Audit Programme: Advantages and Disadvantages of Audit Programmed

Having fixed up the audit scope and gained knowledge over the business, accounting and internal control system, the auditor needs to draw u a plan of action. The plan of action is called audit programme. Professor Meigs defines 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 in the financial statements and giving the estimated time required.” Another writer while dealing with the objects of Audit Programme states: “An audit programmed consists of the procedure undertaken or the particular work done by an accountant.. in carrying out an audit. It is description, 11 memorandum or an outline of the work to be done, prepared by an auditor for the guidance and control of the assistants. It provides a guide in arranging and distributing the work and in checking against the possibility of omission.” A specimen of such an audit programme is given.

  1. There is a complete programmed on the file from which the items to be complicated by a particular junior are ticked off and thus the junior knows what he has to do and by what date each. item is to be completed.
  2. In other cases, the senior chalks out a programme for each clerk according to the nature of the business of the client. In this case there is no previous chalked-out programme.
  3. In the third case, the senior never prepares a programme in advance but may allow it to grow as the work progress.
  4. While preparing the audit programme the auditor should bear in mind two points, viz. The points which are common to all audits and the special points relating to the particular audit. The example of the first is the verification of assets while in the second case payment of insurance policies, annuities, surrender value, tec. In the audit of insurance companies. In other words it should be a Tailor-Made Audit Programmed.”

Each Audit clerk should sign for the work he has performed so that the responsibility may rest upon him for the work he has done. This is very important.

Advantages of Audit Programmed

The advantages of such an audit programme may be outlined as below:

  1. Ensure bout work

It ensures that all necessary work has been done and nothing has been omitted.

  1. Progress of work

The auditor is in a position to know about the progress of the work done by his assistants.

  1. Uniformity of work

A uniformity of the work can be attained as the same programme will be fooled at subsequent audits.

  1. Division of work

Work of the audit can be divided amongst the different juniors who will be responsible for their work. In case a clerk goes on leave, his work can be resumed by another clerk who is in a position to know what work has already been done.

  1. Work of various grade

It simplifies the allocation of work to various grades of articled and audit clerks.

  1. Defend him in court

In case of change of negligence against the auditor for not having done some work, the auditor can defend himself that the work had been done by him or his assistant who had duly signed the audit programme.

  1. Guidance to audit clerk

It is a kind of guidance to the audit clerk for the work ahs to perform. Thus it is a kind of assurance to the auditor that the junior will not overlook essential points while checking the accounts.

  1. Fix the responsibility

In case of nay fraud or error has remained undetected; the responsibility for negligence can be fixed on the clerk who had performed that work as his initials are put on the audit programmed.

  1. Facility to review

It facilitates the final review before the report is signed.

  1. Useful for new audit clerk

For a new clerk the audit programme is a guide to his duty.

  1. Basis for planning

It is a useful basis for planning the programmed for the subsequent year.

Disadvantages of Audit Progrtamme

There are, however, certain disadvantages of such an Audit programme, which may be detailed below

  1. Loss of initiative

An efficient clerk loses his initiative because he adheres to the protramme which has been fixed for him. He may not make any suggestion.

  1. Not cover the whole work

Even if the audit programme is well drawn up, it may not cover everything that might come up during the course of audit.

  1. Mechanical nature

The audit programmed may be followed mechanically year after year though some changes in the routine or internal check might have been introduced by the client. As a matter of fact the audit programmed for each new audit should be an improvement over the precious year according to experience.

  1. Rigid programme

Each business may have a separate problem of its won and hence a rigid programmed cannot be laid down for each type of business.

  1. Small concern

Drawing up of an audit programmed may be unnecessary for a small concern.

  1. Work entrusted

The Audit clerk may regard the work entrusted to him according to the programmes as the maximum work to be done by him.

These disadvantages can be overcome by impressing upon the audit clerk that the audit programme is only a guidance and he should use his initiative and intelligence during the course of audit. He should be encouraged to make suggestions. Moreover, the audit programmes should be modified from time to time and made up-to-date according to experience and changes made in the business.

Leave a Reply

Your email address will not be published.