Final answer:
An auditor develops a detailed audit plan after establishing the audit strategy, which outlines the procedures to be performed. The plan helps in identifying risks and allocating resources efficiently, ensuring a high-quality audit outcome.
Step-by-step explanation:
Once the audit strategy has been established, the auditor develops a more detailed audit plan. The audit plan outlines the nature, timing, and extent of audit procedures to be performed. It is a comprehensive guide for the auditor, providing a clear direction to the audit team and forming the basis for how the audit will be conducted in line with the established strategy.
Developing a detailed audit plan helps the auditor to identify the knowns and unknowns and to determine which audit procedures and techniques will be necessary to obtain sufficient evidence. The detailed analysis involved in creating an audit plan serves as a vital step, enabling the auditor to identify possible mistakes in financial statements or internal controls of the entity being audited, thereby ensuring thorough scrutiny and enhancing the quality of the audit.
Detailed planning is essential for auditing efficiency and effectiveness as it allows auditors to allocate resources appropriately, identify high-risk areas, and implement a strategy that addresses those risks. This thorough preparation is what enables auditors to form their opinion on the financial statements and to provide recommendations if necessary.