When the audit firms in Johor Bahru have an engagement to audit a corporate department, the auditors should acquire audit evidence (Also see Types of Audit Evidence), detect financial frauds and errors, as well as determine the exposure to risks of that department. They should apply their independence as auditors and present the department’s financial position in a true and fair view. Most importantly, the auditors should perform their work according to the applicable standards when they plan, conduct and complete their audit works, as well as prepare and sign the final audit report (Also see What is an Unqualified Audit Report?).
Understanding Audit Guidelines and Audit Procedures
Audit guidelines are the steps that the auditors need to follow to attain specific audit standards. These guidelines govern the essential stages in an audit which includes planning, analytical reviews, collecting evidence, as well as presenting the reports. On the other hand, audit procedures refer to the policies and methods which governs the assessment of the accounts of a company. Such procedures establish the framework for the auditors to perform audit tests and making conclusions.
Vouching and Verification
The auditors (Also see How to Ensure Your Company’s Audit Process Goes Smoothly?) should start performing their audits by vouching and verifying the corporate department’s accounting procedures. Vouching refers to the process of assessing the records of transactions to prove their reliability, relevance as well as accuracy. Besides evaluating the reporting policies, financial controls and accounting systems that the department should obey, the auditors should also determine if the corporate department keep the books of accounts properly. They need to assess the information regarding the company’s transactions to identify whether they are compatible with the source documents. In the end, the auditors should be able to collect valuable pieces of evidence to support the audit conclusions as well as your suggestions.
Analytical Procedures
This process involves assessing distinct sets of financial or non-financial data to establish possible relationships and consistencies in their trends. In this process, the auditors seek to identify any inconsistencies, which may indicate the presence of systemic weaknesses or fraud in the company’s financial data. Thus, analytical procedures assist the auditors in planning their audit procedures and acquiring audit evidence for the final audit report. They may also use reasonableness tests, trend analysis, as well as ratio analysis to examine their analytical procedures.
Recording Procedures
Such procedures (Also see Audit – Procedures for a Construction Audit) refer to keeping the documents and records throughout the entire audit process in the form of audit working papers. According to the ISA 230, the auditing guidelines make it mandatory for the auditors to prepare the working papers. Essentially, the working papers cross-reference the audit’s material facts, results, as well as conclusions. Hence, those papers record the evidence and events of the audit to support the outcome of that audit process. The auditors may include specimen letters, copies of the customer’s documents, the form of checklists, as well as the internal control questionnaires.