Tips for Carrying Out an Audit Essay Example

year's audit. The audit senior communicates with the client to determine when the audit can start. It is important to conduct the audit at the client's location to gather all necessary information. Additionally, it is crucial for the client to be easily accessible and available during this time in order to provide auditors with required information.

The audit consists of three stages: Planning, Field Work, and Review. The Planning stage is essential for comprehending the client's business and controls. In this stage, the audit senior usually discusses the client's annual performance, such as profit changes, reasons behind them, new product launches, and significant staff departures.

This information is documented in the Business Understanding Document. The audit assistants are typically responsible for performing controls testing in the company. Their goal is to verify that documents such as Payment Vouchers, Purchase Orders, Goods received notes, and Delivery Orders are filed sequentially and have proper authorization. This testing is usually done on a sample basis and the results are recorded in the Process Analysis Document. After completing the planning phase, the audit file will be submitted to the audit manager for review. The audit manager will thoroughly review the file and address any concerns or questions.

After gathering responses from the client and incorporating any missing information, the audit senior will move on to the planning phase. Once approved by the manager, the audit team will get ready for the field audit, which is usually the lengthiest stage of the auditing process. This is when several tests of controls and substantive procedures are conducted. It is crucial because it will be reviewed by the partner upon completion. Throughout

this period, tasks will be assigned to staff members to ensure timely completion of work.

The usual tasks assigned to audit assistants involve auditing various aspects of a company's financial records. These tasks include checking the reconciliation of cash and banks (including sending bank confirmations), auditing property, plant, and equipment (to verify fixed assets), examining other payables (looking for unrecorded liabilities), and reviewing other receivables (to verify invoices for deposits and prepayments). The audit senior typically oversees more critical areas such as inventory valuation, trade receivables (through debtors circularisation and aging analysis), trade payables (evaluating aging and confirming balances with creditors), and tax compliance.

Despite the file being sent for tax vetting, the senior must still prepare a basic tax computation and deferred tax verification. Additionally, a stock take will be conducted during the field audit to ensure the proper movement of goods and treatment of obsolete stock. The auditor's main task is to observe the stock count carried out by the client, with only a few samples being physically counted. Furthermore, a statutory audit (stat. audit) will also be conducted during the overall audit process. The company secretary will keep the statutory books at the secretarial office, which does not necessarily have to be located at the client's office.

The stat audit involves reviewing the minutes' book, register of shareholders, directors, secretaries, and annual return to ensure all resolutions passed during the year are accounted for. Once this is done, the field audit is considered complete. During an audit, staff often face challenges such as clients not providing all the necessary information or directing them to others who are also unaware. There is often a

delay in receiving documents as clients struggle to locate them or they are missing. Clients may provide their own explanations for queries but it is important to remember that client representation alone is not sufficient. Documentation like receipts, bank slips, and invoices should support every explanation. Some clients may be uncooperative during the audit, taking time to show supporting documents or provide explanations due to claiming they are too busy. However, it is not feasible for auditors to wait excessively for this information.

The audit senior will create a list called the 'outstanding matters' list that will contain all the necessary information or documents that are pending from the client. This list will be stored in the audit file and a copy will be provided to the client. We will then prepare the draft accounts and send them to the typing room for any necessary changes. After all of these tasks are completed, we will tidy up the audit file and submit it to the audit manager. The audit manager will then review the file and ask any questions or raise any concerns. The audit senior will then address these queries and return the file to the manager.

After receiving approval from the audit manager, the file will be sent to the overseeing partner for review. If needed, the partner may discuss any concerns with the audit manager during the Audit Committee meeting. Once all issues are resolved and endorsed by the audit partner, a draft will be presented to the client for their consent.

After determining the number of copies needed by the client, the accounts will be printed and sent to the client's

directors. The directors' signatures must then be validated by a Commissioner of Oaths. Once obtained, the accounts will be returned to the audit firm where they will be signed by the partner, indicating completion of the full audit. The next step is delivering the accounts to the client for submission to the ROC (Registrar of Companies). Finally, the audit file will be sent to the filing room for spiking.