## Audit Programme – Construction, Evidence & Evaluation

### 1. Periodic Review of the Audit Programme

The audit programme must be periodically reviewed to assess whether it continues to be adequate for obtaining the requisite knowledge and evidence about transactions. A programme that made sense last year may miss new risk areas this year.

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### 2. Constructing an Audit Programme

When building an audit programme, keep the following principles in mind:

#	Principle
i	Stay within the scope and limitation of the assignment
ii	Prepare a written audit programme
iii	Determine the evidence reasonably available; identify the best evidence
iv	Apply only steps useful for the verification purpose
v	Include audit objectives for each area
vi	Consider all possibilities of error
vii	Co-ordinate procedures applied to related items

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### 3. Types of Audit Evidence (Designed to Provide Appropriate Evidence)

An auditor gathers evidence from a variety of fields. The broad types are:

1. Documentary examination

2. Physical examination

3. Statements and explanations of management, officials, and employees

4. Statements and explanations of third parties

5. Arithmetical calculations by the auditor

6. State of internal controls and internal checks

7. Inter-relationship of various accounting data

8. Subsidiary and memorandum records

9. Minutes

10. Subsequent action by the client and by others

> Key principle: Match the best available evidence to the assertion being tested.

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### 4. Advantages and Disadvantages of an Audit Programme

Advantages	Disadvantages
Provides assistants clear instructions	Work may become mechanical (done without understanding)
Gives a total perspective of work for major audits	Programme may become rigid and inflexible
Eases selection and assignment of assistants	Inefficient assistants may hide behind the programme
Prevents overlooking important books/records	May kill initiative of efficient and enterprising assistants
Signatures signify acceptance of work; easy to trace
Principal can control progress of various audits
Serves as a guide for future audits
Serves as evidence against charges of negligence

Worked example

### Example 1

Evidence matching – Cash in hand: The best evidence for verifying cash in hand is a physical count by the auditor. Documentary evidence alone is insufficient.

### Example 2

Evidence matching – Investments pledged with a bank: The best evidence is a banker's certificate confirming the pledge. The auditor cannot physically examine pledged securities held by the bank.

### Example 3

Evidence matching – Book Debts: Multiple evidence types work together:

Client's ledger, invoices, debit notes, credit notes, and monthly statements sent to customers are all evidence.
Some are corroborative (support each other), others are complementary (fill gaps).
Balance confirmation from debtors is also obtained to gain greater satisfaction about the reliability of the book debts assertion.

⚠️ Common exam mistakes

Confusing 'best evidence' with 'any available evidence' – always identify the most direct evidence for each assertion.
Treating the audit programme as a permanent checklist – it must be reviewed periodically and updated for new risks.
Forgetting that a written programme is required; mental plans risk overlooking key books or records.
Listing only advantages of an audit programme in exam answers without mentioning disadvantages – examiners expect a balanced view.

Reference:

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