An audit program can be regarded as a set of directions or audit procedures that auditors need to follow or execute in order to obtain sufficient audit evidence to help them form their options. The audit program is very from client to client, account to account, and year to year. This is because different clients, accounts, and years or periods have a different risk characteristic
In this regard, it is also crucial to ensure the fact that after the audit plan has been prepared, the auditor then prepares programs that comprise steps that the audit team needs to stringently follow when conducting the audit.
The main role of the auditor is to ensure that he has prepared a document, which programs the audit process and includes all the relevant details pertaining to various steps and procedures that are duly followed by the audit process.
There are numerous reasons which prove that it is highly important to draw audit programs for better results. However, it can be seen that the main rationale is to provide a structured approach to the audit process, which can enable the process to be carried out in a smoother manner.
Importance of Audit Program
There are a number of reasons why auditors are supposed to draw up audit programs. Most of these reasons mainly lie in the realm of ensuring that there is proper clarity regarding the execution of the audit process, and how can respective KPIs be solved in lieu of fetching the best possible results.
The importance of an audit program can be explained using the following points:
- Firstly, it can be seen that the audit program helps to ensure that all the important areas are accounted for when conducting the audit. It is important to have proper clarity about the ground that needs to be covered when it comes to Audit Programs so that the best possible results are obtained, which can help the auditor comment on the financial statements with sufficient surety.
- Secondly, the audit program also helps the auditor in allocating work. It shows the holistic scope of the work that needs to be conducted, in addition to how the work is supposed to be spread between different members of the audit team. In the same manner, the audit program also tends to help auditors set their respective job descriptions and targets so that they know what exactly they are supposed to achieve over the continuum of time.
- Audit Programs are also very helpful when it comes to improving quality service protocols. This is predominantly on service evaluations after the task has been carried out so that people can duly evaluate the extent to which the task has been executed in a proper manner.
- Audit Programs are also important to help give the audit team a proper sense of direction as to how they have to work in order to meet their respective criteria. It helps them to identify their progress over the course of time, so that they can accordingly gauge the work that has been done, and if they are on track with completing the order in due time.
- The auditor is also supposed to prepare working papers, in order to draft the important aspects within the scope of the audit. The main purpose behind this is to ensure that there are proper references pertaining to the audit so that it can prove to be useful and resourceful when future audits need to be conducted.
- Finally, an audit program also acts as a viable tool in establishing proof and credibility regarding the overall audit process, and how it has been carried out in order to deliver the best possible results. Therefore, it is also rudimentary to have some paperwork that can back how the process was carried out and executed, so that auditors can have reasonable proof that they executed all the steps and processes in a proper manner.
When should the audit program be prepared?
An audit program is designed to detect the risks of specific accounting items after the auditor performs the risk assessment. The risk of each account is different from time to time and therefore, the audit program should be updated once the risk of that account is assessed as changed. In general, the audit program is updated annually to reflect the change in the risk of each cycle or account.
Therefore, it can be seen that the audit program is a highly important process that helps to determine and further steer the audit process in a favorable manner.
The main premise to do so is built on the rationale that there needs to be proper clarity about the tasks being executed, so that auditors can come up with a viable strategy to execute the task at hand, for better results.
In this case, it is also important to ensure the fact that there need to be proper audit programs designed well in advance, so that there is lesser room for confusion and misunderstanding during the actual process itself.
The need to adopt a structured approach to the audit process tends to be a fundamental point of concern, and audit programs are one way to inculcate a structured approach.