Audit program is a list of work done by an auditor different author has defined as in different ways;
Audit program definition
Professor Meigs says that
“Audit program is a detailed plan of audit work to be performed, specifying the procedure to be followed in verification of each item in the financial statement and giving the estimated time required”.
Howard F Settler: says that
“Audit program is an outline of all procedures to be followed in order to arrive at an opinion concerning a client’s work financial statements”.
Meaning of Audit Program:
Audit program are lists of audit procedures to be performed by audit staff in order to obtain sufficient appropriate evidence.
Explain Audit Program:
Audit Program is prepared by an Auditor or his team. audit program is a list of procedures which is to be performed by Audit staff when they go for audit.
Purpose of Audit Programs.
A set of instructions to the audit team
- Assist with planning and performance of the audit.
- A means to control and record the proper execution of the audit work and also to review the audit work.
- A record of the audit procedures to be adopted, the audit objectives, timing, sample size and basis of selection of each criteria.
- Audit evidence to support the auditor opinion.
Types of Audit program
- Standardized audit programs.
Is a pre-prepared listing of objectives and tests which may be used in any audit.
A consistent approach to all audits. Reduce risks that procedures are omitted.
- Tailored audit programs
Some audit programs need to be tailored to the specific circumstances of an engagement as all clients are different. The design of the audit procedures to be followed match exactly to the actual system of the entity. Reference can be made specifically to particular procedures/documents.
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How Audit program is Prepared:
In preparing Audit Program the following should be given to attention:
- Scope and duties of an auditor.(you may also read scope of audit)
- Books of original entry, ledger and system of book keeping.
- System of internal check.
- Special provision in the legal documents affecting the auditor’s duties.
- General nature and routine of the business.
The scope of the contents of the audit program covers all the routine checking and vouching.
Audit program Contents:
The following contents or audit plan, are used in Audit Program; or we can say things To Be Included in Audit Programs
The audit program contains the name of client the auditor can write the name of business there is need of complete address of the concern in case of public limited company.
It contains the objectives of the business enterprise. There are various objects of nay business unit a small business have few objects while large companies have many objects.
It contains the time limit of stating and completing audit work the duration of audit period may be one month.
It contains the date of stat of an audit the auditor can consult the client before fixing the audit date it must be convent to the management .It shows the details of audit work date wise.
5. Accounting system:
It contains the information about accounting system .the auditor can examine the accounting system and procedure in operation the understanding of accounting system helps to develop the audit program.
6. Internal check:
The audit program contains the notes about the effectiveness of internal check system. The effective internal check is helpful for auditor. He can apply test checking due to proper internal check system if the system is not good it increases the duties of audit staff.
7. Old Reports:
It keeps the contents of old audit report. The auditor can pay full attention to old reports the weakness reported in previous reports must not be repeated in present accounting record it is the duty of the audit staff to the performance of management.
8. Checking Books:
It contain the detail of checking accounting books the number of books kept in stated in the program the books are distributed among audit clerk so that whole data may be examined.
Importance of Audit Program
Advantages of Audit Program :
1. Audit work progress:
It is helpful to note the progress of audit work. The adjustment is made if there is more work and less time and vice versa, in this way work can be completed in time.
2. Transfer of audit clerks:
It is useful for auditor to transfer the work of auditor to another clerk in case of emergency any audit clerk can go on leave. The auditor can ask another audit Clerk to count the work of the first clerk.
3. Audit staff supervision:
It is beneficial for auditor. He can supervise the activates of audit staff the can use the audit program as basis of supervision. Every part of audit work can be competed as per schedule. He can control the activities of audit staff through observation and direction when the audit work is going on.
4. Need of audit staff:
It is helpful to determine the number of person needed to do the work. The staff requirement is essential for every auditor. The shortage of staff means slow progress the exact number of senior and junior audit clerks can be determined. In this way an auditor is able to bundle the audit work properly.
5. Other advantages:
The other advantages are workload distributed, completion of work on time, guidance from senior auditor, work completed on time, negligence control, junior auditor may trained.
Disadvantages of Audit Program :
If audit program is not properly check out it will give the following disadvantage.
It is not suitable for small business concern because they keep a few books of accounts
2. No revision:
It need revision due to shrinking size of business concern. The revision of audit program is not possible the working of audit staff is affected due to rigid program.
3. Accounting staff tricks:
The auditor applies various methods for checking accounting books accounting staff can play trick in recording transaction after having knowledge of auditing. It discloses all details of audit work.
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