Audit Programme

An audit programme is a set of instructions which are to be followed by the auditor for the proper execution of an audit. After the audit plan has been developed, a detailed audit programme is formulated and written. It would contain the various steps and procedures that would be required for the audit process. It would also carry the measures which are typically employed to determine what, and how much evidence must be gathered and evaluated. The responsibilities of the entire audit team would be laid down in the Audit Programme in order to carry out different tasks. This article states the various aspects of the Audit Programme.

Overview

An audit programme offers a basic plan for the audit team concerning the entity's business, its size, the procedure to conduct the audit, allocation of work amongst the team members and the time estimate within which the audit must be completed. It would contain information regarding the relevancy of pieces of evidence, materiality level, risk tolerance, the measure of the sufficiency of the evidence. Therefore, audit programmes are created to enhance the accountability of the audit team and its members for the work performed by them.

An auditor may choose to revise the audit programme if it seems necessary due to prevailing circumstances. An audit programme would be influenced by the size of the entity, type of business or services the entity operates in, the effectiveness of internal controls, applicable laws, and other multiple relevant factors. Thus, an audit programme is prepared by an auditor as per the scope of the work.

Standard Programme & Audit Working Papers

The minimum essential work that is to be performed is the Standard Programme. However, a set audit standard programme applicable to all the circumstances does not exist. The Audit Working Papers document the activities that are performed by the audit programme. Audit Working Papers support the work performed by an auditor and provides assurance that the audit was conducted in accordance with all the appropriate and applicable standards on auditing. It assists the auditor for the proper execution of the audit work. Therefore, an audit programme includes various steps of auditing in an audit programme such as the assessment of internal control, ascertaining accuracy and the reliability of books of accounts, vouching and verification, inspection, valuation of assets and liabilities, presentation of financial statements, scrutiny of accounts and the submission of reports and related disclosures.

Inclusions in an Audit Programme

The following should be evaluated before the formulation of an audit programme.

The Appointment Letter and the appropriate resolution for the appointment.
The terms of the operation which includes the reports required and the manner of determining the audit fee.
The system of bookkeeping and the list of the books of account as maintained by the entity.
The particulars of the Directors, Promoters and their powers.
Names of the individuals who maintain the books of accounts and other authorised individuals.
The Memorandum of Association, Articles of Association and Partnership Deed as applicable.
Details of the business of the client and its accounting systems by assessing and reviewing the information on the following:
- Nature of business of the entity
- Internal Control System as well as the Manager controls
The statement of profit and loss account, balance sheets, auditors' and directors' reports of the prior year and the reports of the internal auditor.
Analytical review procedures to:
- Identify the areas of accounts which are essential due to their size.
- Highlight the unusual figures or relationships in the accounts.
- Design audit test that focuses on critical and unusual items.
- Obtain sufficient audit assurance to permit the reduction or maybe, the elimination of thorough testing in certain areas.
The assessment of audit risk by using professional judgement and the audit procedures to make sure that it is decreased to an acceptable low level.
The preliminary estimates of materiality for the audit as a whole.
The class of accounting transactions that are relevant and to make a decision on the type of testing and samples.
Selection of representative samples.
Test of compliance in order to evaluate the reliability of critical controls.
Material weaknesses in the operation of the critical controls of management.
The performance of the analytical review procedures, substantive tests of details to attain sufficient, reliable and relevant audit evidence for each audit goal.
Fundamental accounting assumptions
Disclosure of the change in an accounting policy that would have a material effect.
The audit report from all the Branch Auditors and any reservation made by a branch auditor which is appropriately dealt with in the finalisation of accounts.
The Working Papers that contain all the audit evidence and are cross-referenced.
Summary of the work done, issues, significant judgements and audit conclusions.
Review by a senior in charge of all the work done by assistants, audit programme followed and the work performed as per the schedule.
Updation of the audit working papers along with the permanent records as well.
Review of the unadjusted errors in order to determine if the individual and aggregate effect is material.
Compliance with the legal and regulatory requirements and with all mandatory accounting standards as issued by the Institute.
Post balance sheet events
Formulation of the draft audit opinion.
Comparison of the budgeted time to actual time and the reasons for significant differences.
The evaluation forms of the complete staff.
Planning of the next year's audit.

Advantages of Audit Programme

The following are the advantages of an audit programme.

An audit programme helps to ensure that all the critical areas are covered during the audit appropriately.
It helps to distribute work among the members of the audit team and assistants as per their level of competence and experience.
An audit programme gives instructions to the audit team and decreases the scope for misunderstanding.
It helps to fix the responsibility for the work done amongst the audit team as the work done can be traced back to the individual in the auditing staff.
It helps to assess the progress of work by ascertaining the part of the audit work that has been completed against how much is left in order to complete the audit successfully.
An audit programme serves as an evidence against a charge of negligence.
An audit programme also serves as an audit record that may come into use for future references once the audit is completed successfully.

Disadvantages of Audit Programme

The following are the disavantages of Audit Programmes.

Rigidity: An audit programme does not possess the advantage of being flexible as the same programme cannot be used for different types of organisations. Every business or entity has the separate and unique issues that they face. Therefore, a single or same audit programme cannot be laid down for every type of business.
Decreases the Initiative of Efficient Staff: An audit programme does nothing to promote the initiative of capable individuals. Assistants and team members would not be able to suggest any improvement in the set plan.
Mechanical Audit Work: An audit programme is considered mechanical that it ignores various other aspects such as internal control.
Overlooking New Areas: As time passes, new problems or issues may arise during the audit, and they may be overlooked in the Audit Programme.

Remedy for Disadvantages

The following are the remedies that can be used against the disadvantages of an Audit Programme.

The remedy for such situations would be to increase the flexibility of the audit programme. It should be flexible enough to include changes and stay open for improvements.
The audit team that conducts the audit should be encouraged to bring the attention of the auditor to any defects or mistakes in the audit programme.
The audit staff should be encouraged to explore unusual transactions thoroughly without the audit programme holding them back from doing so.

Differences between Audit Plan and Audit Programme

The following are the differences between an Audit Plan and an Audit Programme.

Audit Plan	Audit Programme
An Audit Plan lays down the strategies for the audit that has been followed for conducting an audit. This would include the identifying of areas where specific audit consideration and skills required, gain the knowledge of business and so on.	An Audit Programme is an outline of the way the audit is to be conducted. This would include the allocation of specific works to particular individuals on the audit team and the timeline of completing the work and the audit.
Audit Plans are made to cover the following among other multiple things: Acquire the knowledge of relevant accounting systems, policies and internal control procedures. Establish the expected degree of reliance to be kept on internal control. Determine the nature, timing and the extent of the audit procedure that is to be performed. Co-ordinate the work that is required to be implemented.	An audit programme lays down the following procedures for an audit that has to be followed: Evaluation of the internal control Ensure the arithmetical accuracy of the books of accounts. Vouch for every transaction Verify and evaluate the assets and liabilities. Ledger scrutiny Check the overall disclosure and the presentation of all the items in the final accounts. Prepare and submit the audit report.

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