An audit program is a set of directions that the auditor and its team members need to follow for the proper execution of the audit. After preparing an audit plan, the auditor allocates the work and prepares a program which contains steps that the audit team needs to follow while conducting an audit. Thus, an auditor prepares a program that contains detailed information about various steps and audit procedures to be followed by the audit.
An audit program provides a basic plan for the audit team regarding the entity’s business, its size, how to conduct the audit, allocation of work among team members and the estimation of time within which it should complete the work.
It contains details regarding the relevancy of evidence, materiality level, risk tolerance, measure of the sufficiency of the evidence. Thus, programs enhance the accountability of the audit team and its members for the work performed by them.
An auditor may revise the audit program if he considers it necessary due to prevailing circumstances. The size of the entity, type of business or services in which entity deals, applicable laws, the effectiveness of internal controls, and various other relevant factors, also affect an audit program.
Thus, an auditor prepares an audit program according to its scope of work. The minimum essential work to be performed is the Standard Programme. However, there is no set audit standard program applicable in all the circumstances.
Audit working papers document the activities that the audit program performs. Audit working papers support the work performed by the auditor for providing assurance that the audit was performed in accordance with all the applicable standards on auditing (SA’s). It helps the auditor in the proper execution of audit work.
An audit program covers various steps of auditing in an audit program like the assessment of internal control, ascertaining accuracy and reliability of books of accounts, inspection, vouching and verification, valuation of assets and liabilities, scrutiny of accounts, presentation of financial statements, and submission of reports and related disclosures.
- An audit program helps in ensuring that all-important areas are considered while conducting the audit.
- An audit program helps an auditor in the allocation of works among its team members according to their skills and competency.
- It enhances the accountability of audit team members towards work performed by them
- An audit program also reduces the scope for misunderstanding among team members regarding the performance of audit work.
- It helps the auditor in checking the status of audit work, its progress, how much it is left for performance while conducting the audit.
- Auditor prepares audit working papers which contains a record of various audit procedure applied which serves as evidence against the charge of negligence.
- Audit program enables the auditor to keep a record of useful information specifically for future audit and references.
- Rigidity: There is no set standard audit program that can be applied in the case of every entity. However, programs differ for different types of entities. Every entity has its own problems. Therefore, we cannot apply for a single audit program in the case of all business
- Reduces the Initiative of Efficient Staff: A program reduces the initiatives of efficient and competent staff. Thus, staff members cannot make changes in the audit plan and cannot make suggestions to it.
- Audit Work becomes Mechanical: The program becomes mechanical when it ignores other aspects like internal control.
- Overlooking New Areas: A program may overlook the new areas. With the change in time and technology, new problems may arise which an audit program may not consider.