An audit programme is a detailed plan of work prepared by the auditor for the supervision and control of his assistants, before actually beginning the audit. Hence, an audit programme is a systematic detailed and written plan of the audit techniques to be adopted on the basis of which the auditor and his staff proceed with their auditing work.
The main objective of preparing an audit plan is to maintain a link between the various tasks involved in the audit work.
For example, before starting with the building work the building contractor considers various factors such as the plan of the building, the duration in which the work is to be completed the way in which it is to be proceeded with, the number of laborer's to be employed etc Similarly, an auditor makes a plan of the work to be done or constructs a framework of his programme, and proceeds with the auditing work within this framework
A few experts have defined audit programme as follows :
( 1 ) In the words of Howard Settler, " An audit programme is an outline of all procedures to be followed in order to arrive at an option concerning the client’s financial statements
( 2 ) As per Arthur W. Holmes. An audit programme is a flexible, planned procedure of examination.
( 3 ) According to W.W. Biggs. " An audit programme is a detailed plan of the auditing work to be performed, specifying the procedure to be followed in the verification of each item in the financial statements and giving the estimated time required.
( 4 ) According to Spicer and Pegler, " In order to bring in uniformity and to ensure that all that which needs to be done has been done, it becomes necessary to prepare a programme in the programme, the clerk responsible for a particular part of the work, signs against the same upon completion. In this manner, the employer can also get information about the progress of work and work still incomplete.
On the basis of the above definitions audit programme can be appropriately defined as follows: " In order to complete the audit of the accounts of the client in an efficient manner and within the specified time, while maintaining uniformity in work, the plan that is prepared for performing the work of the audit is known as an audit programme. ".
( 1 ) The audit programme should be descriptive so that all that needs to be done during the audit can be analysed. In the plan after each aspect of the workspace is left for the signature of the clerk assigned for doing the same.
( ii ) The plan is always in writing and is prepared by the auditor The main aim of the plan is to ensure that the work of the audit proceeds in an efficient manner is completed within the specified time, there is uniformity in the work done and ensuring that no part of the audit is left incomplete.
Objectives of Audit Programme
Objectives An audit programme is prepared with the following objectives
Preparing a specific framework for the audit work so that it is possible to complete the audit work within the specified period
( 1 ) Division of work among the assistants so that each person is aware of what he is supposed to do.
( H ) Being aware of the progress of work done by employees
( iv ) In case any employee leaves during the audit, then assigning the same work to the person replacing him
( v ) Removing the possibility of any work being left out.
( vi ) Fixing the responsibility of employees Types of Audit Programmes
The audit programme is of the following two kinds:
( 1 ) Standard Programme ( 2 ) Tailor-made Programme
( 1 ) Standard Programme :
An audit programme based on a standard format is known as a standard auditing programme. This document is used uniformly in all audits, and there is no need for the auditor to prepare a separate audit programme for each audit.
Such a programme is also referred to as a fixed or predetermined or a planned programme. Such a programme may be suitably modified in order to accommodate the specific problems of a particular business.
( 2 ) Tailor-made Programme:
A tailor-made programme is one that is prepared separately for each organisation keeping in mind the nature of business, nature of transactions, method of accounting, the efficiency of internal control etc. Such a programme is more practical and flexible as compared to a standard programme.
Advantages of an Audit Programme
The following are the advantages of having an audit programme
( 1 ) By making an audit programme, the auditor assigns work to his staff according to their abilities so that the work can be completed fast and well since a person who is adept in his work does the work very quickly
( 2 )The responsibility of each employee is determined on the basis of the programme. Hence, every person does his work with a lot of caution and diligence since, in case of there being an error, he shall be held responsible.
( 3 )The audit programme also functions as a kind of a progress chart, Due to there being a written programme, the auditor can assess the progress of the work being done by his employees from time to time. He can find out what all has been done and what still remains to be done. By doing so he can also examine the efficiency of his employees.
( 4 ) The audit programme for a year can be prepared very easily by looking into the audit programmes prepared for the past years. This has two benefits. It ensures uniformity in the audit work, and it prevents unnecessary waste of time in formulating an audit programme from scratch.
( 5 ) If clearing the course of the audit due to any reason any employee has to go on leave, or resigns, then it is not difficult for another person to take over the work as the audit programme serves as his guide. Hence, the new incumbent can easily complete the work by following the audit programme.
( 6 ) In case of any dispute between the client and the auditor, and a charge of negligence being levied on the auditor, then the auditor can produce the audit programme in the court as proof in his defence.
( 7 ) By working according to a predetermined plan, many of the problems that may crop up while doing the work are solved automatically. Hence, the unnecessary loss of time in thinking and understanding things can be saved.
( 8 ) Many organisations can be audited simultaneously and efficiently since the audit programme makes it clear that what is to be done and how many people and how much time is required for doing the same. This information makes it possible for the auditor to conduct the audit of several organisation simultaneously.
( 9 )By having a prior written programme, for the audit work, no field of the examination remains untouched and hence the auditor is satisfied that a complete examination has been conducted.
( 10 ) Having an audit programme facilitates control over the audit work since the division of work and responsibilities are specified beforehand. This increases the efficiency of the audit staff and reduces the chances of negligence and errors.
Disadvantages of an Audit Programme
The following are the main disadvantages of having an audit programme :
( 1 )Since the work of the audit is completely according to the audit programme, the staff does the work mechanically which leads to monotony and the staff become negligent and inefficient in doing their work.
( 2 ) Once an audit programme has been made, the employees of the auditor have to work according to the audit programme. Hence, this does not give them an opportunity to display their capability and intelligence. As a result, capable employees also lose their enthusiasm for doing the work.
( 3 ) Due to uniformity in the audit, the employees of the organisation are already aware of the aspects being looked into. Hence, they do their work in a pre-planned manner, and the moral pressure of the audit on the employees is greatly reduced.
( 4 ) Having an audit programme makes the work monotonous and mechanical. This makes the detection of frauds even more difficult since doing so requires a very imaginative and thorough examination.
( 5 ) Since the audit programme is formulated in advance, it becomes very difficult to make changes in it in accordance with changes in circumstances. Hence, it lacks flexibility Audit Process and Audit.
( 6 ) The same kind of programme cannot be applied to every business It becomes necessary to change the audit programme in accordance with the structure of the business. Hence, the same audit programme cannot be used for every organisation all the time.
( 7 ) Inefficient auditors try to cover up their efficiencies by telling upon the audit programme. If an auditor is negligent in doing his work, then he tries to defend himself by showing the audit programme. The audit programme is proof that the auditor has done all his work, and hence his inefficiency cannot be proved.
Remedies or Elasticity in Audit Programme
The above-mentioned disadvantages of an audit programme make it amply clear that the audit programme should not be rigid.
In other words, the same audit programme cannot be used for the audit of every organisation since in reality the way of working and circumstances of each organisation are different. hence, an audit programme will be useful only when there is scope for making alterations in it in accordance with the change in circumstances.
It is also appropriate that in order to motivate competent employees, suggestions based on their experience should also be incorporated into the programme. Appropriate alterations and additions make the audit programme more flexible and are also helpful in the successful completion of the audit work. hence, the audit programme should always be flexible otherwise there is a danger of the audit work becoming mechanical in nature.
The auditor should always consult his subordinates. He should listen to their problems and take proper steps to remove the same after taking due advice from them. He should take care that the work of his subordinates does not become mechanical.
He should make it clear to his staff that the audit programme is only for their guidance. In case the subordinates at any point, find the programme inappropriate, they may make the necessary changes in it.
However, it should be kept in mind that there should not be too frequent changes in the audit programme, otherwise it will defeat its objective.