What does the audit strategy outline?

The audit strategy primarily outlines the nature, extent, and timing (often referred to as the NET) of audit procedures to be performed during an audit engagement. This includes determining which areas of the financial statements require more focus, the timing of when these audits will take place, and the specific audit methods that will be used to gather evidence.

This planning phase is crucial for ensuring that the audit is efficient and effective, allowing auditors to allocate resources appropriately, address potential risks, and meet regulatory requirements. By establishing a clear NET, auditors can tailor their approach based on the specific circumstances of the engagement, including assessing internal controls and identifying areas that may require more scrutiny due to inherent risks.

In this context, options discussing the audit report format, expected financial outcomes, or industry-specific risks, while important in their own right, do not capture the comprehensive and strategic planning aspect that is essential for guiding the overall audit process.