Auditing is one of the absolute necessities of the business world. Without it, mistakes can slip through the cracks and firms can end up with unexpected costs down the line. An accurate audit is also needed in order to attract capital, as potential investors will consider an unaudited firm too much of a risk.
However, an audit is an extremely complicated process. There are many steps involved, and missing or neglecting one could end up causing serious issues down the line. As such, it’s advised you create an audit checklist before you begin.
To help you out, we’ve prepared this list of the most common audit procedures you’ll need to go through in most jobs. While you’ll need to add tasks for more complicated jobs, this will ensure you have the basics completely covered.
Before the audit
It’s advised that you prepare for an audit well in advance. BSI Group recommends scheduling it in two to three months before it’s undertaken, and it isn’t advisable to leave it less than two months. The American Institute of CPAs points out that the longer you prepare for the audit, the less stress you’ll subject yourself to and therefore the more accurate the final product will be.
There are plenty of tasks you can complete well in advance of the actual audit. These are mostly basic organizational jobs; for example, you’ll need a room available to conduct any relevant interviews, so this will need booking out. Here’s your basic checklist for before the audit:
- Create an agenda
- Assess the risk
- Create a schedule for meetings at the beginning and end of the audit
- Schedule in relevant interviews
- Prepare office space for interviews
- Acquire access to any information, files and staff members you’ll need
The audit program
Your audit program will create a framework from which you’ll be able to carry out your work in a structured manner. As such, it needs to be created with clear objectives in mind. These should run through the entire program, with every element you add being crafted to serve your objectives in some way.
One thing most organizations would agree on is that you need to make sure you’re setting realistic timelines for everything. Give yourself enough time to fully complete the audit to the best of your ability. Here are the steps to creating an audit program you should include on your checklist:
- Risks, and any controls mitigating them
- Details of those controls
- Testing procedures for those controls
Audits are complicated, and they require multiple points of view in order to ensure they’re as accurate and comprehensive as possible. In the UK, the Institute of Chartered Accountants in England and Wales found that a quarter of audits were lacking in some way, with 10% requiring significant improvement.
Make sure you’re reviewing the audit with a range of different people to ensure there are no steps that have been missed or areas of data that you’ve misinterpreted. Here are the people you should aim to review your audit with at a bare minimum:
- Senior manager
- Auditor’s point of contact
- Expert in the field