In general an audit tool is anything auditors use to complete an audit. An audit tool can be software such as ACL, Access or Excel. It can also be a hard-copy audit program or check list. In fact, audit tools developed by auditors are usually audit programs, checklists, Excel workbooks and work sheets that are printed out and used as work papers to document the audit as it is completed (and also stored electronically for safe keeping and future reference).
Developing an audit program is a team process in which a supervising auditor, manager or partner approves each section as auditors complete it. An audit program is a step-by-step process written out for the auditors to follow. By following the audit program the auditor can complete the audit in an efficient and effective manner. When an audit program is developed it must go through an approval process so when an audit has been completed and the audit supervisor has reviewed and approved the work there is assurance that the audit has been completed properly and in compliance with applicable audit standards. Once an audit program is completed it can be used for similar audits with a little tweaking. Over time, an audit firm can build a library of audit programs that can be used to develop new programs for new audits. In other words, build on past experience.
Developing a checklist is similar to developing an audit program except that checklists are focused specifically to a function. One checklist will focus on accounts receivables and another checklist will focus on accounts payable and yet another checklist will focus on cash receipts and so on. Developing checklists is a straightforward process, but they are very detailed and are used to evaluate internal controls over a function or process. Seasoned auditors can easily handle the development of checklists and, again, it is a team process requiring supervisor approval. Supervisors need to spend more time on checklists because they are used for detail work that involves internal controls that must be properly evaluated.
Excel worksheets are usually developed by the staff auditors for specific work. For example, a staff auditor may be assigned to test a sample of accounting transactions. These transactions can be listed in an Excel worksheet with all pertinent information such as date, amount, account number, transaction number and so on. The attributes to be tested can also be listed and a tic mark legend developed to indicate the tests performed. Any exceptions or problems can be noted on the work sheet and referenced to the applicable transactions. Conclusions regarding the transaction testing also can be written on the worksheet and referenced to the applicable section of the audit program. All of these worksheets will be reviewed by a supervisor and either approved or sent back for more work.