Jagat Jangra: Your Educational Guide

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An audit committee is an operating committee of a company's board of directors that is in charge of overseeing financial reporting and disclosure.

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It is a written scheme of the exact details of the work done by the auditor and his staff in connection with the particular work. All the work which is assigned to each member of the audit team is written in the audit programme. Audit programme guides the audit personal in work to audit be done.

ADVANTAGES OF AUDIT PROGRAMME 1. Supervision Of Work :- The auditor can judge the efficiency of his audit team by holding of an audit programme. He is in a position to know the progress of the work. He can see at any time that what part of the work has been completed and what remains to be done. 2. Distribution Of Work :- Audit programme is very useful in distributing the audit work properly among the members f the audit team according to their talent. 3. Uniformity Of Work :- Audit programme helps in settling all the things in advance, so the uniformity of work can be achieved. 4. Basic Instrument For Training :- Audit programme is very useful for the new auditor. It provides training and guidance to him. So it is rightly called the basic instrument for training. 5. Legal Evidence :- Audit programme is a legal evidence of work done by every assistant of the audit team. It can be presented in the court of law if any client is taken against the auditor for negligence. 6. Fixation Of Responsibility :- If any error or fraud remains undetected the responsibility of negligence will fall on the particular assistant who has performed that job. 7. Several Audits may Be Controlled :- The auditor controls the audit of various companies at the same time. In the absence of audit programme he can not supervise them effectively. 8. Easy Transfer :- If one assistant is unable to continue the work given to him, it can be given to another person. Audit programme guides him that what is done and what is remaining. 9. Final Review :- Before signing the report, final review is made and for this purpose also auditing programme is very useful. 10. Useful For Future :- On completion of an audit, it serves the purpose of audit record which may be useful for future reference.

DISADVANTAGES OF AUDIT PROGRAMME 1. Not Comprehensive :- Auditors may have covered the whole field but it can not be said with certainty that all the necessary work have been done. 2. Rigidness :- Audit programme looses its flexibility. While each business have a separate problems. So audit programme can not be laid down for each type of business. 3. No Initiative :- It kills the initiative of capable persons assistant can not suggest any improvement in the plan. 4. Too Mechanical :- Such audit programme is mechanical that it ignores many other aspects like internal control. 5. Not Suitable For Small Audit :- It has been proved that audit programme is not suitable for sail audits. 6. New Problems Over Looked :- With the passage of time new problems arise which may be over looked.  

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An evaluation of internal control involves an examination of the effectiveness of an organization's system of internal controls. By engaging in this evaluation, an auditor can determine the extent of other tests that must be performed in order to arrive at an opinion regarding the fairness of the entity's financial statements. A robust system of internal controls reduces the risk of fraudulent activity, which moderates the need for additional audit procedures. The examination concentrates on such issues as:

• The separation of duties
• Checks and balances
• Safeguarding of records
• The training level and competence of employees
• The effectiveness of the entity's internal audit function

The steps involved in this evaluation process include the following:

Determine the extent and types of controls being used by the client. Determine which of these controls the auditor intends to rely upon. Based on the first two steps, determine which audit procedures should be expanded or reduced. Make recommendations to the client regarding how to improve its system of internal controls.

The last of the preceding steps is useful for improving the control environment for the auditor in the following year's audit.