11-06-2011, 03:08 PM
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| Teenager | | Join Date: Jun 2010 Location: Lahore
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Program / Discipline: M.Com Class Roll Number: 182 | |
Audit Programmes and Procedures Chapter 11 - Audit Programmes and Procedures
* Audit Programme
* Kinds of Audit Programme
* Contents of Audit Programme
* Advantages of Audit Programme
* Disadvantages of Audit Programme Definition
Audit programme is a list of work to be done by an auditor. The time period is started for completing the work. The duties are assigned to audit staff. The procedure that will help to verify each time of financial statements. The duplication of work is avoided and an pace of audit work. The auditor is able to have control over the audit staff and their work. The cost of audit remains in line with the audit fee. The auditor can handle audit of many concerns at the same time. Every aspect of financial activities require audit program. The combination of all such programs is considered as master audit programme. The auditor can make changes from time to time in order to meet the requirements of nature and size of business. Kinds of Audit Programme
1. Standard Audit Programme This type of audit programme is preprinted and suitable for all purposes. It saves time and gives added assurance that no important procedure will be overlooked while in the opinion of some others, this type of audit programme is too much mechanical. Due to complexities in the business conditions system of accounting and internal control system, it is not possible to follow a standard audit programme.
2. Modified Standard Audit Programme These type of audit programme contain the usual audit procedures, common to most business and provide space for other specific procedures applicable to the business under examination. This modification of the audit steps and the insertion of the steps that are peculiar to the audit in questions, make the audit programme a modified standard audit programme.
3. Tailor-Made Audit Programme This is individually written programme prepared specially for each audit. It is known as tailor made because a tailor cuts the cloth according to the body of every person. The auditor should take care of such a programme so that no important steps is overlooked or missed. It lists the procedures to be followed on any specific engagement indication any departure from normal practices and specifying the extent of the test of transaction. Contents of Audit Programme 1. Name The audit programme contains the name of client. The auditor can write the name of business. There is a need of complete address of the concern in case of public limited company. 2. Objects The audit programme contains the objects of the business enterprise. There are various objects of any business unit. A small business has few objects while large companies have many objects. 3. Date The audit programme contains the date of start of an audit. The auditor can consult the client before fixing the audit date. It must be convenient to the management. The audit programme can show the details of audit work date wise. 4. Duration The audit programme contains the time limit of starting and completing the work. The duration of audit period may be one month. The size of audit work becomes the basis of duration. 5. Accounting System The audit programme contains information about accounting system. The auditor can examine the accounting system and procedure in operation. The understanding of accounting system helps to develop the audit programme. 6. Internal Check The audit programme contains the effectiveness of internal check system. The effective internal check is helpful for auditors. He can apply test checking due to proper internal check system. If the system is not good it increases the duties of audit staff. 7. Old Reports The audit programme keeps the contents of old audit report. The auditor can pay attention to old reports. The weakness reported in previous reports must not be repeated in present accounting records. It is the duty of the audit staff to note the performance of management. 8. Checking Books The audit programme contains the details of checking accounting books. The number of books kept is stated in the programme. The books are distributed among audit clerks so that whole data may be examined.
Advantages of Audit Programme 1. Supervision of Work The editor can judge the efficiency of his audit team with the held of an audit program. He is in a position to know the progress of the work. He can see at any time that what part of the work has been completed and what remains to be done. 2. Division / Distribution of Audit Work The division of audit works is very useful for the audit staff for maintaining the difference of works among senior or junior clerks according to their ability and skill so that the work is divided to get better results. 3. Systematic and Uniformity of Work Audit program helps in setting all the things in advance. So the systematic and uniformity of work is necessary to achieved the desire. 4. Basic Instrument of Training Audit program is infact a training instruments for the audit staff and also very useful for the new auditors. It provides training and guidance to him. So, it is rightly called the basic instrument for training for the staff at the right time of need. 5. Fixation of Responsibility Audit programmes fixed the responsibilities of the staff. If any error or fraud remains undetected the responsibility of negligence will fall on that particular assistant who has performed that job and no one can blame on each other. 6. Several Audit May be Controlled The auditor controls the audit of various companies at the same time. In the absence of audit program he cannot supervise them effectively. 7. Easy Transfer The principle auditor can transfer to any other person easily. If one assistant is unable to continue the work given to him it can be given to another person. Audit program guides him that what is done and what is remaining. 8. Final Review Before signing the report, Final Review is made and for this purpose also auditing program is very useful and any deficiency or missing in steps can be identified and completed. 9. Useful For Future The audit programme is very useful in the future. On completion of an audit. It serves the purpose of audit record that may be useful for future reference. In case of auditor is appointed for the same concern in any future time the auditor can use the same audit programmes with some changes. 10. Progress of Audit Work Audit programme is useful to note the progress of work. Audit programme is a timetable, which can show the work done on any particular date. The pace of work is going on with the passage of time. The adjustment can be made if there is more work and less time and vice versa. In this way work can be completed in time. 11. Supervision of Audit Staff Audit programme is beneficial for auditor. He can supervise the activities of audit staff. He can use the audit programme as basic of supervision. Every part of audit work can be complete as per schedule. He can control the activities of audit staff through observation and direction when the audit work can be complete in time. 12. Audit Staff Needed Audit programme is helpful to determine the number of persons needed to do the work. The staff requirement is essential for every auditor. The shortage of staff means slow progress. The exact number of senior and junior audit clerk can be determined. In this way an auditor is able to handle the audit work properly. 13. Same Work The benefit of audit programme is that new instructions are not issued due to change in staff. The nature of work remains the same. The audit clerks can know their job just by reading the written programme. The time is saved due to written instructions. 14. Time Table The benefit of audit programme is that work is complete with in stated time period, the saving of time means saving of labour. The saving of time means saving can control the cost of audit due to fixed time. He can arrange audit work of other business concerns. 15. Responsibility for Poor Work The benefit of audit programme is that auditor can fix responsibility for negligence. Audit programme is a timetable of whole audit work to be done by auditors. Every staff member is given some sort of duty to do the audit work. The staff is responsible for completing of work. The performance is noted and responsibility if fixed poor work. 16. Guide To Audit Assistants The merit of audit programme is that it serves as a guide to audit assistants. The junior audit staff can start and complete the audit work with the help of audit programme. There is no need to repeat the instructions every time. Moreover it serves as a guide for future. The new audit programme can be developed can be developed on the basis of old work. 17. Dealing with New Clients The merit of audit programme is that it helps to deal with client. The spare time of audit staff can be used for doing with new clients. The whole year time can be divided. The auditor can audit the accounts if various concerns under audit programme. 18. Proof for Audit Work Done The merit of audit programme is that auditor can use it as proof for work done. In court of law the auditor can avoid liability for negligence. Audit programme is a permanent record of an audit process. The audit programme shows the work performed date-wise. In this way he cannot be held responsible for carelessness. Disadvantages of Audit Programme 1. Not Comprehensive Auditors may have covered the whole fie but I cannot be said with certainty that all the necessary work has been done. 2. Rigidness Audit program looses its flexibility. While each business have a separate problems. So audit program cannot be laid down for each type of business. 3. No Initiative It kills the initiative of capable persons. The assistant cannot suggest any improvement in the plan. 4. Too Mechanical Such audit program is too mechanical that it ignores many other aspects like internal control. 5. Large Concerns / Not Suitable for Small Concerns Audit programme is helpful in large business concerns. It has been proved that audit program is not suitable for small business concerns. 6. New Problems Over Looked In the audit programme there is no chances to accept the changes with the passage of time new problems arise that may be over looked. 7. Changes The drawback of audit programme is that changes in it are not acceptable. The nature of activities of concern may change. There is a need to adjust the changes in the programme. A master programme cannot be drafted. 8. Revision The demerit of audit programme is that there is no revision in it. The business changes from year to year. The working may expand or contract. The audit programme requires adjusting itself to the changing circumstances. 9. Types The demerit of audit programme is that is not suitable for all types of business concerns. A small business may have few books of accounts. It is not necessary to prepare audit programming for small concerns. 10. Staff The accounting staff can know the working of audit. The auditor applies various methods for checking the accounting books. Having knowledge of auditing the accounting staff can devise means to record the transaction. In this way they can avoid their responsibility. 11. Negligence The demerit of audit programme is that it provides protection to inefficient audit assistant. The junior auditors can protect themselves due to weakness of audit programme. The clerks feel responsibility for the duties stated in the programme. 12. Errors The drawback of audit programme is that it may fail to located error. The errors of principles cannot be detected, as the double entry is complete in such case. No doubt the location of errors and fraud is the responsibility of management. But owner depends upon auditors to protect their rights.
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