What are the three components of an audit program?

An audit program is a structured guide for conducting an audit and typically consists of three crucial components: the objective, the scope, and the program steps.

The objective defines the purpose of the audit and what the auditors aim to achieve. It sets the focus, whether it’s to assess compliance, evaluate efficiency, or ensure the accuracy of financial statements. A clear objective is essential for steering the audit process in a meaningful direction.

The scope delineates the boundaries of the audit, including what will and will not be included. It outlines the specific areas or functions that are to be examined, the time frame of the audit, and any limitations that might affect the audit. Clearly defined scope helps in resource allocation and ensures that efforts are concentrated on areas of greatest risk or relevance.

Program steps consist of the detailed actions that auditors will take to gather evidence and evaluate the financial statements against the criteria established by the objective and scope. This may include specific testing methods, the types of data to be reviewed, and the procedures for documenting findings.

In contrast, other options may present components that are either incorrect or incomplete. For example, narratives may refer to explanations or descriptions that could inform the audit process but are not foundational components of the audit program itself. Similarly, repeating