CA Durgesh Kabra
An auditor prepares a plan after the selection of senior and junior staffs allocating the jobs to them, mentioning when to start, how to do the work etc. This plan is known as audit program. An auditor should include all the procedures in written form, objectives of each sector and all the directions which are to be given to the staffs which helps to control their works and helps to implement such programs into action.
Things Which Are To Be Included In Audit Programs
Audit program is a detailed program which helps to guide and control the junior staffs. Audit program classifies the work of junior staffs which helps to complete the audit task without leaving any points. Audit program is prepared all the programs, nature and size of business, internal check and internal control.
Following are the facts regarding audit program:
- Audit program is a detailed work plan which includes the time of doing work and how to do the works.
- Audit program includes audit procedures
- Audit program estimates the duration to complete the audit task
- Senior staffs prepare audit program to junior staffs on the basis of nature of business
- Generally accepted points are included in the audit program
- Junior staffs put tick marks in the completed tasks
- Detail information of works of all the junior staffs like audit of bank/ cash book, purchase book, sales book etc.
- Auditor should prepare audit program considering the nature of client.
- Separate list of work assigned to assistant should be prepared by the auditor.
- Audit program should fix the time period to complete jib assigned to the assistants.
- Assistant should sign after the completion of his/her job.
After the introduction of compulsory process of Peer Review into mechanism for categorized Practicing Unit it is one of the essential parts for clear Peer Review Report.
As the Audit period is in peak now to facilitate audit procedures the following article on Audit Programme and various checklists with reference to relevant matters will stand handy and useful to one and all.
In my earlier share on Checklist on Working Papers with reference to Standards on Auditing i.e. general checklist of audit analysis/documentations/evidence also facilitate easy understanding on documentation.
SUMMARY POINTS OF AUDIT PROGRAMME:
- Appointment letter and the relevant resolution for the appointment.
- Terms of the engagement including reports required and manner of determining audit fees.
- System of book-keeping and the list of the books of accounts maintained by the entity.
- Particulars of the promoters,Directors and their powers.
- Names of persons who write the books of accounts and other authorised officers
- Memorandum and Articles of Association, Partnership Deed as applicable.
- Details of business of client and its accounting systems by reviewing and assessing information on:
- nature of business of the entity
- Internal control system including owner/manager controls.
- Statement of Profit and Loss account, Balance sheet, Auditors’ and Directors’ reports of the previous year and the reports of internal auditor
- Analytical review procedures in order to :
- identify areas of accounts which are important because of their size
- highlight unusual or unexpected figures or relationships in the accounts
- design audit test which concentrates on important and unusual items
- obtain sufficient audit assurance to allow the reduction or even elimination of detailed testing in some areas
- Assessment of audit risk by using the professional judgement and audit procedures to ensure that it is reduced to an acceptable low level
- Preliminary estimates of materiality for the audit as a whole.
- Class of accounting transactions which are relevant and to decide the type of testing and samples.
- Selection of representative samples.
- Compliance tests to evaluate the reliability of key controls.
- Material weaknesses in the operation of key controls of management.
- Performance of analytical review procedures, substantive tests of detail to obtain sufficient, relevant and reliable audit evidence for each audit objective.
- Fundamental accounting assumptions, i.e,. consistency, going concern and accrual basis of accounting are followed by the client in the preparation and presentation of financial statements.
- Disclosure of change in an accounting policy which has a material effect.
- Audit report is received from all the Branch Auditors and any reservation made by the branch auditor is appropriately dealt with in the finalisation of accounts.
- Working papers contain all audit evidence, and are cross-referenced.
- Summary of work done, problems, important judgements and audit conclusions.
- Review by Senior in charge of work of all assistants, audit programme followed and work performed as per time schedule.
- Updation of audit working papers including permanent records.
- Review of unadjusted errors to determine whether individual and aggregate effect is material.
- Compliance with legal and regulatory requirements.Compliance with all mandatory Accounting Standards issued by the Institute.
- Post balance sheet events.
- Formulation of draft audit opinion.
- Comparison of budgeted time to actual and reasons for major variations.
- Complete staff evaluation forms.
- Planning of next year’s audit.
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