Page 42 - CA Inter Audit PARAM

CA Ravi Taori

QNO Audit Programme (One Audit Program for All Not Practical) Old Course-(M18R/N20R/
C2OC.085 Bhaskar CNO C2OC.080 M19R)
Evolving one audit programme applicable to all business under all circumstances is not practicable.
Explain
Answer ➢ Businesses vary in nature, size and composition; work which is suitable to one business may not
be suitable to others; efficiency and operation of internal controls and the exact nature of the
service to be rendered by the audit or are the other factors that vary from assignment to
assignment. On account of such variations, evolving one audit program applicable to all
business under all circumstances is not practicable.

➢ However, it becomes a necessity to specify in detail in the audit program the nature of work to
be done so that no time will be wasted on matters not pertinent to the engagement and any
special matter or any specific situation can be taken care of.

QNO Audit Program (Periodic Review) Old Course -- (SM17/M19R/SM20/SM21/S24E)
C2OC.090 Bhaskar CNO C2OC.080
The utility of the audit programme can be retained and enhanced only by keeping the programme as
also the client’s operations and internal control under periodic review so that inadequacies or
redundancies of the programme may be removed. Explain
Answer ➢ Periodic Review of The Audit Program

Why Periodic Review
There should be periodic review of the audit programme to assess whether the same
continues to be adequate ephorate in in grecque site knowledge and evidence about the
transactions. Unless this is done, any change in the business policy of the client may not be
adequately known, and consequently, audit work may be carried on, on the basis of an
obsolete programmed, for this negligence, the whole and it may be held as negligently
conducted and the audit or may have to face legal consequences.

Example-
• If the audit programme for the audit of a branch of a financing house, drawn up a
number of years ago, fails to take into consideration that the previous policy of
financing of a vehicle has been changed to financing of real estate acquisition, the
whole audit conducted thereunder would be entirely misdirected and may even
result into nothing more than a farce. [Pacific Acceptance Corporation Ltd. v.
Forsyth and Others.]

Changes in operation and ICS
The utility of the audit programmer can be retained and enhanced only by keeping the
programmer as also the client’s operations and internal control under periodic view so
that inadequacies or redundancies of the programmer may be removed. However, as a
basic feature, audit programme not only lists that as Kato be carried out but also contains
a few relevant in strictions, like the extent of checking, the sampling plan, etc.

Rigidity
So long as the programme is not officially changed by the principal, every assistant
deputed on the job should unfailingly carry out the detailed works according to the
instructions governing the work. Many persons believe that this brings an element of
rigidity in the audit programme. This is not true provided the periodic review is undertaken
to keep the programme as up to date as possible and by encouraging the assistants on the
job to observe all salient features of the various accounting functions of the client.

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