. Both are necessary for a successful audit, and they must be consistent with each other.