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Audit Process
The most successful audit projects are those in which you, the audit client, and Internal Audit have a constructive working relationship. Our objective is to have your continued involvement at every stage, so you understand what we are doing and why, while trying to minimize disruptions of your daily activities.
A typical audit is comprised of four stages: planning, fieldwork, reporting, and follow-up.
Planning
During the planning phase, we notify you of the audit through an announcement letter. An auditor will contact you to set up an audit planning meeting. The purpose of the meeting is to discuss the audit process and review the scope and objectives of the audit, discuss any concerns or suggested scope items, and discuss risks inherent to the unit.
Fieldwork
In this phase the auditor gathers relevant information about the unit in order to obtain a general overview of operations and internal controls and performs transaction testing. It is during this phase that the auditor determines whether the controls identified during the preliminary review are operating properly and in the manner described by the client. These procedures usually test the major internal controls and the accuracy and propriety of the transactions.
As the fieldwork progresses, the auditor will discuss any significant findings with our audit customer. Hopefully, the audit customer can offer insights and work with the auditor to determine the best method of resolving the finding. Upon completion of the fieldwork, the lead auditor will summarize the audit findings, conclusions, and recommendations and review them with our audit contact.
Reporting
Our principal product is the final report in which we express our opinions, present the audit findings, and discuss recommendations for improvements. After the fieldwork is completed, Internal Audit will meet with the unit's management team to discuss the findings, conclusions, and recommendations. The auditor prepares a draft report, taking into account any revisions resulting from the closing meeting and other discussions. The report consists of several sections and includes: the distribution list, scope and objects, overall assessment, and our findings and recommendations. We issue the draft report to unit management only, along with a management memorandum detailing any less significant findings.
We request that management provide written responses to the draft report comments, indicating how and when the recommendations will be implemented. Once the management responses have been received, Internal Audit incorporates the responses into the draft report, creating the final report. The final report is distributed to the unit's reporting supervisor and other appropriate members of the University's senior management. This report is primarily for internal University management use. All audit information should be treated as confidential and is reported only to those within the University who need to know.
Finally, as part of Internal Audit's self-evaluation program, we ask clients to comment on Internal Audit's performance. This feedback has proven to be very beneficial to us, and we have made changes in our procedures as a result of clients' suggestions.
Audit Follow-Up
Internal Audit will perform a follow-up review to verify the recommendations included in the final report have been implemented.
Six-Step Audit Process for small business
An audit is a formal check of financial accounts of an individual, business or organization. An internal audit is conducted by members of the same organization or business, and an external audit may be conducted by a regulatory agency or governmental agency. There are six specific steps in the audit process that should be followed to ensure a successful audit.
Requesting Financial Documents
After notifying the organization of the upcoming audit, the auditor typically requests documents listed on an audit preliminary checklist. These documents may include a copy of the previous audit report, original bank statements, receipts and ledgers. In addition, the auditor may request organizational charts, along with copies of board and committee minutes and copies of bylaws and standing rules.
Preparing an Audit Plan
The auditor looks over the information contained in the documents and plans out how the audit will be conducted. A risk workshop may be conducted to identify possible problems. An audit plan is then drafted.
Scheduling an Open Meeting
Senior management and key administrative staff are then invited to an open meeting during which the scope of the audit is presented by the auditor. A time frame for the audit is determined, and any timing issues such as scheduled vacations are discussed and handled. Department heads may be asked to inform staff of possible interviews with the auditor.
Conducting Onsite Fieldwork
The auditor takes information gathered from the open meeting and uses it to finalize the audit plan. Fieldwork is then conducted by speaking to staff members and reviewing procedures and processes. The auditor tests for compliance with policies and procedures. Internal controls are evaluated to make sure they're adequate. The auditor may discuss problems as they arise to give the organization an opportunity to respond.
Drafting a Report
The auditor prepares a report detailing the findings of the audit. Included in the report are mathematical errors, posting problems, payments authorized but not paid and other discrepancies; other audit concerns are also listed. The auditor then writes up a commentary describing the findings of the audit and recommended solutions to any problems.
Setting Up a Closing Meeting
The auditor solicits a response from management that indicates whether it agrees or disagrees with problems in the report, a description of management's action plan to address the problem and a projected completion date. At the closing meeting, all parties involved discuss the report and management responses. If there are any remaining issues, they're resolved at this point.
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