The audit process has a significant role in identifying the company's operational gaps, so that remedial measures can be optimally designed.
These improvement measures are crucial factors in driving productivity while increasing company profits.
Therefore, the audit process should not be viewed as an attempt to find fault with employees.
With the right procedures, auditing can actually be a strategic tool to support the company's progress.
Then, what are the stages in the audit process and how to run it successfully? Find the answer in the following discussion!
Understanding The Audit Process
The audit process is a series of activities aimed at obtaining information about the performance and quality of the financial statements of a company.
This process involves auditor. as an independent party in charge of evaluating and providing an objective opinion.
As already explained, the audit aims to ensure that the operational processes have been carried out in accordance with the established controls effectively.
Through a series of stages carried out, it is expected that improvement opportunities can be identified and implemented properly.
4 Stages Of The Audit Process
In general, the audit process is carried out through 4 stages, namely:
1. Planning Stage
At this early stage, the auditor designs an audit strategy to ensure that the audit process runs effectively and efficiently. For this, auditors usually perform the following steps:
- Request the required documents: Before starting the audit, the auditor will request a list of relevant documents, such as financial statements, General books, current accounts, to the previous year's audit report.
- Consider The Inherent Risks: The Auditor must evaluate the inherent risk, that is, the risk of errors that may occur naturally in the financial statements. For example, complex calculations are more prone to error than simple ones.
- Develop An Initial Audit Strategy: In the third stage, the auditor will develop a strategy to minimize audit risk. It is intended that opinion what the auditor gives will be relevant and based on strong data.
- Understand The Client's Business: The Auditor must understand how the client's business operates in order to identify potential problems that may arise, including in terms of legal obligations. They will study organizational documents, structures, and interviews with relevant parties.
2. Testing Information
After the audit plan is set, the auditor begins to test the documents and data that have been collected, namely by:
- Start Doing Field Work: Auditors verify information through direct observation and interviews with relevant staff to test client compliance with accounting standards. At this stage, the auditor also evaluates the client's internal control system.
- Procedure and analysis: In conducting the test, the auditor uses analytical procedures to study the relationship between data, both from the financial and non-financial side, to detect any discrepancies.
3. Getting Results
After the test is completed, the auditor will evaluate whether there are material risks in the financial statements:
- Discovery of errors or Material risks: If errors or problems are found in the financial statements, the auditor will take note of them and clarify these findings to the client. The Auditor will also work closely with other auditors to ensure consistent results.
- Open Meetings: This is where the auditor presents the initial findings to senior management to discuss the detected risks. If there are significant findings, the auditor will draw up corrective actions that the client may be able to take.
4. Prepare Evaluation Results
The final stage of the audit process is the preparation of the audit report which consists of 2 sub-stages:
- Prepare Audit Report: The Auditor will compile a summary of all the results of the examination, including errors in calculations and other important findings. In this report, the auditor also provides recommendations on actions that the company can take.
- Setting Up A Closing Meeting: After the report is completed, the auditor will hold a closing meeting with the client to discuss the results of the audit and the steps to be taken next. The Auditor will ensure that the client understands the report and agrees with the suggested action plan.
Types of Audit process
The success of the audit process can not be separated from its compliance with the type of audit conducted. The following are the types of audit processes in general:
- Preventive Audit Process: This Audit aims to prevent problems before they occur. Auditors provide clear guidelines for the process to run smoothly, while determining who is responsible for each step.
- Detective Audit Process: This Audit serves to detect if there are errors or anomalies in the running process. However, these audits only identify problems without providing solutions or remedial measures.
- Corrective Audit Process: When the auditor finds a problem, this audit will investigate the cause and offer a solution to fix it. The focus is on providing concrete recommendations so that the problem does not occur again in the future.
Tips for a successful Audit process
1. Prepare Documents In Full
Make sure all relevant documents, such as financial statements and ledgers, are ready and organized to facilitate the audit process.
2. Establish transparent communication
Open communication with the auditor is essential to avoid misunderstandings during the audit process. Clarify immediately if there are any questions or findings.
3. Conduct An Internal Evaluation
Before the audit begins, Do internal evaluation to identify potential problems. This will minimize the risk of findings that can have a negative impact.
4. Provide Accurate Information
Make sure the data provided to the auditor is accurate and trustworthy. Data errors can slow down the process and affect the auditor's opinion.
5. Focus on solutions
If there are findings, use the audit results as an opportunity to improve performance, not just look for errors. Focus on a concrete improvement plan.
Conclusion
An effective audit process can help a company identify operational gaps and take appropriate remedial steps, thereby increasing productivity and profitability.
By involving software audit such as Audithink's Comprehensive Features, the audit process will run more quickly and accurately, making it a strategic tool for the company's progress
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