1- What do you mean by Audit programme discuss its process?

An audit programme is a set of instructions which are to be followed by the auditor for the proper
execution of an audit. After the audit plan has been developed, a detailed audit programme is
formulated and written. It would contain the various steps and procedures that would be required
for the audit process. It would also carry the measures which are typically employed to determine
what, and how much evidence must be gathered and evaluated. The responsibilities of the entire
audit team would be laid down in the Audit Programme in order to carry out different tasks. This
article states the various aspects of the Audit Programme.

An audit programme offers a basic plan for the audit team concerning the entity’s business, its size,
the procedure to conduct the audit, allocation of work amongst the team members and the time
estimates within which the audit must be completed. It would contain information regarding the
relevancy of pieces of evidence, materiality level, risk tolerance, the measure of the sufficiency of
the evidence. Therefore, audit programmes are created to enhance the accountability of the audit
team and its members for the work performed by them.

An auditor may choose to revise the audit programme if it seems necessary due to prevailing
circumstances. An audit programme would be influenced by the size of the entity, type of business
or services the entity operates in, the effectiveness of internal controls, applicable laws, and other
multiple relevant factors. Thus, an audit programme is prepared by an auditor as per the scope of
the work.

Process of Audit Programme

Step 1: Planning

The auditor will review prior audits in your area and professional literature. The auditor will also
research applicable policies and statutes and prepare a basic audit program to follow.

Step 2: Notification

The Office of Internal Audit Services will notify the appropriate department or department personnel
regarding the upcoming audit and its purpose, at which time an opening meeting will be scheduled.

Step 3: Opening Meeting

This meeting will include management and any administrative personnel involved in the audit. The
audit's purpose and objective will be discussed as well as the audit program. The audit program may
be adjusted based on information obtained during this meeting.

Step 4: Fieldwork

This step includes the testing to be performed as well as interviews with appropriate department
personnel.

Step 5: Report Drafting

After the fieldwork is completed, a report is drafted. The report includes such areas as the objective
and scope of the audit, relevant background, and the findings and recommendations for correction
or improvement.
Step 6: Management Response

A draft audit report will be submitted to the management of the audited area for their review and
responses to the recommendations. Management responses should include their action plan for
correction.

Step 7: Closing Meeting

This meeting is held with department management. The audit report and management responses
will be reviewed and discussed. This is the time for questions and clarifications. Results of other
audit procedures not discussed in the final report will be communicated at this meeting.

Step 8: Final Audit Report Distribution

After the closing meeting, the final audit report with management responses is distributed to
department personnel involved in the audit, the President, Provost, and Chief Financial Officer, and
CWRU’s external accounting firm.

Step 9: Follow-up

Approximately six months after the audit report is issued, the Office of Internal Audit Services will
perform a follow-up review. The purpose of this review is to conclude whether or not the corrective
actions were implemented.

2- Explain various advantages and limitation of Audit

programme?

An audit program is a set of directions that the auditor and its team members need to follow for the
proper execution of the audit. After preparing an audit plan, the auditor allocates the work and
prepares a program which contains steps that the audit team needs to follow while conducting an
audit. Thus, an auditor prepares a program that contains detailed information about various steps
and audit procedures to be followed by the audit.

An auditor may revise the audit program if he considers it necessary due to prevailing circumstances.
The size of the entity, type of business or services in which entity deals, applicable laws, the
effectiveness of internal controls, and various other relevant factors, also affect an audit program.

Thus, an auditor prepares an audit program according to its scope of work. The minimum essential
work to be performed is the Standard Programme. However, there is no set audit standard program
applicable in all the circumstances.

Advantages of the Audit Programme

1. An audit program helps in ensuring that all-important areas are considered while conducting
the audit.

2. An audit program helps an auditor in the allocation of work among its team members
according to their skills and competency.

3. It enhances the accountability of audit team members towards work performed by them
4. An audit program also reduces the scope for misunderstanding among team members
regarding the performance of audit work.

5. It helps the auditor in checking the status of audit work, its progress, how much it is left for
performance while conducting the audit.

6. Auditor prepares audit working papers which contains a record of various audit procedure
applied which serves as evidence against the charge of negligence.

7. Audit program enables the auditor to keep a record of useful information specifically for
future audit and references.

Disadvantages of Audit Programme

Rigidity: There is no set standard audit program that can be applied in the case of every
entity. However, programs differ for different types of entities. Every entity has its own
problems. Therefore, we cannot apply for a single audit program in the case of all business
entities.

Reduces the Initiative of Efficient Staff: – A program reduces the initiatives of efficient and
competent staff. Thus, staff members cannot make changes to the audit plan and cannot
make suggestions for it.

Audit Work becomes Mechanical: The program becomes mechanical when it ignores other
aspects like internal control.

Overlooking New Areas: A program may overlook the new areas. With the change in time
and technology, new problems may arise that an audit program may not consider.

3- Write short notes on various types of Audit programme?

Fixed Audit Program

A fixed audit program is a set of standardized instructions that need to be followed by the
auditor while conducting the audit. It includes all possible audit procedures to be followed
during the audit although all of them may not be applicable in a situation. A fixed audit
program aims to take care of every possible audit situation that may arise during an audit.

The disadvantage of the fixed audit program is that it is very rigid and nothing is left to the
discretion of the audit team. Also, it is difficult to follow the same audit program even in the
same organization over the years, as the conditions in the organization are likely to change.

Flexible Audit Program

A flexible audit program is one that does not prescribe the exact audit procedure to be
followed by the auditors while conducting an audit. It simply gives an outline of the scope,
nature, and limitations of the audit assignment to be conducted. Also, the nature of work to
be performed by each person of the audit staff is not predetermined under it. The auditors
decide most of the things as the work proceeds and the reliability of procedures and internal
control system become known to the auditor.

Thus, it allows the auditor to develop, adapt and modify the program according to the
situation. Also, there is a scope for some initiative by the audit staff if the situation so
requires. However, it is possible that some important audit procedures may not be followed.

Types of Audit Program

Not all audit guides are the same. They vary in flexibility, and they could either be standard
industry programs, specific to one enterprise, or more generalized. Some programs are
focused more on complying with current regulations. Other types are standardized and can
be applied to many firms operating within the same niche.

1 – Standardized Audit Program

It is the simplest program. Unlike specific versions, the main goal of standardized programs
is to offer a standard reference that will be used in an area. These documents are not
devised by a specific company but often by corporate institutions.

For example, a corporate alliance focused on the fintech industry could release a new audit
program. It would determine what steps are necessary to consider a company fit to operate
in this market.

All other companies similar to this organization could then use it as a guide. Other
companies can either devise their plans or follow the same standards. Companies who
choose a customized and unique program take into account the specificities of their
businesses,

2 – Tailored Audit Program

The tailored program is the opposite of the standardized version. It takes into account the
specificities of the company and builds from there.

Due to the specificity of this type of audit, guides vary from business to business. Unlike its
more neutral counterpart, it is devised by people inside the company, and it takes its goals,
mission, and culture into account. In other words, this program will not be useful if applied
outside the firm.

3 – Compliance Audit Program

Compliance audit plans focus solely on following compliance rules. It’s the kind of program
that will determine all the actions that a third-party auditor will have to follow to determine
whether a business is following the current regulation imposed by the government.

It is one of the most vital plans in highly regulated areas such as finance. If companies fail to
create proper compliance programs, they get fined and face hurdles from the regulatory
agencies.
 4 – Fixed or Flexible Audit Program

Audit guides are further classified based on whether they are fixed or flexible. A fixed
program is very rigid and does not allow for changes. It is more common in tailored audits. It
looks specifically into situations that affect the company. There is no need to change such a
guide. Because right from the inception, it is tailored to fit the business.

However, for flexible audit programs, the auditor gets only an outline of the scope and
procedures. In this case, the auditor has more freedom to determine how the work will be
done. Auditors have room to modify parts of the program as they see fit. Such a practice is
more common in standardized audits that need more flexibility. These then can be applied
to a wide range of firms across sectors.

 Fixed Audit Program

A fixed audit program is a set of standardized instructions that need to be followed by the
auditor while conducting the audit. It includes all possible audit procedures to be followed
during the audit although all of them may not be applicable in a situation. A fixed audit
program aims to take care of every possible audit situation that may arise during an audit.

The disadvantage of the fixed audit program is that it is very rigid and nothing is left to the
discretion of the audit team. Also, it is difficult to follow the same audit program even in the
same organization over the years, as the conditions in the organization are likely to change.

 Flexible Audit Program

A flexible audit program is one that does not prescribe the exact audit procedure to be
followed by the auditors while conducting an audit. It simply gives an outline of the scope,
nature, and limitations of the audit assignment to be conducted. Also, the nature of work to
be performed by each person of the audit staff is not predetermined under it. The auditors
decide most of the things as the work proceeds and the reliability of procedures and internal
control system become known to the auditor.

Thus, it allows the auditor to develop, adapt and modify the program according to the
situation. Also, there is a scope for some initiative by the audit staff if the situation so
requires. However, it is possible that some important audit procedures may not be followed.

4- What do you mean by audit documentation, discuss its

purpose?

Audit documentation, also known as audit working paper, is the record of procedures auditors
perform, relevant audit evidence obtained during their audit work and the conclusion they form
based on the audit evidence gathered. Audit documentation could be stored in the form of paper,
electronic or other types of media.

It is important for auditors to have proper documentation of their audit work so that it can be used
as evidence of the work done to support the audit opinion they form. It also assists audit team
members for the whole audit process, starting from the planning stage until the end of the audit
engagement.

Purposes of Audit Documentation

Audit documentation can serve many purposes to auditors including being as evidence of their work
and conclusion, helping team members in performing audit work including supervision and review,
etc.

According to ISA 230, audit documentation serves a number of purposes as included in the table
below:

Purposes of Audit Documentation

It provides evidence of auditors’ basis for a conclusion about the achievement

1
of the overall objective.

It provides evidence showing that audit work was properly planned and
2 performed in accordance with ISAs and other legal and regulatory
requirements.

It assists audit team members to plan and perform their audit work in the
3
engagement.

It assists audit team members who are responsible for supervision to properly
4
direct, supervise and review audit work, both hot and cold review.

5 It enables audit team members to be accountable for their audit tasks.

6 It allows the record of matters of continuing significance to be retained.

It enables the conduct of quality control reviews and inspections (both internal
7
and external).

5- Explain various form and contents of audit

documentations?
Content of Audit Documentation

It is not possible or practical for audit to record everything they have done during their audit working
starting from day one in the auditing work on the engagement. So, auditors will have to use their
experiences and professional judgment to decide which information should be recorded in the
content of audit documentation.

Also, the content of audit documentation may be different from one audit engagement to another.
This is due to the circumstances of the engagement and audit procedures may be different from one
type of client to another depending on the nature and risks of the client.

In this case, auditors should consider several factors when documenting their audit work, as
included in the table below:

Factors to consider when document audit work

1 The size and complexity of the client’s business

2 The nature of audit procedures that are needed to perform

The identified risks of material misstatement that could occur on financial

3
statements

4 The significance of the audit evidence that have been obtained

5 The nature and extent of exceptions that have been identified

An auditor should prepare audit documentation sufficient to enable an experienced auditor having
no previous connection with the audit to understand.

a. Nature, timing and extent of audit procedures:

o Identifying characteristics of specific items and matters tested.

o Who performed the audit and the date of completion.

o Who reviewed the report, the date and extent of review.

b. Results of the audit procedures performed and evidence obtained:

o Document discussions of significant matters.

o Nature of the significant matters – when and with whom discussed.

c. Significant matters arising during the audit:

o Document how the inconsistencies have been addressed.

 o In case of departure from the standard, the relevant requirements and the reason
for departure, the alternative audit procedures performed to achieve the aim of that
requirement.

6- What is the various responsibility of auditors with

respect to audit documentations?
Responsibility of the Auditor

This SA is designed to assist the auditor in identifying material misstatement of the financial
statements. He is responsible for obtaining a reasonable assurance that the financial statements as a
whole are free from any material misstatement. However, due to inherent limitations of audit there
exists an unavoidable risk.

Duties of Auditor

 Obtain knowledge about legal and regulatory framework

 Know-how the entity is complying with the same
 Obtain Audit evidence w.r.t. compliance
 Conduct audit procedures to identity non-compliance
 Ensure compliance by management
 Inspect correspondence, if any, with authorities
 Remain alert to suspection, if any
 Obtain written representations from management where necessary.