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shashee
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Posted: 25 Aug 2008 at 01:38 | IP Logged  

The audit program usually cannot be finalized until the:

a.     Consideration of the entity's internal control has been completed.
b.     Engagement letter has been signed by the auditor and the client.
c.     Reportable conditions have been communicated to the audit committee of the board of directors
d.     Search for unrecorded liabilities has been performed and documented.


Ans A.

Explanation for not having d given is:The search for unrecorded liabilities typically takes places after year-end, while the audit program is prepared during planning. Information obtained from the search is not needed to finalize the audit program.

I cud not understand. If anybody, please clarify


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HillbillyLawyer
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Posted: 25 Aug 2008 at 02:33 | IP Logged  

This is not asking about what is necessary to finalize the substantive audit.  Rather, I infer it is asking about what is necessary to finalize the design of the program, i.e. what steps/procedures are planned to be completed during the course of the audit.

There is a very similar question in Gleim which uses the word "plan" instead of "program."  Answer and explanation are same as what you encountered.  In initially reading your post, I understood "program" to be synonomous with "plan."  I didn't remember that Gleim had used alternative wording until I looked back at the question.

I googled the term "audit program" and found it to be defined the same as my understanding of "audit plan."

See http://www.abrema.net/abrema/audit_program_g.html

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hrithikzgirl83
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Posted: 25 Aug 2008 at 20:57 | IP Logged  

Audit programs need to be prepared before you start any of your fieldwork.  So the only work you've done is testing the internal controls of the company.  After you check the IC, assess your risk, then you can finalize your audit programs.



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shashee
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Posted: 26 Aug 2008 at 09:22 | IP Logged  

thank hillbilly & hrithikgirl

the link is really helpful in understanding concept.

now things r clear

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