Audit ProcessThe following are 4 auditing processes at the company, it consist of :
The planning stageIn the planning stage, there are stages you need to go through, such as:
- Considering default risks
From audit planning to the issuance of audit reports, the auditor must consider various risks. In the audit planning stage, the auditor must consider the inherent risk of a risk of misstatement inherent in the account balance or assertion about the account balance. For example, more complex calculations are more likely to result in errors than simple calculations.
- Develop an initial audit strategy for significant assertions.
The ultimate goal of planning and conducting audits by auditors is to reduce audit risk to a low level, to support the opinion whether, in all material respects, financial statements are fairly presented. This goal is realized through gathering and evaluating evidence about the assertions contained in the financial statements presented by management. Develop an initial audit strategy for significant assertions
- Consider various factors that affect the initial balance, if the engagement is a first year audit
The auditor must determine that the initial balance reflects the proper application of accounting policies and that the policy is applied consistently in the current year's financial statements. If there is a change in accounting policy or its application, the auditor must obtain certainty that the change should be carried out, accounted for, and disclosed.
- Review information relating to the client's legal obligations.
- Carry out procedures and analytical
Evaluation of financial information made by studying the relationships that enter between one financial data and other financial data, or between financial data and non-financial data. Analytical procedures include the simplest comparisons to complex models that kill various relationships and data elements. Consider the initial materiality level
- Consider the initial materiality level
Initial materiality at the level of financial statements needs to be applied by the auditor because the auditor's opinion on the reasonableness of the financial statements is applied to the financial statements as a whole. Initial materiality at the account balance level is determined by the auditor at the audit planning stage because in order to reach conclusions about the fairness of the financial statements as a whole, the auditor needs to verify the account balance.
- Gain an understanding of the business and client's line of business
Information TestingAfter going through the planning stage, the auditor will begin testing all information and data obtained in the field, then analyze it. In carrying out this process, there must be a company that is tasked with overseeing the performance of an auditor. So that cheating can be avoided and the results of testing data and information are objective and right on target.
In this stage, the auditor also conducts a mapping stage about the problems that might arise from the observation process, which all of this is related to the information he got beforehand and also to external parties who are involved in the company's funding process.
Get ResultsIn this step, the auditor's duty is to examine the material risks of the company. Then it will be seen if there are errors from the company's financial statements and also losses suffered by the company. After that, the auditor clarifies again. If your company is large, then you must have more than one auditor. If necessary, form a special team of auditors. Because, the greater a company, the risk of financial irregularities will also be even greater.
Before drawing conclusions, an auditor will match the results with other auditors. If other auditors also find the same financial mistakes, then certainly there is something wrong with the company's financial condition. For this reason, the auditor team will conduct further in-depth checks.
Develop Evaluation ResultsThe final step is to compile the evaluation results in the form of a report. Later, this report will be submitted to the company that appointed the auditor. In the report, the auditor must also write recommendations for progress that might be achieved. This is the last step of the entire audit process.
That's 4 easy steps to carry out corporate audits. You will know how your company's financial condition is with the audit process. Although the process is very complicated like hiring an auditor or forming a special team of auditors, the benefits you get are far greater. This audit can also avoid the naughty and ignorant elements who try to disrupt your company's finances.