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Definition of audit programme. Set of procedures (evidence – gathering steps) that an auditor believes is necessary to perform to obtain reasonable assurance that the financial statements are not affected by material misstatements.An audit program is a set of policies and procedures that dictate how an evaluation of a business is done. This generally involves specific instructions as to what, and how much, evidence must be collected and evaluated, as well as who will collect and analyze the data and when this should be done. These types of programs are used to check up on things like a business performance, finances, economy, and efficiency, and are generally tailored to a specific business or purpose. Purposes of audit programme Guiding audit staff in audit work Provide evidence of proper planning and recording of audit work to be done Provide the basis for coordinating and supervising audit work and controlling the time spent Audit programs are important because they standardize the data collection and evaluation process. By setting out a specific list of steps to be followed and data to be collected, the program ensures that auditors collect all the information they need in an efficient manner while under appropriate supervision. Keeping the process standardized also means that all the data collected can be used to make useful comparisons between businesses, departments, and previous years inspections, since the same set of data is collected each time. Additionally , having a program like this in place makes sure that any problems are discovered promptly and reported to the correct person. Main components of audit programme will include the objectives, procedures and conclusion of each audit work performed.
2 types of audit programmeStandards audit programme (standards working papers are used on all auditsfor efficiency and proper delegation, control and review)Tailored audit programme (different working papers are used to suit thedifferent types of client’s businessAudit Program are of four types1- Standard Audit program2- Modified Audit program3- Tailor made Audit program4- Audit program with check list1-S.A.PSome auditor’s prepare a standard audit program or make use of what may becalled uniform work papers this type of pre printed audit program is provided tothe audit staff who are expected to conduct the audit strictly according to thestandard instruction. His program may include standard verification programsfor the principal accounts or group of accounts.2-M.S.PThis program is also printed but covers special sections of work such as that oncash transactions and the detailed general work. Obviously such pre establishedprogram requires modification to make them applicable to specific situations.3-T.M.A.PSome auditors have the practice of preparing their own program for eachsituation as the meet it, relying on their own knowledge of auditing techniquesand their past experience to ensure that all essential procedures have beenincluded4-A.P.W.CLSome Auditors prepare their own program and in addition carry a more or lessextensive check list of auditing procedures form which they select those whichthe think are most applicable
ADVANTAGE AND DISADVANTAGE OF USING AUDITPROGRAMME Benefits derived from the audit programme… To obtain a degree of reasonable assurance that the fin statements are not affected by material misstatements and to make a conclusion on the truth and fairness of fin statements. To guide the audit staff in discharging their duties competently and with due care, i.e. on the nature, timing and extent of the procedures to perform. To provide evidence of proper planning and a record of the work done that conforms to auditing standards. To provide a basis for delegation and coordinating the audit work. To control the time spent on gathering sufficient appropriate audit evidence.ADVANTAGE OF AUDIT PROGRAMMESUPERVISION OF WORK:The editor can judge the efficiency of his audit team with the held of all auditprograms. He is in a position to know the progress of the work. He can see atany time that what part of the work has been completed and what remains to bedone.DIVISION / DISTRIBUTION OF AUDIT WORK:The division of audit works is very useful for the audit staff for maintaining thedifference of works among senior or junior clerks according to their ability andskill so that the work is divided to get better results.SYSTEMATIC UNIFORMITY OF WORK:Audit program helps in settling all the things in advance, so the systematicuniformity of work is necessary to achieve the desire.BASIC INSTRUMENT FOR TRAINING:Audit program is infect a training instruments for the audit staff and also veryuseful for the new auditors. It provides training and guidance to him. So it isrightly called the basic instrument for training for the staff at the time of need.
SOLID LEGAL EVIDENCE:Audit program and audit working papers are solid legal evidence of work doneby every assistant of the audit team. It can be presented in the court of law ifany action is taken against the auditor for negligence. These programmes andpapers proves that the auditor has used his skills and due care in the audit of thefirm so his liability can be reducedFIXATION OF RESPONSIBILITY:Audit programmes fixed the responsibilities of the staff. If any error or fraudremains undetected, the responsibility of negligence will fall on that particularassistant who has performed that job and no one can blame on each other.SEVERAL AUDIT MAY BE CONTROLLED:The auditor controls the audit of various companies at the same time. In theabsence of audit program he cannot supervise them effectively.EASY TRANSFER:The principle auditor can transfer to the any other person easily. If one assistantis unable to continue the work given to him it can be given to another person.Audit program guides him that what is done and what is remaining.FINAL REVIEW:Before signing the report, final Review is made and for this purpose alsoauditing program is very useful and any deficiency or missing in steps can beidentified and completed.USEFUL FOR FUTURE:The audit programme is very useful in the future. Or completion of an audit, itserves the purpose of audit record that may be useful for future reference. Incase of auditor is appointed for the same concern in any future time the auditorcan use the same audit programme with some changes.
Disadvantages of audit programEven though audit program has number of advantages, it is not free fromlimitations. Some of the major disadvantages of audit program are as follows:1. Audit Program Harasses To StaffsAll the staffs should perform task within the limitation given in audit program.So, staffs cannot use their knowledge and calibre which harasses to them.2. Possibility OF Being UnsuitableNature and size of business differs. So, the program which is prepared at thebeginning of the year remains unsuitable. Different organizations may havetheir own problems. So, similar type of program may not be applicable to all.3. Audit Program Increases the Chance of FraudStaffs of the client get information about the audit program in advance whichincreases the chance of committing frauds. Similarly, it harasses the audit staffsso they perform the work of audit carelessly which also increases the chance ofcommitting frauds.4. Audit Program Is Unsuitable To Small ConcernSmall concern has less transactions and work of audit can be completed in shortperiod of time. So, audit program is not essential to audit such concern.5. Exclusion of Problems of New TechnologyNew techniques and technologies are used in the work of accounting. Suchtechnology creates the problem in the work of audit but such problems andremedial measures are not included in the audit program.