Key Activities: Identify internal audit lead, gather necessary financial records, review past audit findings (if applicable).
Purpose: Ensures the business is organised and prepared for an efficient audit.
Key Activities: Formal engagement process where the auditor is appointed, objectives and scope are set, and fees are agreed.
Purpose: Defines the audit’s objectives, scope, and expectations between the company and the auditor.
Key Activities: Auditor assesses areas of high financial risk within the company, including industry-specific risks and potential fraud risks.
Purpose: Helps the auditor focus on high-risk areas to enhance audit effectiveness.
Key Activities: Auditor develops a detailed audit plan outlining audit procedures, timelines, and resource allocation.
Purpose: Ensures that the audit process is well-structured, efficient, and in line with regulatory requirements.
Key Activities: Auditor conducts tests on financial records, internal controls, and supporting documents, usually including:
- Transaction testing
- Verification of balances
- Review of contracts and records
Purpose: Gathers evidence to verify the accuracy and completeness of financial statements.
Key Activities: Auditor analyses results from testing, compares to expectations, and identifies any discrepancies or issues.
Purpose: Determines if any adjustments or further explanations are required from the company.
Key Activities: Auditor meets with management to discuss preliminary findings, allowing the company to clarify any identified issues or make adjustments.
Purpose: Provides an opportunity for collaboration and transparency before finalising the audit.
Key Activities: Company makes any necessary adjustments based on audit findings; auditor reviews the final statements.
Purpose: Ensures that the financial statements reflect accurate and compliant financial information.
Key Activities: Auditor drafts a formal report, providing an audit opinion on the financial statements (e.g., unqualified, qualified).
Purpose: Concludes the audit with a clear, documented opinion on the accuracy of financial statements.
Key Activities: Auditor submits the report to company management or stakeholders. The report may also be presented to the board or external stakeholders if required.
Purpose: Ensures transparency and allows stakeholders to make informed decisions based on reliable financial information.