Audit Program

An audit program is a course of action that businesses undertake to comply with regulations. While the content varies depending on the type of business, the principles are the same.

The goal of the audit program is to devise a guide for the auditor to follow. This guide comes with predetermined goals.

• Audit programs are tools that help auditors determine a course of action. The program is a guide that highlights steps taken to achieve compliance. These steps helped the company pass external audits.
• The process has several advantages, such as determining the time and human resources involved. The program gives auditors a clear view, a roadmap.
• The main types of programs are compliance, standardized audits, and tailored audits. Each type of audit has a distinct purpose with its strengths and weaknesses.

The main objective of an audit program is to prepare a step-by-step guide that is detailed and practical enough for an external auditor. It’s essentially a detailed checklist that will determine whether or not a company adheres to certain criteria. The specific evaluation standards depend on the kind of company and the purpose of the audit. However, the process of creating the document remains the same.

Once created, this guide instructs the audit team. The personnel involved in auditing use the guide to coordinate with each other. While in-house auditors often use it, the impersonality of the document is vital to maintain its usefulness in case there is a change in management. An objective guide also helps when the task is delegated to someone new.

An audit plan meets the following goals:

• It helps allocate human resources to evaluation. In addition, this program helps in the division of responsibilities.
• It is used in setting a clear metric of what needs to be done for a successful evaluation.
• An audit program is a roadmap. An auditor can easily check how much work is pending and how much it is completed.
• It enables the auditor to maintain a record. As a result, the next audit will be easier with material to compare with.
• The audit plan enhances efficiency, uniformity, and continuity of the process.

Not all audit guides are the same. They vary in flexibility, and they could either be standard industry programs, specific to one enterprise, or more generalized. Some programs are focused more on complying with current regulations. Other types are standardized and can be applied to many firms operating within the same niche.

#1 - Standardized Audit Program

It is the simplest program. Unlike specific versions, the main goal of standardized programs is to offer a standard reference that will be used in an area. These documents are not devised by a specific company but often by corporate institutions.

For example, a corporate alliance focused on the fintech industry could release a new audit program. It would determine what steps are necessary to consider a company fit to operate in this market.

All other companies similar to this organization could then use it as a guide. Other companies can either devise their plans or follow the same standards. Companies who choose a customized and unique program take into account the specificities of their businesses,

#2 - Tailored Audit Program

The tailored program is the opposite of the standardized version. It takes into account the specificities of the company and builds from there.

Due to the specificity of this type of audit, guides vary from business to business. Unlike its more neutral counterpart, it is devised by people inside the company, and it takes its goals, mission, and culture into account. In other words, this program will not be useful if applied outside the particular firm.

#3 - Compliance Audit Program

Compliance audit plans focus solely on following compliance rules. It’s the kind of program that will determine all the actions that a third-party auditor will have to follow to determine whether a business is following the current regulation imposed by the government.

It is one of the most vital plans in highly regulated areas such as finance. If companies fail to create proper compliance programs, they get fined and face hurdles from the regulatory agencies.

#4 - Fixed or Flexible Audit Program

Audit guides are further classified based on whether they are fixed or flexible. A fixed program is very rigid and does not allow for changes. It is more common in tailored audits. It looks specifically into situations that affect the company. There is no need to change such a guide. Because right from the inception, it is tailored to fit the business.

However, for flexible audit programs, the auditor gets only an outline of the scope and procedures. In this case, the auditor has more freedom to determine how the work will be done. Auditors have room to modify parts of the program as they see fit. Such a practice is more common in standardized audits that need more flexibility. These then can be applied to a wide range of firms across sectors.

Consider the following example to understand audit guides better.

The image illustrates the first page of an audit program. It is devised with a few different steps divided into areas.

First, there are steps that auditors need to follow during the background planning phase. On completion of background planning, auditors can start the next set of steps in another company department, say information systems. Subsequently, other departments will be audited similarly.

Some audit guides are straightforward, others detailed. Unlike the example above, some audit guides have an extensive introduction to explain the audit objectives. Detailed introductions are useful because they leave a thinner margin for mistakes. So, they are excellent for third-party use.

This has been a Guide to What is Audit Program and its Meaning. Here we discuss its objectives and types using samples. You may also have a look at the following articles to learn more –

• Certified Internal Auditor (CIA)
• Audit Test
• Interim Audit