An audit programme plays an important role in the execution of audit work. It is desirable that an audit programme should be developed for each & every audit, and especially for bigger audits. The audit programme is a list of examination and verification steps that must be followed in such a way that the interrelationship of one step to the next is clearly defined.
In this article, we have discussed the meaning of an audit programme, its objectives and specimen.
What is an audit programme?
An audit programme is a series of verification procedures that are applied to the financial statements and accounts of a particular company in order to acquire sufficient evidence. The evidence so obtained will allow the auditor to make an opinion on such statements.
In other words, an audit programme is a systematic plan of audit methodologies to be adopted and used in order to achieve audit objectives. It defines the work to be done, who is to do it, and how it should be performed within the projected time frame.
It outlines the tasks to be undertaken by the audit staff and the level of checking to be done by them for the examination of the client’s books.
It involves the following:
- Which work is to be performed?
- Who has to do such work?
- Within what time it is to be done?
In short, an audit programme acts as a checklist of audit procedures to be performed.
Every auditor designs the audit program based on his or her convenience and the nature or type of client’s business. An audit program may have the following characteristics:
- It is a set of procedures that must be followed in order to conduct the audit more efficiently.
- It is a written schedule prepared by the auditor.
- It represents a blueprint of the audit work.
- It helps in the delegation of audit work based on the competencies of audit personnel.
- It can be used in the future as evidence for the audit work performed.
- It describes the work to be performed by the audit staff, as well as the manner and time limit for completion.
Evolving one audit programme is not practicable for all businesses
Businesses vary in nature, size, and composition; work that is appropriate for one business may not be appropriate for another. Moreover, the efficiency and operation of internal controls, as well as the exact nature of the service to be rendered by the auditor vary from assignment to assignment. Because of these variations, developing a single audit program that applies to all businesses in all scenarios is not practicable. For each business, a specific audit program should be designed individually.
Objectives of Audit Program
An audit programme helps to serve the following important objectives:
- To provide explicit directions to audit assistants, outlining the nature of the work to be undertaken and establishing a time frame for completion of each task.
- To make it easier to coordinate various parts of audit work.
- To maintain consistency in the performance of audit work and to eliminate duplication and repetition of work.
- To ensure a fair distribution of work across the audit team.
- To define the accountability and responsibility of each audit assistant.
- To serve as a guide for planning the audit work in the future.
- To be used as evidence in the future to indicate the date of completion of audit work, methods or procedures followed, personnel involved in the completion of audit work, and so on. (If a charge of negligence is brought against the auditor, an audit programme can act as evidence in support thereof)
Format of Audit Program
Given below is a specimen of an audit program:
(Specimen format of Audit Program)
The audit programme should be flexible
To begin, an auditor should build a programme based on the type, size, and composition of the organization, as well as the reliability of internal controls and the specified scope of work. The goal should be to plan for a minimum of essential work, which may be referred to as a standard programme.
As knowledge is gained through the actual performance of the work, the programme should be altered to address scenarios that were initially overlooked but are now relevant to the particular concern.
Similarly, if any work that was originally planned proves to be unnecessary or irrelevant, it may be dropped. Also, the audit assistants should be encouraged to think beyond the scope of the programme that has been assigned to them. They should be instructed to note and report any important matters that come to their attention during the course of the audit.
Periodic review of the programme
The audit program should be reviewed on a regular basis to ensure that it is still adequate for gathering the necessary knowledge and evidence regarding the transactions. Unless this is done, any change in the business policy of the client may not be adequately known, and hence, the audit work may continue to be carried out on the basis of an outdated programme. Furthermore, as a result of this negligence, the entire audit may be deemed as negligently performed, and the auditor may face legal implications.
For details on the Types of Audit Programme and another specimen, please refer to this blog:
To know more about the advantages and disadvantages of Audit Programme, please refer to this blog:
Also, for understanding the difference between an audit plan and an audit programme, refer to this blog:
Hope the information is helpful!