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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

Auditing has always been a challenging task for external auditors. It requires them to utilise their full mental potential to find the evidence. The job of auditors has always been extremely tough. They almost empty their minds in completing the pile of paperwork and go back home with tiredness.

The traditional process of finding the factual proof of data and tallying the balance sheet amount exhausts these auditors. It increases their tensions and worries to handle the mess of paperwork that usually requires days to weeks in preparing financial audit reports. Many companies are fed up wasting their time and effort gathering valuable information and presenting it to their bosses.

Doing a manual audit is a cumbersome job and makes them feel wary going through the minute detail of examining petty cash vouchers. They have to collaborate with the internal auditor and other accounting department staff to collect meaningful data.

Here are the eight mindful tips to consider for real time reporting:

Creating An Initial Plan

The first and foremost tip is to create a plan that works out. It should be beneficial and profitable for a company and fulfil the core objectives of an auditor. Before conducting a real-time audit, it is necessary to have initial planning and data assembling. The pre-gathering of information helps an auditor leave no chances for error in handling the audit operation from the beginning.

Defining The Purpose And Future Scope Of Firm’s Auditing

An external and statutory auditor’s responsibility is to explain the clear purpose and futuristic potential of conducting a detailed audit. The audit purpose illustrates an auditor’s mission to execute an error-free audit and prepare a clean and transparent report.

In the scope of the audit, the professional auditors highlight the advantages of audit for the organisation. It includes preparing a clean financial record with no discrepancies and increasing the company’s profit, revenue, income, and sales.

Asking For The Necessary Financial Documents

It is a vital tip to notify the company about the audit. An auditor has to ask permission to execute the audit and show his documents’ requirements for the process. The list of documents includes a copy of the past assessment report, financial ledger, receipts of vouchers, and bank statements. Furthermore, he can also ask for the organization’s chart, copies of the board committee, and minutes of company meetings.

Collecting The Valid Evidence

Auditors are hired to collect the proof of evidence and gather the minor and major information that relates to the company. The process of data gathering is painstaking and requires hours and hours of time to dig deep into every detail, such as accounts receivables, payables, and petty cash vouchers. It involves observation, examination, and interview questions to junior and senior-level employees.

Using Automation To Prepare The Audit Reporting

Nowadays, auditors are blessed with the latest technological tools to conduct the audit process. It is better to use an inspection app rather than messing your head in piles and heaps of paperwork.

Using an audit app saves time and executes the assessment process within minutes. Automation makes life easier for auditors and makes them get rid of a traditional way of auditing. It helps auditors generate as many reports as they can by using customised templates.

Scheduling The Meeting

Arranging the meeting involves having an open session with junior administrative staff and senior key executives. In this session, the auditor presents the scope and potential of an audit. He gives a specified time duration to the board members and discusses all the matters regarding the company audit. Auditors conduct interviews with ordinary staff members and explain to them the process of auditing.

Implementing The Five C’s Rule

The popular five C rule of auditing involves the criteria, condition, cause, consequence, and corrective plan of action. These are the basic components of audit reporting that allow auditors to provide great detail of the inspection and examination process.

The criteria refer to compliance with the standard auditing practices. Likewise, condition defines the existing state of audit and allows an auditor to identify and address the financial issues.

Drafting An Unbiased Audit Report

After having a thorough inspection and examination, it is a responsibility of an external auditor to create a detailed report based on his findings. In his final report, the auditor shares his unbiased opinion about the progress and future success of the company. He also highlights and rectifies the issues that come across in the data found.

The amount of the balance sheet and income statement reflects the actual position of a business. These factors show the true value of an asset, capital, cash, and revenue that strengthen the financial status of an organisation in the stakeholder market. The expenses and liabilities must be eliminated that leave a bad impact on the customers and shareholders.

Bottom Line

Hence, in a nutshell, these above-mentioned are worthwhile tips to consider for company audit reporting. It offers the real time capture of data and information. Follow these remarkable techniques and conduct a systematic audit for any kind of organisation worldwide. Auditing gives a clear perspective of the company and predicts its future scope in the market.

Also Read: 7 Crucial Tips To Use Auditing App For Your Business