Clarence is a new audit junior and is attending training sessions at the audit firm. Clarence is trying to focus on the main points in the training because there will be a test at the end of the week. The topic today is audit strategy, with specific reference to the standard on planning audits. Clarence needs some advice to help him study.

Required

(a) What is an audit strategy? What is the auditing standard that directs auditors to establish an overall audit strategy?

(b) Make a summary of the process used by an auditor to determine the degree of reliance on detailed substantive procedures for a particular class of transaction.