Q. Discuss various types of audit programmes. What are the points to be kept in mind while modifying audit programme.
Ans. An Audit programme is a flexible, planned procedure of examination. Audit programme are of following two types.
(1) Standard Programme: An audit programme based on 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 fixed or predetermined or 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 which is prepared separately for each organisation keeping in mind the nature of business, nature of transactions, method of accounting, efficiency of internal control etc. Such a programme is more practical and flexible as compared to a standard programme.
Every auditor prepares an audit programme according to his convenience and keeping in mind the nature of business. The success of an efficient auditor depends largely upon the audit programme. Hence, the auditor should formulate the audit programme very carefully. While preparing an audit programme the following things must be kept in mind:
1. In Writing: The audit programme should always be in writing in order to avoid any misunderstandings between the auditor and his employees in the future. When there is a written audit programme the auditor’s staff need not enquire again and again about the work to be performed by them.
2. Clarity: While drafting the audit programme it should be ensured that it is simple and clear so that every person concerned with the programme can understand it easily. Ambiguity in the programme results in hindrances in the audit work and waste of the time and efforts.
3. Division of Work: The audit programme should be in accordance with the departments of the organisation so that work may be assigned and responsibility may be fixed among the staff on the same basis. While dividing the work the auditor should be completely aware the level of competence of his staff, since only then he will be able to assign work in accordance with the capabilities of the person. The division of work should be done keeping the business of the organisation and various other aspects of the work to be done in mind, so that the work may be completed successfully and no part of the work escapes examination by the auditor.
4. Flexibility: The audit programme should be flexible, so that in case of a change in circumstances, there is no problem in altering the programme. During the course of the audit, some circumstances do arise due to which work cannot be proceed according to the plan and minor deviation have to be made. Hence, the programme should be such that minor alterations can be made in it.
5. Policies and Provisions: While formulating the audit programme, the related policies and provisions having bearing on the audit work should be kept in mind, such as, Memorandum of Association and Articles of Association in the case of a company and the partnership deed in case of a partnership concern. In order to prepare a good audit plan it is necessary that the books of accounts being maintained by the organisation, the method of accounting being used, internal check system etc. be kept in mind and efforts should be made to reduce the deficiencies in the same.
6. Object Oriented: The audit programme should be in accordance with the objectives of the organisation so as to maintain co-ordination in the work of the organisation and complete the audit smoothly and within the specified time. Unless the audit programme has these qualities, it is of no practical use.
7. Previous Reports: While drafting the audit programme the final accounts and auditors reports of past years should be looked into, since by doing so many facts which are important from the point of view of the audit will come to light.
8. Department–wise: A separate audit programme should be prepared for each department and sub-department of the organisation. Apart from this different audit programmes should also be prepared depending upon the nature of work. For example, different audit programmes should be prepared for cash, purchases, sales etc. By doing so one can obtain important information and explanations from the employees of the organisation in a smooth manner.
No comments:
Post a Comment