Chapter 4 Planning and Programming Audit

Nama : Rida Widyanti
NIM : F0308076
Chapter 4 Planning and Programming Audit
In any audit, especially in performance audits, the auditor should be concerned with how to
organize his own work as any other manager. In auditing, this “how” is often described as:
“Audit planning and programming: adequate planning for information and evidence to
be gathered on the audit objective during each phase of the audit function with the proposed
procedures to accomplish the plan.”
The auditor, then, should appropriately determine in advance such items as:
1. The types and quantity of personnel he needs to do the work
2. What information he should gather, how to gather it, and how to evaluate it in order to know
his audit objective
3. What evidence and how much of it he must gather, along with the means to obtain it, in order
to come to the proper conclusion on the objectives, and
4. What result he expects in the way of a report from the work he will do
From his audit planning and his audit program, the auditor will then use various and techniques
 To obtain and use personnel properly, and
 To gather information and evidence, record it in proper form, summarize it so that it can be
evaluated, and then come to an opinion or conclusion on the audit objective.
From this evidence on the objective and the conclusion, he develops a report, which he then presents to
a third party.
Audit Planning
Any kind of audit planning involves three chief concerns that pertain to the overall audit work:
1. Staff and times estimates
The auditor is concerned with staff and time estimates for two separate and distinct periods
of time:
 Preliminary work. The management of audit organization must plan for this preliminary
activity by allotting a certain amount of time for it, and this type of time estimate
becomes an overhead charge until the audit become certainty.
 Detailed examination. For the detailed examination, the auditor should include in his
audit program estimates of time required to do the work. These should include both the
types of personnel needed as well as the man-days estimated to do the audit. While
staff and time estimates will undoubtedly need to be revised as the work goes on, an
original estimate can still be useful to the audit supervisor in planning.
2. Other planning consideration
The auditor needs to plan for a lot of information on the organization, its staff, and its
operations before he begins to make examination. Planning for preliminary phases of the audit
is just as important as audit programming for the detailed examination. The determination of
what is wanted in a prior audit phase is most important, as the results of that determination
become the basis for the program of the next phase.
In public accounting or management services, auditor often must start his engagement
with a proposal. It pertains to manager to apply equally with proposals and engagement letters
for performance audits.
3. Report planning
The auditor should be considering what he is to report on as soon as he determines that he has
affirm audit objective, but the detailed evidence and the opinion or conclusion for the report
will be developed during the detailed examination phase.
Audit Programming
The audit program for each phase, should spell out specifically, what the objective is of the
phase, what must be done to accomplish the objective, as well as what will be done with the result.
When the auditor finds there is a reason for change, he should with approval of his audit supervisor,
make that change.
The audit program for preliminary survey

The main purpose of this phase is to obtain background and general working information on the
audit area. The auditor also makes preliminary test of management control to identify activities
warranting further attention, and it called possible audit objective.
In order to obtain proper background and working information and identify a possible audit
objective, by writing out it in detail, during the preliminary survey phase, what background data must he
obtain, where to obtain them, and what he is to do with them after he has them.
The program for review and testing of management and internal control
Assessing the extent evidence can be relied upon to insure accurate information is often called
determining the competency of evidence, but auditor must go beyond this. He must also consider what
evidence he still needs to assure himself that his audit objective concerning efficient, economical, or
effective.
Furthermore, it is only from review and testing of management control that an auditor able to
determine the detailed steps he will need in his audit program to accomplish detailed examination. By
following a single transaction for an activity all the way through the organization, an auditor can easily
determine the reliability of the information from people within organization and from organization’s
records. He can also spot any weakness in the particular activity that he may want to examine in greater
detail himself or may wish to report to management.
Following a single transaction in the activity pertaining to the tentative objective all the way
through the organization or system, he can easily ascertain whether or not the tentative weakness,
previously identified, is a significant weakness that needs reporting on.
Combined program for the preliminary survey and the review and testing management control
Whether individual audit program are prepared for preliminary survey and for the review and
testing of management control or one program is prepared for both phases, the program must identify
the specific audit objective for the detailed examination and specific steps for accomplishing that
objective. In M-audit, the only objective identified is a tentative objective, which requires an
engagement letter for approval in order to continue the examination.
Audit program for detailed examination

In both in M-audit and P-audit, it is most important that sufficient evidence be obtained on the
criteria, as well as causes and effects, to assure that those criteria are acceptable and that they are not
easily rebutted.
All detailed examination programs generally contain four parts:
1) Background information concerning audit
The background information is usually a brief description of the organization, its
programs, activities, and the way it carries out its procedures concerning the activity
under examination.
2) Result expected from the audit work
The specific result expected on each assignment should be stated as clearly as possible
within the framework of the elements of the audit objective. The result should be
achievable from the procedures provided in the audit program.
3) The audit procedures needed to accomplish the result
This part of the program consists of the specific directions for carrying out the detailed
examination phase of the audit. It should be subdivided into sub objectives concerned
with the causes of the deficiency in the operations of the activity.
4) Special instruction, if necessary. They are:
 The procedures to be followed in handling significant or unusual development
that may arise during the audit
 The method to be followed in indexing and filling working papers
 The use of internal audit work and external studies by consultant
 Other important matters not covered elsewhere in the work program

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Nama : Rida Widyanti

Chapter 4 Planning and Programming Audit

The audit program for preliminary survey

Audit program for detailed examination

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