The Mechanics Of An Audit

The key elements of our audit approach are as follows:

1.  Conduct client needs assessment exercise - the objectives are to gain a better understanding of the client’s service delivery needs (what they value), help us achieve higher levels of client satisfaction and identify ways to increase the value of our services.  We complete a detailed questionnaire at the initial meeting which forms part of our needs assessment programme.

2.  Identify and orient the audit team - internally, we form the engagement team based on information obtained during the client needs assessment activity, as well as on the resources required to complete the audit.

3.  Perform general planning and identify areas of audit significance - we seek to understand how external and internal factors affect the client’s business, gain an understanding of the client’s control environment and how these factors may affect our audit strategy.  We also perform an overall financial analysis to help us identify significant accounts and learn more about the client’s operations and financial condition.  Preliminary materiality judgments are made that are used to determine the nature, timing and extent of our audit procedures.

4.  Develop and confirm our service delivery plan - based on what we have learned about the client in the planning procedures, our engagement team develops the audit plan.  Our planned deliverables and other significant aspects of our service delivery are confirmed with the client and documented in an Audit Planning Memorandum.

5.  Understand and evaluate significant sources of information and identify and evaluate relevant controls - we obtain an understanding of and evaluate the sources of information that affect significant accounts.  Our objective is to assess the likelihood of errors of audit importance in each significant account or group of accounts resulting from the particular processes that affect the account(s) concerned.  We determine the types of error that could occur in these processes and how they could occur.  We then identify the relevant controls that exist to prevent or detect these errors and to ensure the reliability of estimates, and consider their potential effectiveness.

6.  Perform tests of controls - When we have determined that we intend to rely on a client’s controls for one or more objectives, we satisfy ourselves that those controls were in use and functioning as intended throughout the period of reliance.

7.  Develop and execute final audit - we make a final evaluation of controls based on the results of the tests and develop final audit programs accordingly. Substantive procedures are performed to obtain direct evidence as to the completeness, accuracy, and validity of data and as to the reasonableness of the estimates and other information contained in the financial statements.

8.  Draw overall audit conclusions and present the value of our results - we evaluate the overall results of our audit procedures and document the overall audit conclusions we reached based on those results.  The management letter and audit report are discussed and agreed with the client.  

9.  Improve service delivery - At the close of the engagement the client is asked to provide us with direct feedback on its satisfaction with the delivery of our services.  The team reviews its performance in order to capitalise on its achievements and learn from its experiences.

 
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