When to determine the scope of the audit

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Scope describes what falls within an audit. So the engagement letter will specify the extent of the auditor's remit - what is being audited (the financial statements), for what period ((year to ...) and the activities that, in broad terms, spell out that what they will do in achieving the audit objective cannot be limited (i.e. access to books, making inquiries, etc, etc). This is necessarily broad and generic for the purposes of establishing a contract. The overall audit strategy and more detailed audit plan will always be tailored to the specifics of each client. Here the scope (think extent) at an overall level would include for example, whether we visit/audit all or some branches/locations (or subsidiaries in a group scenario), whether we plan to rely on internal audit, whether we will need an expert, etc. These are all things which, before doing any audit tests/work, we can identify as having a bearing on the timing and direction of the audit. Timing and direction are inter-related - interim procedures are generally associated with a compliance approach (i.e. reliance on controls) - in the absence of which the approach may be wholly substantive.

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