Accounting Blog for Business
Posted by Janis Narvas
Jul 25, 2018 10:00:00 AM
If your organization is going through its first external audit this year, chances are, you are apprehensive of it. For some people, even thinking about the external audit requirements can cause panic and anxiety. Of course, there’s no need to feel panicked or stressed about an audit – that is, if you as an organization prepare for it.
In a nutshell, an external audit zeroes in on your company’s compliance and overall financial performance. Typically, auditors examine financial statements, so it’s important to keep your company’s records error-free.
What preparations should you make?
How do you make the external audit procedures less painful? Here are some of the preparations that you need to make to make the external audit process successful.
Designate a liaison or an audit manager.
During the preparation stage, you should designate a contact person within your organization who will be responsible for coordinating with auditors. This person should have strong project management and communication skills, as they will lead briefing sessions for individuals who will be participating in the audit (e.g., those who may be required to produce documents or need to be interviewed by the auditors, as well as parties who need to be updated about the audit progress).
Usually, individual contributors and specialists who may be tapped to assist in the audit preparations are engaged in their daily tasks. The audit manager can make sure that these resources are available, and that your managers and department heads fully support the activities to be undertaken in order for the audit preparations to succeed.
Understand the audit standards.
Every audit is different depending on the standards that you are being audited against. Know the scope and requirements of the audit standards so that you can adequately prepare for the audit. Typically, the external audit process examines the company’s financial statements and accounting records. Other types of audits, however, may also look into the other departments in a company during an external audit.
For instance, an external audit focusing on information security and technology may audit the IT department, while an audit focusing on operations may evaluate your organizational structure and business processes.
Ensure proper documentation of your internal processes.
Based on the standard your company is being audited against, determine who among your staff and managers can help give the auditor a comprehensive view of your financial and business procedures.
Prior to the audit, the same subject matter experts and process owners should help you in making sure that all necessary controls are implemented and that you comply with the standards set by the audit. Perform appropriate checks and analyses to identify gaps in your business processes and prepare all materials that will be asked for by the auditors, such as policy documentation, financial statements, and other pertinent documents.
Every audit differs according to the type and scope of the audit which you will be audited for. By following the aforementioned suggestions, you can start preparing for your organization’s first external audit.
Get help from audit professionals
Learn how D&V Philippines can prepare you for the external audit procedures that your company will go through. Download our whitepaper Audit Support Group by clicking the link below to learn about our services.
Schedule a consultation today to learn more about what we can do for your organization.
Topics: Audit and Compliance