Overview of the audit process

Audit phases and workflow

The first step to a successful audit is an organized and systematic approach. Whether you are due for an internal audit, external review or routine compliance check, insight cannot be driven during the audit process if teams don’t understand it. This article provides an overview of the key phases of an audit, explains the activities involved in each stage and offers some tips for achieving a successful outcome.

What is the audit process?

Audit activities are a sequence of planned and structured actions (procedures and methods) performed by the audit services to review implemented controls, determine correctness, and adherence with established criteria. It serves as a check and as an opportunity to find out what can be done better. It is a cycle as well, planning, fieldwork (doing), reporting, and follow-up. Every phase of the process adds to’s credibility and relevance for stakeholders.

Preparation and reporting of audit: the basement

Preparation is the key to doing a good audit. In planning, auditors establish their objectives, scope of work and criteria. The teams collect background information, conduct early risk analysis and assess relevant stakeholders. A solid plan should include timelines, resources and who to communicate with to keep management in the loop.

Risk analysis at the planning stage ensures that audit effort is focussed where it will have most impact. Auditors can better concentrate time and expertise if they focus in high risk areas that might materially impact operations or financial statements. The planning also encompasses the development of analytical procedures and the identification of evidence necessary to support conclusions.

Fieldwork in the field: evidence and controls gathering

Fieldwork is where the audit plan gets done. This stage is the one for identifying evidence obtained from interviews, observations, examination of documents and records, sampling and testing systems. Auditors assess if the controls are effectively designed and working as intended. Tests can be both substantive and tests of controls.

Proper documentation procedures are key elements of field work. I) Working papers should be documented in detail by procedures performed, evidence obtained and the basis for conclusions. Documentation backs auditors’ findings and leaves an easy-to-follow trail for reviewers. Balance thoroughness and efficiency to stay productive in fieldwork.

Communication during fieldwork is also key. Frequent conversations with process owners and audit sponsors help manage misconceptions, enabling auditors to explain findings beforehand. Open communication allows management to be prepared for potential problems and avoids defensive responses when draft findings appear.

Reporting – can turning findings into workable insight

Auditors then summarize evidence in the form of findings and recommendations after fieldwork is completed. Stories need to be easy, brief and ordered. Good audit reports contain summary, scope and objective, findings with evidence-of including key risks or issues- and recommendations.

Context matters in reporting. The results of this audit should be expressed in business language, risk quantification (where possible) and provide realistic steps of remediation. Risk and effort-based prioritisation facilitates for management to concentrate on improvements with high impact.

A communal style of reporting can help foster acceptance. When making preliminary comments to management prior to issuing a report, it promotes discussion and verifies content. But the auditors should have an independent and objective mindset while working meaningfully with — and getting feedback from — stakeholders.

Follow-up: ensuring change happens

The audit doesn’t stop with report. Actions taken are followed up to monitor the execution of agreed actions. Successful follow up demands deadlines, accountability, and progress checking. Auditors commonly test to ensure that corrective actions have been taken and are effective.

A robust follow up process supports accountability and shows that Audits are resulting in positive action. It also gives useful input for future audits, by pointing out trends or where management has spent to remediate.

Roles and responsibilities

Clear roles are essential in conducting successful audits. Auditors conduct the review, design tests and write reports. Remediation is owned by management and recommendations are implemented. From the standpoint of governance--whether by boards, or audit committees--those overseeing must be in a position to assure accountability and that resources are deployed properly.

Internal collaboration is essential. Some areas of expertise and some process owners can provide guidance which could enhance the quality of an audit. Engaging them early in the planning process and keeping lines of communication open during fieldwork also helps ensure intermediaries interpret findings accurately and know how to apply them.

Auding best practices to improve results

Risk prioritization: Deploy a risk-based methodology to prioritize audit resources and focus on areas of most concern.

Communicate early and often: Consistent updates can prevent surprises and establish credibility with stakeholders.

Write clear: Good papers help the reviewer review and draw conclusions.

Think practically when suggesting: Recommend practical, prioritized steps for management to take.

Monitor: A rigorous monitoring mechanism that allows track-ability and takes follow-up to ensure recommendations converting into results.

Typical problems and solutions among young innovators

Audits may be subject to resource limitations, missing or incomplete documentation, and from resistance of those affected. The solution: Address these by planning properly, gaining senior sponsorship for access and backing up findings with evidence. Auditors, when evidence is restricted, should disclose the restrictions and employ alternative procedures if they do not.

Conclusion

Being aware of the audit process and phases helps an organization to face their reviews with clear intent. Every step in the process—planning and reporting, fieldwork and follow-up—has an impact on how robust your findings are and how much positive change can be made. Risk, communication and practical "what to do" recommendations will add customer value to internal audit and turn it into an important driver of control improvement and organizational performance.