## Audit Programme: Meaning, Development, and Periodic Review

### Meaning

An Audit Programme is a detailed plan of applying audit procedures with clear instructions, designed to achieve specific audit objectives.

---

### How an Audit Programme is Developed

```

Auditor understands:

├─ Nature, Size & Composition of business

└─ Internal controls

↓

Standard Audit Programme created

[Aimed at essential minimum audit work]

↓

Audit Progresses

↙ ↘

Delete unnecessary Tailor procedures

procedures as per circumstances

```

Assistants must bring significant matters to the notice of seniors during audit progress.

---

### Why Different Entities Need Different Programmes

Reason	Explanation
(a) Nature, Size & Composition	Business characteristics vary widely
(b) Suitability	What works for one business may not work for another
(c) Efficiency of Internal Controls	Different control environments require different responses
(d) Nature of service	The exact service rendered by the auditor differs per engagement

---

### Periodic Review of Audit Programme

Purpose: Assess whether the programme continues to be adequate for obtaining sufficient knowledge and evidence about transactions
Risk if NOT reviewed: Updated business policies and changed circumstances will not be reflected
Legal consequence: If audit is done on the basis of an obsolete programme, the auditor faces legal liability
How to enhance utility: Keep the audit programme under constant review, with internal control changes in mind

Worked example

### Example 1

Example — Tailoring a Standard Programme:

A Standard Audit Programme for a manufacturing company includes stock count procedures. The same programme is applied to a service company that holds no physical inventory. The auditor must delete the stock-count procedures (unnecessary for this entity) and tailor the programme to focus on work-in-progress valuation or billing cycle controls instead.

### Example 2

Example — Consequence of Not Reviewing:

An auditor uses last year's programme for a retail client. Unknown to the auditor, the client switched from manual cash registers to a fully automated POS system during the year. Because the programme was not reviewed, IT-specific controls and system-generated report testing were never included. The audit missed a significant control risk — the auditor faces professional and legal exposure.

⚠️ Common exam mistakes

Using last year's programme without review — assuming a business hasn't changed is a common and dangerous error.
Treating the Standard Audit Programme as the final programme — it is only the starting point; it must always be tailored to the specific entity.
Not deleting irrelevant procedures — performing unnecessary procedures wastes time and gives a false sense of completeness.
Failing to escalate significant matters found during the audit to senior team members, even though the programme requires it.

Reference:

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Audit Programme – Meaning, Development, and Periodic Review

Worked example

⚠️ Common exam mistakes