Discuss different Types of Audit Programme.
There are two main types of audit programs:
- Fixed Audit Program.
- Flexible Audit Program.
Fixed Audit Program.
It is a set of standardized instructions, which are to be followed while conducting the audit. A fixed audit program includes all possible audit procedures, although all of them may not be applicable in a situation. Its attempts to take care of every possible audit situation, therefore, it prescribes procedure to be followed in each situation.
The problem with this kind of program is that it is very rigid. Nothing is left to the initiative of the audit team. Further, it is difficult to follow the same audit program even in the same organization over the years, as the conditions in the enterprise are likely to undergo changes.
Flexible Audit Program.
A flexible audit program does not prescribe the exact audit procedure to be followed. It prefers to give an outline of the scope, nature and limitations of the audit assignment. It does not predetermine the nature of work to be performed by each person of the audit staff. Most of the things are decided as the work proceeds and the reliability of procedures and internal control system becomes known to the auditor.
Thus, a flexible audit program allows the auditor to develop, adapt and modify the program according to the needs of the situation. It also leaves scope for some initiative by the audit staff if the situation so warrants. However, the danger is that some important audit procedures may not be followed.
An audit program should be reviewed every time even if the audit is repeated of the same organization. It should reviewed in the bight of the following points:
- Any change in the ownership of the organization since previous audit.
- Any change in the organizational structure resulting into changes in the authority or responsibilities of employees.
- Utility or otherwise of the working papers of previous year.
- Any changes in the books and records being maintained and its implication for the audit program.
