Audit Programme

1. Audit Programme

2. Audit Assertions • As part of the planning stage, auditors need to prepare audit tests to test the account areas. • To assist the auditors there are 5 audit assertions for the income and expenditure and 5 audit assertions for the balance sheet. • Transactions are to be tested in audit with reference to the audit assertions. Assertions will be different for different account areas.

3. Audit Assertions (Contd.) • In respect of Income and Expenditure Accounts, the assertions are: • Completeness, i.e. All relevant transactions have been recorded. • Occurrence, i.e. All transactions are stated accurately. • Measurement, i.e. All recorded transactions actually occurred. • Regularity, i.e. All transactions accord with relevant laws and regulations. • Disclosure, i.e. All transaction are classified and described in line with relevant regulations.

4. Audit Assertions in respect of Income-Expenditure Accounts

5. Audit Assertions in respect of Balance Sheet Items • In respect of Balance Sheet items, the assertions are: • Completeness : All assets and liabilities relating to the period have been recorded. • Ownership:The assets and liabilities recorded pertain to the entity. • Valuation:The asset or liability is valued in line with appropriate accounting policies, consistently applied. • Existence:The assets or liabilities represented in the statements exist at the Balance Sheet date. • Disclosure:All assets and liabilities are disclosed, classified and described in line with the applicable reporting framework

6. Audit Assertions in respect of Balance Sheet Items

7. A detailed audit program • An audit program consists of an appropriate audit procedure to achieve these audit objectives. • Audit programmes are prepared while planning the audit. At the planning stage, auditors will need to prepare audit tests to test the account areas.

8. Audit Programme • The audit programmes set out what the auditor will test in relation to each audit assertion • The auditor should set out in the audit programme: • the objective of the test; • what constitutes an error; • the population to be covered.

9. Functions of audit programme Audit program • Links planning and execution • Provides framework for supervision and accountability • Helps transfer expertise to junior staff • Facilitates Administrative control

10. Advantages of an effective audit programme • Efficiency and consistency • Clear instructins for staff • Avoids overlooking or duplicating work • Evidence of work done • Basis for future audits • Quality work results

11. Methods of Obtaining Audit Evidence • Inspection • Observation • Inquiry • Confirmation • Computation • Analytical procedures • Surveys • Interviews • Physical verification

12. Inspection • Examination of records, documents or tangible assets. • Generally, an audit team places considerable reliance on this for both tests of control and substantive tests.

13. Observation • Watching a process as it takes place. • Useful in testing controls that leave no audit trail. • But, its reliability is limited because the presence of the audit team may influence the way in which the process in carried out.

14. Enquiry and confirmation • Obtaining information from knowledgeable people inside or outside the auditee entity. • Used for both testing of controls and substantive testing. • Confirmation is a response to an enquiry which corroborates information contained in the accounting records.

15. Computation • Checking the arithmetical accuracy of source documents and accounting records. • Central feature of substantive testing. • It is reliable, as the evidence is created by the audit team itself.

16. Analytical procedures • The analysis of the relationship between items of financial data or between items of both financial and non-financial data. • Its reliability depends on the plausibility of the relationship examined and the controls operated over the data used.

17. Surveys and interviews • Using carefully designed questionnaires. Independent consultancy firms may be outsourced for conducting surveys. • Interviews with concerned officers.