Page 91 - DCOM204_AUDITING_THEORY

Unit 5: Audit Planning

5.13 Additional Parts of Audit Planning Notes

Other areas in relation to audit planning include:
1. Setting materiality and assessing audit risk and inherent risk.
2. Understanding internal control and assessing control risk.

3. Gathering information to assess fraud risks.
4. Developing an audit plan.

5.14 Audit Programming

The following are the features of audit programming
1. Most of the time audit is conducted by a team instead of just an individual. If business is
small or if there is not much to be done then it might be possible to conduct the whole
engagement easily by an individual. But usually amount of work, time constraints and
other factors require the audit engagement to be conducted by more than one person.
2. Depending on the audit, audit team can have different number of members. Usually the
team is structured in a Partner, Manager and Assistants which may further be divided into
senior assistants and juniors.
3. In order to properly assign work to each individual and what is required to be done by
whom there must be some kind of an instructions set otherwise, more than one members
might be auditing the same area or in other case some areas are left completely unaudited.

4. To ensure efficient and effective conduct of audit assignment, audit programmes or audit
programs are used.
5. Audit programme contains step by step instructions to be carried out by team members
i.e. it is simply a list of audit procedures to be executed by team members.
6. Even though audit programme sets out the whole agenda for every member of the team
but the main users are juniors for whom it acts as a dictation to be followed. The main
purpose of audit programme is that every material area has been audited appropriately
and sufficient appropriate audit evidence has been obtained in respect of every important
areas of audit.
7. Audit programmes are prepared on the basis of audit plan usually by the auditor – who in
the audit team is either partner or manager. But sometimes, audit firms have a basic audit
programme and the same is used by the auditor after making some modifications to it to
make it according the audit engagement in hand.
8. Mostly it is in the form of a checklist which can be used by the juniors to make sure every
required procedure has been implemented. This can also help in monitoring the work of
juniors in specific or assistants in general.

9. Audit programmes may be laid down in advance for the whole year for some aspects of
the audit which auditor expects to be auditing after regular intervals of time or when
needed. For understandability and convenience, audit programmes are written for each
audit area separately and then assigned to specific team members.
10. What procedures shall be part of audit programme is to be decided by the auditor and
depends on the auditor’s judgement.

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