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Cost and Management Audit · Cost Audit Programme

Conducting the Cost Audit Programme and Modifying It

Updated 11 October 2026 · Fact-checked

A cost audit programme is the detailed list of audit procedures. You carry it out in line with the relevant Standards on Cost Auditing (SCA 103 para 5.2), review work as it proceeds, and revise the programme when circumstances change. The plan is the overall strategy. The programme is the step-by-step procedures.

Understand Conducting the Audit per Programme and Modifying It

A cost audit plan is the overall strategy. It sets the scope, timing, areas of risk and resources for the audit. A cost audit programme sits under the plan. It lists the specific procedures to be performed, such as checking material consumption, verifying overhead allocation or reconciling cost and financial records.

Think of the plan as the route map and the programme as the turn-by-turn directions. The plan answers 'what and when overall'. The programme answers 'which procedure, on which item, by whom'.

Conducting the audit means performing these procedures while complying with the Cost Auditing Standards. SCA 103 para 5.2 says the cost auditor shall comply with each Cost Auditing Standard relevant to the audit. A standard is relevant when it is in effect and the circumstances it addresses exist. Para 5.3 adds that you must understand the entire text of the standard, including its application and explanatory material, to apply it properly.

A programme is not fixed. As you find new facts, such as a misstatement, a weak control or a change in the auditee's operations, the risks change. You then modify the programme: add procedures, widen samples or drop procedures that no longer apply. Record the change and the reason in your working papers.

Throughout, you apply professional skepticism (para 5.6) and professional judgment (para 5.8). Skepticism means you recognise that the cost statements may be materially misstated. You do not accept explanations without evidence.

Key rules to remember

Compliance with relevant standards (SCA 103 para 5.2)
Relevant standard = in effect + circumstances it addresses exist
The cost auditor shall comply with each relevant Cost Auditing Standard.
Representing compliance (para 5.4)
Report compliance only if ALL relevant standards are fully complied with
Do not state compliance in the report if even one relevant standard is not fully complied with.
Departure from a requirement (para 5.5)
Exceptional circumstances → alternative audit procedures achieving the aim of the requirement
Departure is allowed only in exceptional circumstances, and alternative procedures are mandatory.
Objective not achieved (para 5.11)
Objective not achieved → evaluate effect on overall objectives → consider modifying opinion
This links the programme to the report.
Plan vs programme
Plan = overall strategy; Programme = detailed procedures
Use this to answer difference questions.

How to solve Conducting the Audit per Programme and Modifying It questions

Use this method for questions on conducting, reviewing or revising a cost audit programme.

  1. 1Identify what is asked: difference between plan and programme, requirements of SCA 103, or a case needing a revised programme.
  2. 2State the relevant principle first, such as the duty to comply with relevant standards (para 5.2) and to apply skepticism and judgment (paras 5.6, 5.8).
  3. 3Link the facts of the case to the programme. Name the procedure affected, for example cost sheet verification or overhead allocation.
  4. 4Explain what changed: a new risk, a misstatement found or a change in the auditee's operations.
  5. 5Say how the programme is modified: add procedures, extend samples or substitute alternative procedures.
  6. 6Mention documentation of the change and the reason in the working papers.
  7. 7Consider the reporting effect. If a standard's objective cannot be achieved, evaluate the impact on the opinion (para 5.11).
  8. 8Close with a clear conclusion in one line.

Quickest way: Plan, Follow, Adapt, Record

When to use it: Use it for short-answer or MCQ questions when you have little time.

  1. Plan = strategy. Programme = procedures.
  2. Follow the relevant SCAs (para 5.2).
  3. Adapt the programme when risks or facts change.
  4. Record the change and reason.
  5. Report compliance only if every relevant standard is fully complied with (para 5.4).

Common mistakes in Conducting the Audit per Programme and Modifying It

  • Using plan and programme as the same thing.

    Both are prepared before the audit and sound alike.

    Fix: Write one line each: plan is the overall strategy, programme is the detailed procedures.

  • Saying every Cost Auditing Standard applies to every audit.

    Students skip the word 'relevant'.

    Fix: State the test: the standard must be in effect and the circumstances it addresses must exist.

  • Treating the programme as fixed once approved.

    It is seen as a checklist.

    Fix: Say it must be reviewed and revised when new facts, risks or misstatements arise, and the change is documented.

  • Claiming departure from a requirement is freely allowed.

    Students confuse judgment with discretion.

    Fix: Departure is only in exceptional circumstances and needs alternative procedures that achieve the aim (para 5.5).

  • Stating compliance in the report despite a partial lapse.

    Students think substantial compliance is enough.

    Fix: Para 5.4 requires full compliance with all relevant standards before representing compliance.

Worked examples

Example 1

A cost auditor of a manufacturing company has prepared a programme. During the audit, she finds that the company changed its method of allocating utilities cost during the year. Explain what she should do in relation to the programme and the standards.

Show the solution
  1. The change creates a risk that cost statements may be misstated, so skepticism applies (para 5.6).
  2. She reviews the programme and finds the existing procedures on overhead allocation are not enough.
  3. She modifies the programme by adding procedures: examine the basis of the change, recompute allocation under both methods and check consistency with cost records.
  4. She keeps complying with each relevant standard (para 5.2) and applies professional judgment (para 5.8) in deciding the extent of added work.
  5. She documents the change and the reason in the working papers.
  6. If an objective of a relevant standard still cannot be achieved, she evaluates the effect on her opinion (para 5.11).

Answer: She should revise the programme by adding procedures on the changed allocation method, document the change, continue to follow relevant standards, and consider modifying her opinion if an objective cannot be achieved.

Example 2

Distinguish between a cost audit plan and a cost audit programme. Also state when the auditor may depart from a requirement of a Cost Auditing Standard.

Show the solution
  1. Plan: overall strategy covering scope, timing, risk areas and resources. It is broad and prepared first.
  2. Programme: detailed procedures to be performed, item by item, to carry out the plan. It is specific and usable by the audit team.
  3. Programme can be revised as the audit proceeds, and the plan may also be updated when the overall approach changes.
  4. Departure: SCA 103 para 5.5 allows it only in exceptional circumstances.
  5. In that case the auditor shall perform alternative audit procedures to achieve the aim of the requirement.
  6. Representing compliance in the report needs full compliance with all relevant standards (para 5.4).

Answer: The plan is the overall strategy; the programme is the detailed set of procedures. Departure from a requirement is allowed only in exceptional circumstances, with alternative procedures achieving its aim.

Exam tips

  • For difference questions, use a two-column comparison in words: scope, detail, timing and purpose.
  • Quote the para numbers 5.2, 5.4, 5.5, 5.6, 5.8 and 5.11 of SCA 103 only when sure of what each says.
  • In case questions, always name the changed fact and the exact procedure you would add.
  • Keep every answer decision-ready: state what you do, why, and the effect on the report.
  • In MCQs, watch words like 'all', 'relevant' and 'exceptional'. They decide the correct option.

Practice questions from Cost Audit Programme

Conducting the Audit per Programme and Modifying It in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Conducting the Audit per Programme and Modifying It: frequently asked questions

What is the difference between a cost audit plan and a cost audit programme?

The plan is the overall strategy covering scope, timing, risks and resources. The programme is the detailed list of procedures that carry out the plan.

What does SCA 103 para 5.2 require?

It requires the cost auditor to comply with each Cost Auditing Standard relevant to the audit. A standard is relevant when it is in effect and the circumstances it addresses exist.

Can a cost audit programme be changed during the audit?

Yes. If risks, facts or misstatements change, the auditor revises the programme and records the reason. Professional judgment decides the extent of change.

Can the auditor ever skip a requirement of a standard?

Only in exceptional circumstances. The auditor must then perform alternative procedures that achieve the aim of that requirement (para 5.5).