AUDITING

Audit Programme, Routine Checking, Efficiency Audit

STUDENT NAME:
NEHA GUPTA
AUDIT PROGRAMME

An audit programme is a set of directions which the

auditor and its team members need to follow for
proper execution of audit. After preparing an audit
plan, auditor allocates the work and prepares a
programme which contains steps that the audit
team needs to follow while conducting an audit.
Thus, an auditor prepares a programme which
contains detailed information about various steps
and audit procedures to be followed by the audit.
An audit program provides a basic plan for
the audit team regarding entity’s business,
its size, how to conduct the audit,
allocation of work among team members
and the estimation of time within which it
should complete the work.
ADVANTAGES

1. An audit programme helps in ensuring that all

important areas are considered while
conducting the audit.
2. An audit programme helps an auditor in the
allocation of work among its team members
according to their skills and competency.
3. It enhances the accountability of audit team
members towards work performed by them
4. An audit programme also reduces the scope for
misunderstanding among team members
regarding the performance of audit work.
5. It helps the auditor in checking the status of audit
work, its progress, how much it is left for
performance while conducting the audit.
 DISADVANTAGES

1. Rigidity: There is no set standard audit programme

which can be applied in case of every entity. However,
programmes differ for different types of entities. Every
entity has its own problems. Therefore, we cannot apply
a single audit programme in the case of all business
entities.
2. Reduces the Initiative of Efficient Staff: – A programme
reduces the initiatives of efficient and competent staff.
Thus, staff members cannot make changes in the audit
plan and cannot make suggestions to it.
3. Audit Work becomes Mechanical: The programme
becomes mechanical when it ignores other aspects like
internal control.
4. Overlooking of New Areas: A programme may overlook
the new areas. With the change in time and technology,
new problems may arise which an audit programme may
not consider.
Routine Checking:

Whatever may be the size, constitution and

nature of activities and transactions of a
business, there are certain records and books
which are common to all types of business
organizations.

The checking of such common records and

books which is carried on by the auditor as a
matter of routine is known as routine checking
in auditing. Routine checking involves normally
four types of functions:
 ADVANTAGES

(i) The books of original entry can be thoroughly

checked and the errors and fraud can be easily
detected.

(ii) Postings (i.e., matters taken from records made in the

books of original entry to the ledger) can be checked.

(iii) The checking of castings and postings done in

routine checking is the very basis upon which the final
results of audit depend. Hence, it helps in the checking
of final accounts ultimately.

(iv) In short, it reveals the errors and fraud of a simple

nature and, if done with care and caution, it helps in the
verification of the arithmetical accuracy of the entries.

(v) Routine checking is a simple job which can be done

Disadvantages :

• Routine checking is practically a mechanical

process and hence, it can cause monotony to
those who are entrusted with this task.

• Only minor cases of fraud can be detected by

routine checking. Major items of fraud cannot
be brought to light.

• There appears to be a lot of difficulty in

tracing out compensating errors and
errors of principle.

• Routine checking is not always considered

important in the audit of a business where self-
balancing system is used.
EFFICIENCY AUDIT

Effectiveness denotes
accomplishment of objectives and
efficiency denotes fulfillment of
objective with minimum sacrifice of
available scarce resources.
Efficiency Audit is the audit which
ensures that every rupee invested
yields optimum results.
The main objective of Efficiency
Audit is to ensure that:

(i) There is most optimum utilization of investment,

and

(ii) That investment is canalized in most profitable

lines.

Efficiency Audit indicates towards appraisal or

scrutiny of actual performance with reference to
expected efficient standards.
The parameters based on which Efficiency Audit
is conducted are:

(a) Return on capital,

(b) Capacity utilization,

(c) Optimum utilization of men, machines and materials,

(d) Export performance and import

(e) Liquidity position, and

(f) Payback period.

THANK YOU