What is auditing program?

Answer 1

AUDIT PROGRAM COMPONENTS

I. Audit Objective Development of the Audit Objectivea) Departmental objectives: Why was the department created?

b) Control requirements: What controls are in place in the department to ensure its objectives are met?

c) Audit Objective: Why are we auditing this department? Should be a combination of departmental objectives and control requirements.

To ensure….

To determine…

II. Audit ScopeWhat is the Audit Scopea) Establishes parameters or boundaries for the audit

b) Identifies:

· Area to be audited (department or function)

· Timeframe

· Sample size (volume or dollars)

III. Audit Program StepsGuidelines for Preparing Audit Programsa) Review audit program, if any, from prior audit. Determine what was covered, how it was covered, in what depth and with what results.

b) Perform a preliminary survey to determine objectives of the operations, existing systems of internal control and apparent risks.

c) Review internal audit literature which addresses the operation to be reviewed and may provide guidance to conducting the audit.

d) The objectives of the operation under review should be carefully stated and agreed to by the client.

e) Programs should be tailor-made to the audit assignment unless compelling reasons dictate otherwise.

f) Work steps should include positive and clear instructions. They should not be stated in the form of questions.

g) If possible, the audit program should indicate the relative priority of the work steps. Thus, the more important parts of the program will be completed in the allotted time.

h) Audit programs should be flexible and permit the use of initiative and sound judgment in deviating from prescribed procedures. Audit supervisors should be informed promptly of major deviations.

i) Programs should not be cluttered with material from sources readily available to the staff. Incorporate by reference, where feasible.

j) Unnecessary information should be avoided. Include only what is needed to perform the audit work. Excessive detail wastes the time of those who prepare and read the programs.

k) Audit programs should bear evidence of supervisory approval before they are carried out. Significant changes should also be approved in advance.