## **Learning Outcomes**

After studying this article, you will be able to explain the role of audit programmes in the audit strategy and plan, describe how they guide audit work, and evaluate the main advantages and disadvantages of using standardised audit programmes. You will understand how audit programmes contribute to audit documentation, quality, and risk management, while recognising the need for appropriate professional judgement in their use.

## **ACCA Foundations in Audit (FAU) Syllabus**

For ACCA Foundations in Audit (FAU), you are required to understand how audit planning is carried out efficiently and effectively. In particular, revision and exam success depends on your knowledge of:

- The purpose of planning an audit, and the distinction between audit strategy and the audit plan
- The structure and content of audit programmes
- The role of audit programmes in supporting audit objectives and procedures
- The benefits and limitations of using standard or standardised audit programmes
- The necessity for flexibility and application of professional judgement in designing audit work
- The importance of audit documentation and control over audit quality

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. What is the primary function of an audit programme within the audit planning process?
2. State two benefits and two drawbacks of using standardised audit programmes.
3. True or false? Audit programmes should always be followed strictly, with no changes allowed during the audit.
4. Give an example of how the use of a standard audit programme might lead to a potential problem for audit quality.

## **Introduction**

Effective audit planning is essential for ensuring that audit work is performed in an organised, efficient, and risk-focused manner. Once the audit strategy and plan are developed, the specific procedures to be performed—what, how, and by whom—must be clearly documented. This is the purpose of the audit programme. For the ACCA exam, you need to understand both the value of these programmes and the reasons auditors must be cautious in relying on standardised approaches.

> **Key Term: audit programme**
> A document listing the detailed audit procedures to be performed for a specific area of the audit, including references to risks, objectives, sample sizes, and staff responsibilities.

## **Role of Audit Programmes in Audit Strategy and Plan**

### Structure and Purpose

An audit programme sets out, in detail, the audit procedures required to achieve the objectives of each audit area (such as sales, purchases, payroll). It acts as a set of instructions for audit staff, recording not just what tests should be performed, but also the rationale, extent, timing, and responsible individual. Audit programmes form an essential part of the audit documentation, supporting supervision, review, and quality control.

During planning, the overall audit strategy determines scope, major risks, and the broad allocation of resources. The audit plan translates this into a more detailed approach, while the audit programme provides the line-by-line operational guidance for audit procedures at the assertion level.

> **Key Term: standardised audit programme**
> A pre-prepared list of typical audit objectives and procedures designed to be used across different clients or audit areas.

### Link to Audit Documentation

Audit programmes help ensure that all necessary work is carried out and recorded. They enable traceability—from identified risks and objectives in the audit plan to the specific procedures applied and their results. They serve as a basis for quality control during supervision and review.

## **Advantages of Audit Programmes**

Properly designed and implemented, audit programmes provide several key benefits:

- **Consistency and completeness:** Audit programmes offer a checklist to make sure no critical procedures are missed, especially on recurring or routine audits.
- **Efficiency:** Standard programmes help less experienced staff know exactly what to do, ensuring efficient delegation and training.
- **Control and supervision:** Work can be tracked, reviewed, and signed off, aiding supervision and ensuring procedures are performed correctly.
- **Documentation:** Programmes create a clear record of planned and executed procedures, supporting future audits and regulatory compliance.
- **Risk management:** By formalising responses to identified risks, audit programmes support a risk-focused approach across different areas.
- **Quality improvement:** Standardisation promotes consistent high-quality work, even in areas with high staff turnover.

### **Worked Example 1.1**

**As an audit senior, you are leading the audit of Carltex Ltd. The team includes two juniors who are new to the payroll audit. How does the audit programme benefit your planning and supervision?**

> **Answer:**
>
> - You can provide juniors with the payroll audit programme, which describes exactly what checks, tests, and evidence are required.
> - Juniors work through the specified tasks, ticking each as completed and recording results.
> - As senior, you review the audit programme for sign-offs and any exceptions noted, ensuring no steps are missing and quality is maintained.

## **Disadvantages of Audit Programmes**

Despite their benefits, audit programmes have limitations that must be recognised:

- **Loss of flexibility:** Rigid use may cause auditors to focus on standard procedures even when unique client risks require alternative approaches.
- **Stifling professional judgement:** Over-reliance can discourage staff from applying critical thinking and adapting to changes in client circumstances.
- **Inadequacy for all situations:** A standard programme might miss unusual transactions, new regulations, or changes in accounting systems.
- **'Tick box' mentality:** Staff may focus on completing tasks for the programme rather than understanding the risks or objectives, reducing audit quality.

### **Worked Example 1.2**

**A large client, after a recent business acquisition, has changed its revenue recognition policy. The audit team uses the prior year's standard revenue audit programme without adjustment. What risk does this pose?**

> **Answer:**
>
> - The unchanged standard programme may not include procedures targeting the new revenue area, so significant risks could go undetected.
> - This demonstrates how inflexible, standardised programmes can fail to address material changes, potentially leading to audit failure.

### **Exam Warning**

> A common error in the exam is to describe audit programmes as a substitute for professional judgement. In reality, audit staff must always consider whether the standard programme requires adjustment for specific client risks or business changes.

## **Standardised vs Tailored Audit Programmes**

Standardised programmes are pre-set, often used for common audit areas like purchases or receivables. While they provide helpful structure, the auditor must assess each client's unique risks before use. Audits involving complex systems, significant changes, or unusual transactions will require the programme to be customised. Failure to do so could result in missed areas of potential misstatement.

> **Key Term: professional judgement**
> The application of appropriate experience, knowledge, and scepticism by the auditor when making key audit decisions.

## **Audit Programmes and Quality Control**

Audit programmes enable traceable supervision and review. As each procedure is performed, the staff member initials and dates the step. Reviewers can identify who did what, when, and any errors or omissions for follow-up. They provide evidence, if ever needed, that procedures were performed according to accepted standards.

## **Summary**

Audit programmes are an essential tool in audit planning, providing structure, clarity, and discipline to the execution of audit work. However, auditors must remain alert to their limitations, ensuring that standardised approaches are adapted as needed for the risks and circumstances of each client. Sound professional judgement is always required.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- Define the audit programme and explain its function in the audit plan
- State the benefits of audit programmes for efficiency, supervision, and documentation
- Identify potential drawbacks of rigid or inappropriate use of standardised audit programmes
- Explain that audit programmes do not replace professional judgement and must be adapted for each audit
- Recognise the importance of documenting completed work on the audit programme for quality review

## **Key Terms and Concepts**

- audit programme
- standardised audit programme
- professional judgement

Audit strategy and plan - Role, advantages and disadvantages of audit programmes