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Disadvantages of Audit Programme

The disadvantages of a predetermined audit program include: (1) audit staff may fail to notice unusual features in the organization and lack innovative techniques, (2) staff have less initiative and focus more on completing work quickly than maintaining standards, and (3) the program may not be revised even after errors and new areas need checking unless revised.

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675 views

Disadvantages of Audit Programme

The disadvantages of a predetermined audit program include: (1) audit staff may fail to notice unusual features in the organization and lack innovative techniques, (2) staff have less initiative and focus more on completing work quickly than maintaining standards, and (3) the program may not be revised even after errors and new areas need checking unless revised.

Uploaded by

zenellebella
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Disadvantages of Audit Programme

The disadvantages that may be experienced by conducting audit as per Predetermined audit programme
are;

1. The audit staff may find the work mechanical, and fail to notice unusual features (if any) in the
organization.

2. The audit staff may not develop any innovative techniques in audit. Initiatives on the part of the staff
may not be encouraged in the per-determined audit programmes.

3. The audit staff will be more interested to complete the work in time rather than to maintain any
standard in the work.

4. Staff cannot take their own decisions and they are compelled to comply with the audit programme.

5. The audit programme may not be revised from time to time even after errors noticed during the
audit.

6. During the course of audit, new areas to be verified may come to the notice of the audit staff Unless
the audit programme is revised, such areas may escape from auditing.

7. Pr-determined audit programme may not be suitable for small organizations.

What are current and Permanent Audit files?

In the case of recurring audits, some working paper files may be classified as permanent audit files
which are updated currently with information of continuing importance to succeeding audit, as distinct
from current audit files which contain information relating primarily to the audit of a single period.

A permanent audit file normally includes :

• Information concerning the legal and organizational structure of the entity. In the case of a
company, this includes the Memorandum and Articles of Association. In the case of a statutory
corporation, this includes the Act and Regulations under which the corporation functions.

• Extracts or copies of important legal documents, agreements and minutes relevant to the audit.

• A record of the study and the evaluation of the internal controls related to the accounting
system. This might be in the form of narrative descriptions,questionnaires or flow charts, or some
combination thereof.

• Copies of audited financial statements for previous years.

• Analysis of significant ratios and trends.


• Copies of management letters issued by the auditor, if any. Record of communication with the
retiring auditor, if any, before acceptance of the appointment as auditor.

• Notes regarding significant accounting policies.

• Significant audit observations of earlier years.

The current file normally includes :

1. Correspondence relating to acceptance of annual reappointment.

2. Extracts of important matters in the minutes of Board Meetings and General Meetings as
relevant to audit.

3. Evidence of the planning process of the audit and audit programme.

4. Analysis of transactions and balances.

5. A record of the nature, timing and extent of auditing procedures performed, and the results of
such procedures.

6. Evidence that the work performed by assistants was supervised and reviewed.

7. Copies of communication with other auditors, experts and other third parties.

8. Letters of representation or confirmation received from the client.

9. Conclusions reached by the auditor concerning significant aspects of the audit, including the
manner in which exceptions and unusual matters, if any, disclosed by the auditor’s procedures were
resolved or treated.

10. Copies of the financial information being reported on and the related audit reports.

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