Audit Programme

Audit Assertions
As part of the planning stage, auditors
need to prepare audit tests to test the
account areas.
To assist the auditors there are 5 audit
assertions for the income and expenditure
and 5 audit assertions for the balance
sheet.
Transactions are to be tested in audit with
reference to the audit assertions.
Assertions will be different for different
account areas.
 Audit Assertions (Contd.)
In respect of Income and Expenditure
Accounts, the assertions are:
Completeness, i.e. All relevant transactions have
been recorded.
Occurrence, i.e. All transactions are stated
accurately.
Measurement, i.e. All recorded transactions
actually occurred.
Regularity, i.e. All transactions accord with
relevant laws and regulations.
Disclosure, i.e. All transaction are classified and
described in line with relevant regulations.
 Audit Assertions in respect of
Income-Expenditure Accounts
Assertion Questions
Completenes Has the transaction been
s recorded in the accounting
records?
Measuremen Is the transaction recorded at
t the correct value?
Occurrence Is the transaction recorded as
expenditure in correct year of
account?
Regularity Is the transaction legal and
regular?
Disclosure Is the transaction correctly
coded and disclosed?
 Audit Assertions in respect of
Balance Sheet Items
In respect of Balance Sheet items, the assertions
are:
Completeness : All assets and liabilities relating to the
period have been recorded.
Ownership: The assets and liabilities recorded
pertain to the entity.
Valuation: The asset or liability is valued in line with
appropriate accounting policies, consistently applied.
Existence: The assets or liabilities represented in the
statements exist at the Balance Sheet date.
Disclosure: All assets and liabilities are disclosed,
classified and described in line with the applicable
reporting framework
Audit Assertions in respect
of Balance Sheet Items
Assertion Questions

Completeness Have assets been recorded in

the accounts?
Ownership Is the asset/item the property of
the entity?
Valuation Is the item recorded at the
correct value?

Existence Was the item still in existence at

the balance sheet date?
Disclosure Is the item correctly
summarized or disclosed?
 A detailed audit program
An audit program consists of an
appropriate audit procedure to achieve
these audit objectives.
Audit programmes are prepared
while planning the audit. At the
planning stage, auditors will
need to prepare audit tests to
test the account areas.
 Audit Programme
The audit programmes set out what
the auditor will test in relation to
each audit assertion
The auditor should set out in the
audit programme:
the objective of the test;

what constitutes an error;

the population to be covered.

 Functions of audit
programme
Audit program
Links planning and execution

Provides framework for supervision and

a ccountability
Helps transfer expertise to junior staf

Facilitates Administrative control

Advantages of an effective
audit programme
Efficiency and consistency
Clear instructins for staf
Avoids overlooking or duplicating work
Evidence of work done
Basis for future audits
Quality work results
Methods of Obtaining Audit
E vidence
Inspection

Observation

Inquiry

Confirmation

Computation

Analytical procedures
Surveys

Interviews

Physical verification
 Inspection

Examination of records,
documents or tangible assets.
Generally, an audit team
places considerable reliance
on this for both tests of control
and substantive tests.
 Observation
Watching a process as it takes
place.
Useful in testing controls that
leave no audit trail.
But, its reliability is limited
because the presence of the audit
team may influence the way in
which the process in carried out.
Enquiry and confirmation
Obtaining information from
knowledgeable people inside or
outside the auditee entity.
Used for both testing of controls and
substantive testing.
Confirmation is a response to an
enquiry which corroborates
information contained in the
accounting records.
 Computation
Checking the arithmetical
accuracy of source documents
and accounting records.
Central feature of substantive

testing.
It is reliable, as the evidence is

created by the audit team itself.

 Analytical procedures
The analysis of the relationship
between items of financial data or
between items of both financial
and non-financial data.
Its reliability depends on the
plausibility of the relationship
examined and the controls
operated over the data used.
Surveys and interviews
Using carefully designed
questionnaires. Independent
consultancy firms may be
outsourced for conducting
surveys.
Interviews with concerned
officers.