Get To Know How a Basic Accounting Audit Can Be Performed
Auditing is an interesting as well as challenging domain that requires analytical bent of mind and concise application of Generally Accepted Accounting Standard using standard auditing producers.
For performing a basic accounting audit, you need to follow some basic steps:
Firstly, you need to recognize the organization or client that is to be audited. Abide by the company procedures of commencing an audit, such as engagement letter to establish the terms of operation and establish the terms of operations. Figure out the various business departments to be audited. Set up an audit team and resources needed for the audit taking into account the desired skills and performance levels.
Understand the client's business organization, his/her business objective and identify the accounting standards, policies, legislature and that are relevant to the department to be audited and previous accounting audit reports and observations. During analysis, identify audit risks and inherent risks that might be involved in the audit process. Plan and collect resources to be used so that you do not need to rely on the client being audited for supplies.
Once you have set up your audit team, introduce them to the client being audited. Analyzed the existing accounting systems and then sketch flow charts that reflect the system infrastructure. Examine the flow charts and identify if there is any flaw in the system. After system analysis, examine the established sample of transactions and records to check for compliancy, accuracy, expertise according to standard requirements. Inspect the selected volume and types of transactions audit so as to perform an efficient audit according to the sampling frequency and percentages established. During the audit process maintain effectual and standard observations, and recommendations for the respective accounting systems and accounting records examined.
The next step would involve gathering evidence by recording observations and making recommendations to improve the accounting systems. Assemble standard audit data files using information collected during the audit which include current and permanent file papers, audit administration and evidence papers and then eventually synthesize the data collected by all the members of the audit team. Once the data has been collected, produce an audit report document to be presented to seniors in the audit department for further examination and analysis.
Last but not the least, conduct an audit meeting with an audit supervisor to officially communicate the audit findings to incorporate the required recommendation. Make final alteration in the report drawn from audit observations to include the client's comments and suggested recommendations.