Audit

Programme
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○ An audit programme is a detailed, written statement designed by

the auditor indicating the work to be performed by the audit
assistants, specifying the time limit for completion of work,
INTRODUCTI instructions and guidance to the audit staff.
ON ○ it is a tool for planning, directing and controlling the audit
work.
○ An audit programme is a detailed plan of the auditing work to be
performed.
○ It specifies the procedures to be followed in the conduct of
audit more efficiently.
○ The auditor outlines the whole procedure of audit from
beginning till the finalization of audit report.
○ Audit programme is generally contained in the audit notebook.
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Definition

○ Prof. Meigs
An audit programme as, “an audit programme is a detailed plan
of the auditing work to be performed, specifying the procedures
to be followed in verification of each item and the financial
statements and giving the estimated time required.”
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Characteristics of an Audit Programme

1. It is a set of procedures to be adopted to conduct the audit more efficiently.

2. It is a written scheme designed by the auditor.

3. It is a blue print of the audit work.

4. It facilitates delegation of work, based on the capabilities of audit staff.

5. It acts as evidence in future for the audit work being performed.

6. It specifies the work to be done by the audit staff, the manner and time limit for completion of the work.
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Objectives of
Audit Programme
1. To provide clear instructions to the audit assistants specifying the nature of work to be performed and
fixing the time span for completion of each work.

2. To facilitate coordination among various parts of audit work.

3. To ensure uniformity in the performance of audit work and to avoid duplication and repetition of work.

4. To attain a fair allocation of work among audit team.

5. To fix responsibility and accountability of each audit assistant.

6. To serve as a guide for planning the audit work in future.

7. To serve as evidence in future showing the date of completion of audit work, methods or procedures
undertaken, persons involved in completion of audit work etc.
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1. Name of the client.
2. Nature of operations and business of client.
Contents of 3. Review of system of internal check.
an 4. Date of commencement of audit work.

Audit Progra 5. Duration of audit work.

mme 6. Accounting system followed in client organization.

7. Review the report of the previous auditor.
8. Review the remarks, instructions or objections raised in the previous audit
report.
9. Examine the various ledger accounts and subsidiary books.
10. Examine the statutory books and registers, profit and loss account, and
balance sheet.
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1. Helps in Estimation and Division of Work: Audit Programme helps Advantage

in estimating the quantum of audit work in advance and also helps in s
dividing the work among the audit assistants based on their capabilities.

2. Helps in Fixation of Responsibility: It enables to fix responsibility on the audit

assistants by clearly defining the scope of work.

3. Helps in Future Planning: Audit programme serves as a basis for planning the audit
work for subsequent year.

4. Serves as a Guide: It serves as a valuable guide for the audit staff in execution of
the audit work for succeeding years.
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5. Valuable Evidence: It serves as an evidence for the work done as initials of those who have done
the particular work are appended to it.
The auditor can produce the audit programme as a proof when a charge of negligence
being brought upon him.

6. Uniformity: It provides for uniformity in audit work as the same work will be done every year.

7. Continuity: When an audit staff goes on leave others can continue the work by referring to the
audit programme, hence, audit programme provides for continuity of work.

8. Coordination: If facilitates coordination and helps in supervising the work of the audit staff.
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1. Mechancial: When audit work is conducted mechanically every year based
on the audit programme, it causes monotony and boredom to the auditor
and audit staffs.
2. No Quality in Work: The audit staff will be more interested to complete
Disadvantag the work in time rather than to maintain any standard in the work.
es 3. Loss of Initiative: Audit staff cannot take their own decisions and they are
compelled to comply with the audit programme. Hence, an efficient audit
clerk loses his initiative and interest as he cannot make any suggestions.
4. Rigidity: A rigid and inflexible audit programme cannot be laid for all
types of business. During the course of audit, new areas to be verified may
come to the notice of the audit staff. Unless the audit programme is
revised, such areas may escape from auditing.
5. Shelter for Inefficient Staff: Inefficient audit staffs conceal their mistakes
or weakness on the basis of audit programme. Hence, it provides shelter
for inefficient audit staff.
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1. Fixed audit programme

Types of Audit 2. Flexible audit programme
Programme
Another type

1. Audit programme for independent audit

2. Audit programme for internal audit

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AUDIT NOTE BOOK

• Audit Note Book is a register maintained by the audit staff to record
important points observed, errors, doubtful queries, explanations and
clarifications to be received from the clients.
• It also contains definite information regarding the day-to-day work
performed by the audit clerks.
• In short, audit note book is usually a bound note book in which a large
variety of matters observed during the course of audit are recorded.
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• The note book should be maintained clearly, completely and

systematically.
• It serves as authentic evidence in support of work done to protect the
auditor against any legal charge initiated against him for negligence.
• It is of immense help to the auditor in preparing audit report. It also acts as
a valuable guide for conducting audit for future years.
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Contents of General Information

Audit Note
• The nature of the business carried on and the important documents
Book
relating to the constitution of the business.
• The name of the client and the audit year.
• A list of books of accounts in use.
• Names of principal officers, their duties and responsibilities.
• Particulars of the accounting and financial system followed and the
internal check-in operation in the business.
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• Details regarding accounting and financial policies followed in the

business.
• A copy of the audit program.
• The technical terms used in the business.
• Notes and queries which might be required at a subsequent audit.
• The accounting method followed in the business.
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Special Matters to be recorded in the Audit Note Book
• Routine queries not cleared, i.e., missing receipts and vouchers, etc.
• Details of mistakes and errors discovered.
• The points raised during an audit, to which the attention of the auditor
must be drawn, i.e., failure of the company to comply with the provisions
of the Companies Act or the Memorandum of Association and other
legal requirements.
• Extracts from minutes books and contracts and other correspondence with
various government agencies, financial institutions, debtors, creditors, etc.
• The points to be incorporated into the audit report.
• The points which need further explanation and clarification, e.g., a change
in the basis of valuation of finished stocks or the computation of
depreciation, etc.
• Date of commencement and completion of the audit.
Materiality and
Audit Planning
and Performing
an Audit (SA
320)
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INTRODUCTION
○ Deals - with the auditor’s responsibility to apply the concept of
materiality in planning and performing an audit of financial statements.
○ This SA also deals with the requirements of determining materiality and
performance materiality when planning the audit, revision as the audit
progresses and documentation requirements.
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Credits
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