Elements of the Financial Report Audit Process

After15 years of experience in the field of auditing, I have concluded that the financial audit planning is quite important and crucial in order to present an effective and accurate audit. Have you ever thought about what does the word ‘successful audit’ means? It can be defined as a stage where both the auditee and the audit management feel good or agree with the result.

Now, the question is; what are the elements of a financial report? As per my experience, the following are the major components for your financial report or audit:

Research for the area to audit

It is very important to understand and analyse the process and function of a business that needs to be audited. If you do not have knowledge of that business, then you need to conduct thorough research to know about the various functions and processes involved.

Continuous communication within the process

Communication is always preferable in the process of auditing. Interacting with the auditee before the audit process helps you to understand the concerns easily. You can interact directly with the person if you prefer not to use telephone calls. You must avoid email communication as it is a time-taking process.

Risk assessment

Auditors must identify and analyse the risks of the business by the use of their knowledge. Identifying and assessing such risks need a high-level of judgment skills and knowledge. Thus, it is essential to have deep knowledge of the specific business and risks it encounters in the past few years. The auditors must have knowledge of its customers, competitors, and suppliers.

Audit strategy and plan

Once you identify the risks of the business, the auditors must develop a plan for their audit strategy to address those risks which makes the business owner awake over the night. The audit plan and strategy includes the tasks like making an approach to test the different financial statement items, creating a time table for each task, deciding how much to rely upon the business's internal controls, and allocation of tasks to each audit member.

Gathering evidence

Other elements of an auditing process are collecting evidence and evaluating them properly. It requires the professional judgment and skepticism through analysing the internal processes or control of the company, tracing financial statements of the company.

Finalisation

Now, in the end, auditors need to make a judgment on the basis of their collected evidence and analysis. This conclusion termed as the audit of the firm.

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