Six Easy To Learn Techniques For Audit Planning

October 9 , 2021

Many organisations appoint internal auditors to take the responsibilities of keeping a check on the flow of financial transactions within a company. It is a job of an auditor to check the transparency in every single transaction. He has to maintain the fair record of all accounting activities that happen in a financial year. It is a standard practice for every small and large company in the United Kingdom and all around the world.

The financial year begins on the 1^st of July and ends on the 30^th of June. It works entirely different from a regular calendar year that starts on January 1^st and finishes on December 31^st. The job of an internal auditor is to maintain the smooth and seamless workflow operations and check discrepancies in the financial dealing. It leaves the negative impression on the stakeholders and damages the reputation of the company in the market.

If in case, the responsibilities of internal auditor do not work out effectively, the company decides to hire the third party external statutory auditors to find out the embezzlement in the accounting system.

The initial task of external team of auditors is to think of a logical strategy and make an audit plan that work out for the company. In this blog, we will discuss about the six easy to learn techniques for successful audit planning:

Planning An Audit

It is a well thought out process of what to do, how to do, when to do, and who is the responsible person for auditing. There has to be someone in a team who has to become a lead and take responsibility of efficiently executing and effectively completing the task.  The lead auditor should have an extensive knowledge about the client business. He should be well-aware of core objectives, accounting systems, and internal control procedures & policies to complete the audit work in a given time frame.

Determining The Size Of Company

The size of a business plays an integral role in the audit operation. It affects the performance of auditors and put an impact on their work. The large number of employees increases the time duration of auditing and requires a detail assessment of financial records of transactions. The essential rule of planning an audit is to find the size and corporate organisation and begin your work as accordingly.

Making An Appointment

Appointment is an initial stage of meeting with company executives and discussing about the detailed audit procedure. Before signing an audit engagement letter, auditors need to make sure that there should be no hindrance in the project from initiation to finalisation.

The audit company should check and verify the up to date information regarding the client and their business. They should review the legal threats and complications that occur in the execution of audit procedure. Make sure that the letter of engagement is duly signed by both parties.

Assessing The Potential Risks

When it comes to auditing, it is necessary to assess the risks at the beginning so that you can execute a smooth audit task operation. The audit assessment work involves the examination of company situation from different angles. Auditors should review the previous year issues.

They should examine the permanent audit file of an organisation and analyse risk factors. The audit company should discuss the issues with the management of company that could occur during the existing year. They should do a preliminary assessment of ongoing concerns and draft a financial information audit template report for their analytical review.

Creating A Professional Audit Approach

It is a job responsibility of auditors to create and maintain a professional audit approach. They should draft a complete summary of primary audit risks and how they affect the planning and working of audit.

All the risks should be categorised as low, medium, or high with respect to their significance. Auditors must document all potential risk areas and prepare a financial statement framework on how to deal with these issues.

Administering The Audit Team

The third party external audit agency is responsible for planning and creating a proper team of staff. They should have skill set and experience of handling, executing, and completing the audit task within a given time table.

The lead auditor should arrange a regular meeting with his team members and explain them how to address the risks that occur in the audit process. He should brief his team about their task assignment and how to carry out their responsibilities and work unitedly together.

Bottom Line

Hence, in a nutshell, these above-mentioned are the notable tips for audit planning and execution. Planning is a fundamental idea in auditing that makes a process systematic and well-organised for auditors to perform their tasks efficiently.

It provides a step by step procedure of what to do next and how to complete the audit work. The end goal of auditing is to detect the irregularities in the financial statement. They should maintain instant professional reports and submit them to the shareholders.

Also Read: 6 Ingenious Ways You Can Do Audit Planning