An audit program is a detailed action plan enlisting audit procedure designed to obtain sufficient and appropriate audit evidence.

In the audit program, each procedure must include detailed specifications, a conclusion on each audit procedure, and reasoning/evidence obtained via procedure execution. This document helps the auditor ensure that all planned auditing areas are covered in testing audit assertions.

Conceptual understanding

An audit program is an essential document designed to plan the audit, set the working direction, and track its progress.

Plan the audit

The audit program is designed based on the balances/transactions/information in the financial statement. Additionally, factors like overall business risk and internal control assessment help determine the extent of audit procedures. Hence, the audit program varies from client to client.

Setting audit direction

Setting audit direction defines a roadmap for performing the audit procedures. It’s a listing that guides the execution of the audit procedures. For each assertion, the auditor needs to plan an audit procedure. For instance, assertions like existence, completion, and presentation must be covered via audit procedures. Hence, the audit team is directed to perform their work using the audit program.

Tracking the audit progress

The audit program is an effective tool for tracking audit progress. As the team performs audit procedures, they keep on ticking for successful procedure execution. So, the number of procedures completed indicates the extent of the audit completed.

So, this document is prepared at the planning stage and updated periodically, and all ticks should be completed when concluding the audit opinion. It’s a standard way to ensure that all assertions for the audit are satisfied.

Types of audit programs

The following are the types of audit programs.

Standard audit program—A standard audit program contains pre-defined audit procedures for the specific account balance/transactions. This type of audit program can be imported from the library of an audit processing tool. The best part of using this audit program is the mental satisfaction that all assertions will be satisfied when procedures have been performed.

Tailored audit program—As part of the smart auditing approach, a tailored audit program is designed to understand the needs and requirements of the balance/information given in the financial statement. The auditor is required to ensure an effective audit procedure is designed against each assertion applicable to the financial statement.

Compliance audit program—The compliance audit program provides a fixed listing of the audit procedures to be performed. The criteria and requirements given in the compliance audit program must be complied with.

Advantages of an audit program

The following are the advantages of using an audit program.

1. Higher efficiency—An effective audit program defines a clear auditing path. The audit team is clear on requesting data, analyzing/testing data, and concluding each audit procedure. Hence, an effective audit program is a great way to direct the audit in the right direction with higher efficiency and intact energy.
2. Audit teamwork allocation—The Audit program helps ensure the auditing heads’ appropriate allocation. Complex, technical, and challenging procedures can be allocated to the senior members of the team and vice versa. Hence, the audit program helps with the appropriate allocation of audit planning and task execution.
3. Controlling & tracking tool—The Audit program helps to track audit progress efficiently. By looking at the audit program, the audit manager can get an idea if the audit is progressing in the right direction and at the right pace. Hence, the audit program is an effective way to control and track the audit activities.
4. Evidence completion—Religiously following the audit program helps ensure the auditor has obtained a complete set of audit evidence and that there are no flaws or gaps in the audit file. Hence, audit quality is enhanced.
5. Setting the scope—At the planning stage, business risk assessment and internal control efficiency checks help with overall risk assessment and setting the extent of audit procedures required to obtain reasonable assurance on the financial statements. Hence, adopting a systematic approach to formulating the audit program helps set the audit scope and maintain a quality audit file.
6. Trust building and improved audit quality—Formulating an audit plan based on risk assessment and business understanding helps to build confidence in audit working papers. In other words, a professionally designed audit program indicates improved quality work.

Disadvantages of the audit program

The following are the disadvantages of the audit program.

1. A rigid approach to auditing—The standard audit program does not allow for creativity or smartness. Instead, it’s a fixed/rigid approach that requires ticks on each line item. Hence, smartness/creativity can be compromised when following the standard audit program.  
2. Consumes time—Formulating, updating, and analyzing the audit program consumes time and energy. Hence, the time cost might outweigh the audit program’s benefits.
3. Requires update—The Audit program is only effective when updated periodically. Although it’s a great way to control your efforts, it’s only helpful when updated periodically. For instance, the conclusion of each audit procedure needs to be noted when done. Hence, there are increasing procedural formalities when using the audit program.   

Difference between audit program and audit plan

Following are the differences between an audit plan and an audit program.

Related purpose—The purpose of the audit program is to enlist audit procedures and track performance and collection of audit evidence. On the other hand, the purpose of the audit plan is to assess the risk, plan audit procedures, allocate the time/resources required to execute the audit, and monitor the overall audit work.

Related usage—The audit program is an effective way to enlist audit procedures and control audit progress. On the contrary, the audit plan is used for risk assessment, designing risk response, collecting audit evidence, and concluding the audit.

Usage timing—The audit program is used during the execution of the procedure and concludes the audit procedure. On the contrary, the audit plan is used from planning to execution and reporting your findings on the audit.

Conclusion

An audit program is a detailed listing of the procedures designed to obtain sufficient and appropriate audit evidence. Each procedure needs to be ticked when performed and evidence collected. The procedures are designed to satisfy assertions given in the financing statement of the auditing client.

There are various advantages of an audit program, such as higher efficiency, ease in allocating work to the audit client, trust building, evidence collection, and controlling and tracking the overall audit work and quality.

However, certain disadvantages of using an audit program include incurring costs in terms of time, resources, and consistent updates required to ensure its effective use.

An audit program is different from an audit plan. For instance, an audit program is used for listing audit procedures and concluding on them. However, an audit plan is a comprehensive way to assess the risk, design audit procedures, collect audit evidence, conclude the audit, and report your findings.