Audit planning is the work done before testing starts: understanding the client, assessing risk, setting materiality, choosing the team and deciding what to test and when. Its output is two documents, an overall audit strategy and a detailed audit plan. Good planning is what stops the audit turning into a scramble in the last week.
Last reviewed: 17 October 2026. Facts checked. We opened the IAASB page on ISA 300 (Revised) and confirmed the strategy, plan, iteration and documentation points below. We did not open ICAI's SA 300, which is the equivalent standard for India, so we have not quoted its paragraph numbers. The timeline is an illustration for a March year-end, not a rule, and the checklists are our practical suggestions.
What the standard says
The IAASB's description of ISA 300 says:
- The auditor sets an overall audit strategy for scope, timing and direction, including which resources go to which areas.
- The auditor then develops a detailed audit plan based on that strategy. It also covers how the team's work will be directed, supervised and reviewed.
- Planning is iterative. It continues until the audit is complete, and the strategy and plan are updated as needed.
- The standard sets documentation requirements.
Our guide to the audit process in India shows where planning sits in the full cycle.
The steps
- Accept the engagement. Check independence, competence and terms. Use the engagement acceptance checklist.
- Agree the terms. Sign the engagement letter covering scope, responsibilities and reporting.
- Understand the entity. Its business, industry, systems, controls, people and reporting framework.
- Assess risk. Identify where the financial statements could be materially misstated. Our audit risk scorer assessment framework shows one way to rank them.
- Set materiality. Overall, and a lower level for testing. See audit materiality explained and the materiality calculator.
- Plan the response. Decide what tests address each risk, and their nature, timing and extent.
- Plan analytical procedures. Early analysis highlights unusual movements. See analytical procedures in audit planning.
- Plan the team and time. Allocate people, supervision and review, and decide whether you need specialists. The audit time estimator can help with the hours.
- Write the strategy and plan. Record it, and get the partner's approval.
- Hold a team briefing. Make sure everyone knows the risks and their tasks.
Documents you should have on file
| Document | Purpose |
|---|---|
| Engagement letter | Terms and responsibilities |
| Acceptance and independence record | Shows the firm checked before it accepted |
| Understanding of the entity | Business, systems and environment |
| Risk assessment | Risks and the link to responses |
| Materiality workings | Thresholds and the basis |
| Overall audit strategy | Scope, timing, direction, resources |
| Audit plan or programme | The detailed procedures |
| Team allocation and timetable | Who does what by when |
| Prior-year review points | Carry-forward issues |
| Information request list | What you need from the client |
For the checklist itself, the audit checklist generator can create one tailored to the client.
A sample timeline
This is an illustration for a company with a 31 March year-end. Adjust to your client. Nothing here is a statutory date.
| When | What happens |
|---|---|
| Before year-end | Acceptance, engagement letter, understanding the entity, risk assessment, draft plan |
| Around year-end | Planning meeting with management, information request list sent, inventory counts planned |
| Interim | Test controls and early transactions, review early analytics |
| After year-end | Receive the trial balance, update risk assessment, fieldwork on balances |
| Late fieldwork | Review of estimates, related parties, subsequent events |
| Completion | Partner review, management representations, draft report |
| Reporting | Discuss with those charged with governance and sign |
The sooner the trial balance and key schedules arrive, the more room the plan has. Late or changing books are the usual cause of slippage. See client changes books after audit started.
Common planning mistakes
- Using last year's plan with the date changed.
- Setting materiality once and never revisiting it.
- A risk assessment that is not linked to specific tests.
- No information request list, so the client does not know what to prepare.
- Not updating the plan when something changes.
- Team briefing skipped, so juniors test without knowing why.
Frequently Asked Questions
What is audit planning?
Work done before testing to understand the client, assess risk, set materiality and decide what to test, ending in an audit strategy and audit plan.
What is the difference between the audit strategy and the audit plan?
The strategy sets scope, timing and direction. The plan sets the detailed procedures that follow from it.
Is the audit plan fixed once approved?
No. Planning is iterative, and the strategy and plan are updated as the audit goes on.
How long should audit planning take?
It depends on the client's size and complexity. We did not find a standard figure.
Which Indian standard covers audit planning?
SA 300 is the Indian equivalent of ISA 300. We did not open ICAI's text for this article.
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Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error