An audit program is the auditor’s plan of action in a written form or a document.
The auditor should prepare a written program containing procedures needed to implement it. It should also contain the audit objectives. Detailed instructions should be included so that the assistants can properly implement the program. If the auditor’s staff follows this program well, it will be easy for the boss to control the proper execution of the same.
While preparing such an auditing programme the auditor has to decide to what extent he can really rely on the internal control system and internal check systems being used by the business unit. If there is a proper internal control system, the auditor need not check each and every transaction and item in detail as the occurrence and possibility of errors and frauds are scares.
If the auditor feels that the internal control system is not sufficiently reliable he or she must insist on production of appropriate reliable accounting evidences or supporting documents for every transaction entered in the books of accounts. The auditor may also decide the appropriate time allocation for different procedures to be followed, the number of assistants he or she can spare for the particular task.
The auditor, if the circumstances demand, may have to make changes in the plan if there are significant changes. In other words, the audit plan should be flexible enough.
In simple words, the audit programme, is a sort of time table containing the sequence in which the auditor wants to verify the books of accounts of an entity and the time he or she allots to each operation. An auditor should prepare for the audit programme for every audit especially in the case of a data of a large concern.
Development of an Audit Programme:
Internal control: Before preparing the audit program the auditor should study the internal control systems prevalent in the organisation and to what extend it is reliable. When the auditor is satisfied enough that the system found is reliable the auditor need not verify each and every item in details and he or she can just go for test checking.
Business of the client: There should be an indepth study of the business of the client, there should be enough study of the way the business functions its important features and the way it is conducted. The auditor needs to find enough information of the working of the business of the client so that it is easy for him or her to analyse the activities and each and every transaction of the financial statements.
Cost benefit: The cost analysis is an integral part of the audit program, the auditor cannot neglect the cost factor. Huge cost associated to the business which could be minimised to a certain extent, should be analysed by the auditor.
Assistants available: The auditor must analyse the amount or the volume of work. He or she should take into account in number of assistants to make available to complete this assignment.
Advantages:
The audit program conducted has several advantages attached to it.
It ensures that each and every transaction is accounted for and register is checked and verified accurately. There is a check on the progress of the work completed everyday.
There is a proper and systematic way for the proper allocation of time, coordination between the work done by different assistance can be easily done.
Audit Programme is suitable and helps to a great extent to big firms which are dynamic and large.
The auditor can see the day to day proceedings of the work. Audit programme maintains enough control over the work of the auditing staff.
Facilitates timely completion of work, with accuracy.
Conclusion:
Any vital and important task to be completed successfully needs proper planning, similarly, audit of a firm needs proper pre-planning before it is actually performed. Information required to perform a successful audit is first collected and gathered. Accounting system prevalent in the client’s business is studied thoroughly.
Auditor then studies and analyses the internal control systems predominant in the organisations and decides to what extent he can rely on the same. Appropriate accounting and auditing methods need to be followed to come at a conclusion which is accurate and presents a true and fair valuation of the business.
