Preparing for an audit can be challenging for many organisations, especially with increasing regulatory demands. Good preparation is key to ensuring that the auditing process is both thorough and efficient. This article offers practical strategies to get audit ready.
Understanding the auditing process
The below are the key stages in a typical audit:
Planning: Setting the scope, objectives, and timelines.
Fieldwork: Gathering evidence through tests of controls and substantive procedures.
Reporting: Communicating findings and issuing the audit opinion.
Follow-up: Addressing any issues raised during the audit.
Each stage requires careful preparation from the auditor and the organisation under audit. Being aware of the different stages allows one to understand the objective of requests made during an audit.
Enhancing the organisation’s preparation – What makes an organisation audit ready?
1. Clear and regular communication
Effective communication plays a crucial role in ensuring a smooth audit process. Auditors will engage with clients early on to set expectations and timelines. Regular discussions can help identify potential concerns, allowing clients to address these proactively. Preliminary audit meetings are also important as they serve as a platform for addressing questions and clarifying responsibilities. During these meetings, auditors can outline the audit process and timelines, discuss focus areas, and close any pending points.
During audit fieldwork, ensure that the auditor’s requests are addressed as early as possible, and always provide clear answers with detailed explanations. Effective communication not only fosters trust but it ensures that deadlines are met.
2. Cooperate with the auditor’s compliance team
Providing audit services is in scope of anti-money laundering regulations. Before the commencement of any audit work, the auditor needs to ensure that such regulations are being followed by subjecting the organisation requesting audit services to the auditor’s internal policies and procedures for onboarding. In today’s world, this has become a time-consuming pre-requisite which can cause unwanted delays. It is good practise to be proactive and ask about the necessary documentation that the onboarding team would require.
Moreover, keep in mind that these procedures are performed on an ongoing basis and if the organisation is unable to meet the set requirements, the audit services cannot commence. The key point to remember is to always prioritise any requests received from the auditor’s compliance team.
3. Be organised and prepare a detailed checklist
Develop a tailored checklist as a preparation for the audit and ensure that all documentation is ready. This may include:
Documentation on key processes and estimates, including any assumptions made;
Documentation on key internal controls;
Breakdowns and schedules for all income statement and balance sheet line items;
Reconciliations of such schedules to the amounts in the trail balance; and
Supporting documentation for the different items making up such schedules.
Furthermore, it is advisable to identify a key person within the organisation who will handle the auditor’s requests. Such person would be in charge to assist the auditor in gathering the required documentation, reducing the risk of last-minute complications.
4. Follow-up and act on feedback
At the end of the audit process, the auditor would have obtained a holistic view of the organisation and key areas of improvements, and this would be communicated with the client. These can include things such as software updates for maintaining financial records, and inventory items, implementing new internal controls and integrating new technology. All deficiencies noted will be communicated in the auditor’s letter to management.
Understanding the auditor’s observations and acting on them can result in organisation wide benefits. The auditor would be expecting to see improvements on these points in the next audit cycle, however, addressing identified weaknesses will not only contribute to a smoother audit process in the future but will ultimately improve the bottom line.
How Quazar Can Help?
We understand that preparing for an audit can be hectic. Our experienced team is here to help. Contact us today to discuss how we can support you.
Get in Touch:
Trisianne Attard:
Senior Auditor
tattard@quazar.mt / +356 2388 4600
