What is an audit program?


The audit program is a detailed action plan for the audit team. It sets a direction for an audit team to perform audit procedures.

Setting a proper audit program helps to ensure that audit procedures are detailed, effective, efficient, and designed to counter the assessed risk of material misstatement. Further, it’s one of the most favorite areas in the case of quality control review.

In other words, an audit program is a framework that sets the scope, the extent of audit procedures, assessed risk, and pattern of the procedures to collect audit evidence. It also depicts details of the procedures that have been performed, the risk addressed with the performance of the audit procedure, and what conclusion was drawn.

Mostly, auditors aim to collect sufficient and appropriate audit evidence against risk identified in the initial stages of the audit.

Types of an audit program

There are three different types of audit programs.

  1. Fixed audit program
  2. Customized audit program
  3. Compliance related audit program

Fixed audit program

A fixed audit program is a set of extensive and detailed audit procedures. These procedures are designed to cover all the possible circumstances during audit fieldwork. Generally, audit firms keep these audit procedures in their library. So, these can be used at any time and any of the audit clients.

Sometimes audit firms have a policy to use a rigid set of audit procedures without flexibility. Although, it’s an effective strategy in terms of risk coverage. However, it can be time consuming, lengthy, inflexible, and costly approach to audit.

Customized audit program

A customized audit program is when auditors select the most relevant and appropriate audit procedures to cover the risk of material misstatement in certain situations. It’s a smart approach to proceed with an audit. However, the risk is that there might be some areas an auditor might overlook. Hence, this strategy can be adopted when you have competent and experienced audit staff.

Compliance audit program

The compliance audit program reflects how the auditors deal with its duty to ensure compliance. What procedures they intend to perform and document to tackle regulatory reporting/needs.

Compliance audit programs can be different for the different companies depending on their size, industry, operational boundaries, products, number of employees etc.

For instance, listed companies need to comply with the code of corporate governance, listing regulations and company law. On the other hand, private companies do not need to follow listing regulations.

Similarly, the operating environment of the company impacts the compliance-related audit program. For instance, companies operating in the United States need to comply Sarbanes Oxley Act. This act requires companies to ensure backup of electronic communication under disaster recovery plans.

Likewise, companies operating in the United States need to comply with IRS tax rules. On the contrary, the companies in the United Kingdom need to follow provisions with HMRC – Her Majesty Revenue and Customs regulations.

So, auditors need to consider the regulatory environment before designing a compliance audit program.

Objectives of the audit program

Following are the objective of designing an audit program.

  1. It aims to set direction for the audit in line with regulations, policies, procedures, and code of conduct implemented by the audit client.
  2. Clear mapping for the audit procedures helps to enhance audit efficiency.
  3. Auditors can estimate the time required to complete audit. It helps them set a budget, time required to complete the audit, and other administrative aspects.
  4. It helps balance audit quality, timeliness, management priorities, audit quality, stakeholders’ expectations, and risk management strategies.
  5. It’s quite helpful in quality control reviews. As reviewer can get a quick snap regarding audit procedures performed, the conclusion drawn, and the risk covered. Further, an auditing standard requires to execute an audit via audit program to maintain quality.

Advantages of the audit program

Following are some of the advantages of the audit program.

  1. It helps the auditor ensure all sensitive/risky audit areas have been covered. Usually, the audit program is documented at the start of each auditing area/account balance. So, the audit team has a clear direction that if they complete procedures mentioned audit program, they complete audit for that particular head.
  2. The audit program contains different procedures. Some of the audit procedures are technically complex and some are easy to execute. Hence, work can be allocated based on seniority. For instance, junior staff can do vouching, and cut off testing can be allocated to a senior audit team member.
  3. The allocation of the work results in the allocation of responsibility. In simple words, each team member is answerable for the performance of work/audit procedures allocated to them.
  4. It becomes easy for the managers to trace if anyone in the team has not performed their duties. For instance, Mr Jerry was given cut-off testing for the sales. However, there was no sales cut off testing document in the audit working papers at time of audit finalization. So, the manager inquired Jerry. Thank God Jerry was able to present the working paper as he had on the laptop and forgot to attach it to the auditing file.
  5. The audit program makes it clear who needs to perform the audit procedure. Hence, confusion is replaced with clarity.
  6. An audit program can be used to track the progress of audit activities and the time remaining in the audit completion. For instance, if total audit procedures amount to 100 and the audit team has performed 50. It means half of the work is done. Hence, it becomes easy to track audit status.
  7. The audit program is considered a building block for the audit evidence. Hence, it’s favorite area of quality control reviewer.
  8. The audit program, once developed, can be used as a reference for future audits. In simple words, once you’ve developed an audit program for a specific client, there is no need to rework in the next accounting year. As the previous audit program can be used in the future.

Disadvantages of an audit program

Following are some of the disadvantages of the audit program.

  1. There is no single auditing program that fits in all situations. It means auditors have to rework the audit program and make it fit for the specific situation.
  2. The audit team is given a standard program to perform procedures. Hence, they may not be able to make changes and make it more effective.
  3. The audit team has to work as mechanical staff and ignore other aspects of the audit like internal controls and control environment.
  4. If the audit team uses a previously drafted auditing program, they might miss emerging business aspects. Hence, there is a need to remain alert to changes in the business.

Example of audit program (property plant and equipment)

Following audit program can be effective for auditing property, plant, and equipment.

  1. Trace opening balance with last year’s audited financial statement.
  2. Vouch additions in the PPE in terms of authorization and approval.
  3. Recalculate depreciation by applying applicable rate and asset life.
  4. Recalculate gain/loss on disposal and ensure its impact in the financial statement is correct.
  5. Check the mathematical accuracy of the PPE schedule.


The auditing program is the name of planned audit procedures. The auditor needs to perform audit procedures to ensure the effective completion of audit fieldwork.

It helps set a direction for the audit team and ensure that sufficient and appropriate audit evidence is collected in line with auditing standards and business policies.

There are three types of audit programs: fixed audit program, flexible audit program, and compliance-based audit program.

Fixed auditing programs are standard and rigid. Flexible audit programs change in line with client needs. Compliance auditing programs are designed to ensure compliance with regulatory provisions.

Frequently asked questions

What is the importance of an audit programs?

The auditing program is important because of the following reasons.

  1. It sets a direction for the audit team to put effort into.
  2. It helps ensure that important and sensitive audit areas are covered.
  3. It helps to ensure work is allocated to the right audit staff based on seniority and competence.

How is the audit program created?

The audit program is created based on the nature of the account balance/transaction. The goal of an audit program is to ensure that designed audit procedures are sufficient and appropriate to cover the risk of material misstatement.

Who is responsible for creating an audit program?

The auditor is responsible for creating an audit program. This task should be allocated to a competent audit staff as it’s a building block for the entire auditing process.

The audit program needs to ensure procedures appropriately cover risks and collected audit evidence is sufficient and appropriate.

Further reading on auditing program!

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