Audited account program play a really importance function in audit procedure. Organizations need to seek a suited, equal, and effectual quality direction system ( QMS ) need to carry on internal audits, to guarantee that the QMS maps as intended, and that it identifies weak links in the system every bit good as possible chances for betterment. Initially audit be aftering takes topographic point before the elaborate audit work begins. For a specific audit undertaking, an hearer must follow a scheme audit program which respect to the nature, timing and extent of the audit work to be carried out.
Particular attending should be given to treat where the high degree of hazard is influenced by factors such as:
– Severe effects of failure on procedure capableness ;
– Customer dissatisfaction ;
– Non conformity with merchandise ( or procedure ) statutory and regulative demands.
The aims of the audit program are to guarantee that appropriate attending is devoted to the different countries of the audit, possible jobs that may happen are identified and audit reappraisal from old hearer are facilitated.
The audit program establishes the processs necessary to finish an efficient and effectual audit. It includes a elaborate program of the work to be performed every bit good as the stairss required to accomplish the audit aims. There should be sufficient item for less experience staff to execute the stairss nevertheless it should non be excessively elaborate whereby it might do hearers to put to death stairss routinely and overrule their judgement.
Top direction should guarantee the constitution of an effectual and efficient internal audit procedure to measure the strengths and failings of the quality direction system.
An efficient and effectual audit can merely be performed if the audit has been exhaustively and decently planned. ISA 300 “ Planing an Audited account of Fiscal Statements ” contains the commissariats which the hearer is required to follow with in be aftering an audit.
In drumhead, ISA 300 province that the planning phase of the audit should be used to set up an overall scheme for the audit, develop an audit program and cut down audit hazard to an tolerably low degree. In other words, the hearer should be after the audit battle so that it will be performed in an effectual mode and in conformity with auditing criterions.
Adequate audit planning will guarantee that appropriate attending is given to important countries of the audit and that possible jobs are identified on a timely footing. At the planning phase the audit battle spouse should delegate the people who possess the accomplishments and ability required in order to guarantee the audit is carried out expeditiously and in conformity with the International Standards on Auditing.
Audited account program is set based on the Audit Commission ‘s hazard which attack to scrutinize planning that assesses the current national hazards relevant to specific fortunes and betterment of public presentation. There are few stages of an audit that relate to scrutinize planning, such as client credence and continuation, set up an apprehension with the client, preliminary battle activities, obtain apprehension of the entity, set up materiality and buttocks hazards and plan the audit. Planing the audit by and large is regard puting an overall audit scheme and develop audit program.
Performing these preliminary activities ensures that the hearer maintains the necessary independency and ability to execute the battle, ensures that there are no issues with direction unity that may impact the hearer ‘s willingness to go on with the battle and ensures that there is no misconstruing with the client as to the footings of the battle. If there has been a alteration of hearers the present hearer should pass on with the entity ‘s old hearers in conformity with the relevant Ethical Standards.
At the planning phase the hearer will develop the overall audit strategy.A The audit scheme sets the range, timing and way of the audit.A At this phase the hearer will develop the elaborate audit program which will assist place job countries and of import audit countries. The materiality degree is set and countries where stuff misstatement might happen are identified.A Materiality must ever be assessed where an audit sentiment is given.
Once the audit scheme has been established, so the hearer is able to develop the more elaborate audit program to turn to the affairs identified in the overall audit strategy.A The hearer should so cut down the audit hazard to an tolerably low level.A Audit hazard is the hazard that the hearer will get at the incorrect sentiment.
The audit program is more elaborate than the overall audit scheme and ISA 300 defines the contents which the elaborate audit program should take. The elaborate audit program should besides incorporate a description of the nature, timing and extent of planned further audit processs at the averment degree for each material category of minutess, history balances and disclosures.A This subdivision of the audit program interlinks with the commissariats of ISA 330 ‘The Auditor ‘s Procedures in Response to Measure Risks’.A
Finally, the audit program should besides incorporate inside informations of other audit processs to be adopted so that the audit can be carried out in conformity with the ISA ‘s. For illustration, ISA 620 ‘Using the Work of an expert ‘ .
It is of import to understand that one time the planning of the audit is completed, it is non merely disregarded about.A There could be occasions when the audit program might necessitate to be changed, for illustration due to unanticipated fortunes and in these respects the hearer will necessitate to alter the overall audit program.
Macro-level planning applied in the audit of private sector companies. It is a procedure where normally conducted by audit direction, identifies the audits that will be performed within the organisation.
Planning processs are the initial and possibly most of import measure in carry oning a successful internal audit. Without equal planning, the likeliness of losing relevant control weaknesses or meeting engagement-related jobs increases well. Furthermore, improper planning can take to alterations in range or aims after much of the audit work has already been completed.
Although planning is important to scrutinize success, hearers may be given to overlook of import facets of the procedure. To assist guarantee battles run swimmingly, the audit section should develop and document a program for each audit that addresses the audit range, aims, client operations, administrative undertakings, the gap meeting, and the audit plan. With careful planning, internal hearers can run into the aims of their reappraisals and place chances for betterments to the auditable unit ‘s hazard direction and control environment.
Measure the planning of audits ; the administration should be able to maximise the usage of available resources during the behavior of internal audit activities. This can be facilitated by the acceptance of a hazard based attack to the planning of internal audits. This should besides guarantee that the built-in hazards of audit failure in the audit procedure, and to scrutinize results, are minimised.
Below is the phrase of an audit that related to scrutinize planning:
Preliminary battle activities
Obtain apprehension of the entity
Establish materiality and entree hazards
Planning: set overall audit scheme and develop audit program
Preliminary Battle Activities
When be aftering an audit, hearer demands to get down by looking at client ‘s concern and its industry. Performing these activities helps the hearer to see events or fortunes that may adversely impact the hearer ‘s ability to program and execute the audit battle, can cut down audit hazard to an tolerably low degree.
It ‘s of import to utilize multiple beginnings to remain abreast of political and economic events that can impact clients. Hearers can supervise industry-specific tendencies through industry conferences and trade publications. Perform the undermentioned preliminary battle activities at the beginning of the current audit battle is required, which stated in scrutinizing criterions:
Procedures sing credence and continuation of the client relationship and the audit battle.
Evaluating of independent and other ethical demands.
Establish the footings of battle
It is importance for audit house to set up proper quality control policies and processs in their determination devising procedure sing the credence and continuation of audit battle.
Obtain Understanding of Entity
The battle squad should derive an apprehension of the auditable unit ‘s concern and operations every bit good as any of its alone features or concern patterns. Before accepting an audit battle, the squad should reexamine any prior-year workpapers related to the client so that to guarantee the unity of prospective clients. They should besides see obtaining background information on the client ‘s duties and procedures via Web hunts, company papers reappraisal, and treatments with senior direction or other forces familiar with the client ‘s concern country. Internal hearers should pay peculiar attending to new procedures or guidelines, employee turnover, or points that may look out of the ordinary or unusual.
Hearers need to garner assorted degrees of informations about the concern. Good beginnings of information include organisational charts, system and procedure flow charts, employee profiles, client profiles, provider profiles, seller profiles and back uping certification for current enterprises.
Hearers can besides utilize questionnaires to garner company informations from the direction squad and company employees. Questionnaires aid to originate treatments with company forces and can assist you place hazards so that you can foster orient the auditing procedure.
Such consideration is indispensable to minimise the likeliness of tie ining with clients who lack unity. If an hearer is associated with a client who lacks unity, material misstatements may be and non be detected by hearer. This can take to cases brought by users of the fiscal statements. In discoursing client credence issue, a differentiation is made between measuring a prospective client and go oning a current client.
Establish Materiality and Assess Risk
When major events occur, hearers need to rapidly measure the possible effects on client ‘s concern and on the audit procedure, and so necessitate to reexamine findings with client ‘s direction squad.
Hearers besides need to roll up information about the client company ‘s internal patterns. Arrange to run into with client ‘s direction squad to reexamine any procedure or system alterations that might impact the audit. Determine the possible impact of major corporate events such as:
Large additions in gross revenues
Significant employee turnover
New concern enterprises
See utilizing engineering to assist hearers identifies countries of hazard. For illustration, they might utilize database tools to place specific events that need closer monitoring, such as a crisp addition in client returns or little minutess.
This can forestall inaccurate or deceitful accounting patterns merely after they genuinely understand clients ‘ concern hazards.
Planning: Set Overall Audit Strategy and Develop Audit Plan
First, hearers need to place the deliverables of the audit program. For illustration, if their audit focal points on conformity reappraisals, it needs to include the filing of regulative certification. But if executing a more traditional audit, they need to concentrate more on policies, fiscal controls, and GAAP conformity. Knowing the expected deliverables for audit can assist find its focal point, timing, degree of item, and expected continuance.
Second, place the audit range. After have assessed the organisation and defined the audit ‘s deliverables, hearers can get down making the range papers. To avoid confusion during the audit, sum up the range papers for client ‘s direction squad. Identifying the exact range of the audit keeps hearers from being distracted with issues that do non instantly associate to the current audit. In the class of the audit procedure, make note of issues that autumn outside the current range so that you can turn to them subsequently.
Then, develop a undertaking program. A successful audit requires a thorough undertaking program. The old analysis, in bend, helps hearers to specify elaborate undertaking lists, possible undertaking stages, clip frames, and ensuing resource demands.
The Importance of Audit Planning
An efficient and effectual audit can merely be performed if the audit has been exhaustively and decently planned as what stated above.A It is of import to understand that one time the planning of the audit is completed.A There could be occasions such as unanticipated fortunes when the audit program might necessitate to be changed.
Supervision and certification is really of import in audit planning phrase.A The hearer should besides guarantee that they plan the nature, timing and extent of the reappraisal of the work of the battle squad members.A The reappraisal of old battle squad members ‘ work will change depending on assorted factors such as the complexness of the audit battle, the hazard of material misstatement and the competences involved.A
Any important alterations to the overall audit scheme and audit program must besides be documented.A Standard audit programmes can be used to cover with this issue, nevertheless it is of import that the hearer tailors the audit programme suitably so it is specific to the engagement.A
The audit should be used to set up an overall scheme for the audit, develop an audit program and cut down audit hazard to an tolerably low level.A In other words, the hearer should be after the audit battle so that it will be performed in an effectual mode and in conformity with auditing criterions. At the planning phase the hearer will develop the overall audit strategy.A The audit scheme sets the range, timing and way of the audit.A At this phase the hearer will develop the elaborate audit program which will assist place job countries and of import audit countries. Then the hearer is able to develop the more elaborate audit program to turn to the affairs identified in the overall audit strategy.A The hearer should so cut down the audit hazard to an tolerably low level.A Audit hazard is the hazard that the hearer will get at the incorrect sentiment.
The planning phase of the audit is an highly critical area.A Traveling in to an audit ‘blind ‘ is wreckless and does non conform to the ISAs relating to be aftering – viz. ISA 300 and ISA 315.A The nucleus rule involved in the audit planning is to guarantee the audit is carried out expeditiously and that sufficient attending is devoted to of import audit countries.
Tips for prepare an efficiency audit program.
Ask direction to cosign the audit program. This measure encourages direction ‘s early committedness to the principle for the audit and the organisation ‘s allotment of audit clip.
Focus on direction aims. Our aims as hearers must suit within the overall context of direction ‘s aims ; otherwise, direction is much less likely to implement any recommendations from the audit.
Explore the viability of easing a workshop during the audit planning procedure to garner information and place hazards and controls. You may non really inquire for a self-assessment of controls, but including client forces in the planning procedure can heighten the audit ‘s pertinence to direction ends and aims.
Understand the macro-level hazard appraisal procedure good plenty to cognize why the current audit is being performed. Get downing an audit by stating, “ We ‘re here because it ‘s been two old ages since we were last here, ” is non what clients want to hear. We should be able to state why, on an overall company hazard footing, it makes sense to execute the audit at that clip. The micro audit program should do such macro-level factors the implicit in focal point of the audit.
Writing the audit plans.
Determining how and when audit consequences will be communicated.
Obtaining blessing of the audit planning consequences. Get downing hearers who want to cognize more about audit planning, such as what to include in meetings with direction and how audit planning should be documented
In decision, by following these audit processs when in the planning phase of audit, the audit is moderately efficiency.
Result and treatment
As observation of a few audit commission study of a private sector company in Malaysia, They conducted a reappraisal of the one-year audit program and internal and external hearers to fix room for a twelvemonth, and this activity is indispensable. These activities were conducted by audit commission in line with the footings of mention during the fiscal period under reappraisal.
From the reappraisal of operation reappraisal of The Jelutong Stp Project, internal audit program was considered as the major findings of internal audit, fraud probes and actions and stairss taken by direction in response to scrutinize findings. The following determination in the study was reviewed and approved the Annual Audit Plan for the following fiscal twelvemonth prepared by the Internal Audit Department to guarantee to the full protect the bad countries have made important corporate events. The Internal Audit forces have actively conducted several independent reappraisals based on the approved Annual Audit Plan throughout the fiscal twelvemonth under reappraisal. From those findings, it showed that the importance on reviewed the internal audit program which let the external hearers discover the hazard country of the company and increase the efficiency degree of the audit work. Based on the internal audit program, the external hearers can easy understand the strength and failings of the internal control. Then the external hearers can plan and carry on the audit processs in the lowest cost, resources and the shortest clip.
Besides that, reviewed the Audit Planning Memorandum with the external Hearers, Messrs BDO Binder on the range of their audit including audit processs, important accounting and scrutinizing issues, impact of new or proposed alterations in accounting criterions and regulative demands and how the alterations will be later reported besides a determination of the study. From this determination, the hearers can guarantee that they were conducted the audit in the effectual and efficiency manner. As an illustration, within the audit program, the hearers can do certain the audit behavior based on the latest accounting criterion, regulations and ordinance where they can mention to the authorities ISO.
For the 2nd reappraisal from the Tradewinds Corporation Berhad ‘s Audit Committee Report in twelvemonth 2008, internal hearer for the operation of the internal audit map and risk-based audit program is reviewed and approved by the Board of Auditors. The risk-based audit program covers the reappraisal of cardinal operational and fiscal activities including the efficaciousness of hazard direction patterns, efficiency and effectivity of operational and fiscal controls and conformity with the relevant Laws and Regulations. From this determination, it show that the audit program is non merely used by the external audit to carry on the efficiency audit but it besides used by the internal hearer to guarantee their fiscal and operational control was conduct in a efficient and effectual manner. The internal audit professionals take a risk-based audit program to internal audit to assist clients better public presentation and operational efficiency excessively.
For the 3rd reappraisal from the audit commission study of QSR Brands Berhad on twelvemonth 2004 listed that The General Internal Audit Department ‘s range of work covers all the operating divisions of the Group and they performed their responsibilities in conformity with the one-year audit program that was approved by the Audit Committee. As portion of its audit schemes, the General Internal Audit Department behavior hazard appraisals, review the adequateness and effectivity of internal control system and reviewed with the Group ‘s policies and processs and regulative demands, but besides examined the degree of conformity with concern procedures in order to heighten the Group ‘s actions are aimed at. During the fiscal twelvemonth, the General Internal Audit Department issued 18 audit studies. From this determination, it show that how importance of audit program from the audit commission to the internal hearer and there were reference in the study that no any material internal control failures that resulted in a important fiscal loss to the Group. This means that how an efficient audit had been conducted by the company within an audit program of the group.
The last reappraisal from the audit study of Air Asia Berhad on twelvemonth 2007 listed that the used of audit study towards an internal hearer. The audits and reappraisals conducted by internal audit are defined in an one-year audit program that was reviewed and approved by the Audit Committee at the beginning of each fiscal twelvemonth. The program was derived from a hazard appraisal procedure which considers the hazards within each section and the extent that it would hold an impact on the Air Asia. The audit program can guarantee the hearer to concentrate on the most risk country, implemented all the duty within the clip frame and all the things that done by the company is conformity with internal control and relevant jurisprudence and ordinance. This procedure is continually reviewed and strengthened as appropriate. A cardinal public presentation index in the undermentioned twelvemonth is to turn over out hazard direction to the remainder of the Air Asia Group ‘s associates.
From the reappraisal on a few of one-year study and audit commission study in Malaysia ‘s private sector company, we found that the audit program is utile to an hearer to execute a efficiency audit.
The audit program and audit efficiency in private sector are good organize. Although it is still incorporate a sensible audit hazard, but overall is satisfy and do non hold important errors. Audit program assist hearer to observe audit hazard and included measure to make sufficient hazard appraisal. In add-on, audit program besides province the substantial trial that have to be done in order to supply true and just position to users. By utilizing audit program, hearer can form audit work and clear up the occupation range.
With good form audit program, audit efficiency can be increase. With that, energy, clip and money can be imputing in the right topographic point. Therefore, hearer can concentrate on the important hazard country and finish the audit study at a minimal clip.
Audited account program besides is a working paper that help hearer to maintain all the audit grounds obtained during fiscal statements scrutinizing. Audited account program are able to back up the audit work done in order, sufficient and confidence audit grounds. Audit program are an of import belongings of the hearer. In order to maintain professional moral principle, it can non unwrap to third party without consent of the client unless limited specified state of affairss mentioned in ISA 230 Documentation or required by jurisprudence, such as tribunal order, for public involvement and so on. It can be: