AUDIT EXECUTION
&
FIELD WORK
OVERVIEW
• Audit Process • Setting
• Audit Planning Timelines
• Field Work
• Delegation of • Draft Report
• work
Priority Setting
AUDIT PROCESS
AUDIT PLANNING
Audit Planning & Preparation Team Setup and Role Assignment
•Confirm Audit Scope and Objectives: •Assemble the Audit Team:
• Meet with key stakeholders (management, audit committee) to
finalize the areas and objectives to be audited. • Select auditors with relevant expertise for each area (e.g., financial,
• Establish clear goals: e.g., compliance verification, financial accuracy, IT, operations).
risk assessment.
•Assign Roles and Responsibilities:
•Identify Risks: • Clearly define tasks and assign specific team members to high-
• Perform a risk assessment to identify high-risk areas (e.g., significant priority areas.
transactions, internal control weaknesses). • Ensure the team understands their individual roles and objectives.
•Set Timeline & Milestones: •Conduct Briefings:
• Break down the timeline into phases (pre-fieldwork, fieldwork, post- • Kickoff meeting to ensure everyone understands the scope,
fieldwork) and set deadlines for each objectives, timeline, and key risk areas.
DELEGATION OF WORK
Delegation of work in audit execution involves assigning specific tasks to team members based on their expertise and experience.
1. Audit Manager
•Oversees the entire audit process.
•Coordinates the audit plan, ensures compliance with standards, and reviews findings.
•Communicates with senior management and stakeholders.
2. Audit Senior
•Manages the audit fieldwork, supervises junior staff.
•Performs more complex testing (e.g., internal control testing, substantive procedures).
•Reviews audit work papers and ensures compliance with audit standards.
3. Audit Associates/Junior Auditors
•Conducts routine audit tasks (e.g., testing transactions, confirming balances).
•Prepares work papers, documents audit evidence, and performs basic analysis.
•Assists in reconciling accounts and reviewing financial statements.
PRIORITY SETTING
1. Risk Assessment
•Prioritize high-risk areas (e.g., complex transactions, high-value accounts, or areas
with weak controls).
•Focus on areas where fraud or error is more likely to occur.
2. Materiality
•Identify material items (e.g., significant transactions or balances) that could impact
the financial statements.
•Focus on areas with the largest financial impact.
3. Internal Controls
•Test high-risk internal controls early to assess their effectiveness.
•Focus on controls related to critical processes (e.g., revenue, procurement).
4. Compliance
•Prioritize compliance with regulatory requirements (e.g., tax filings, industry-
specific regulations).
5. Time Management
•Allocate more time to high-priority areas, ensuring that sufficient time is given to
key tasks.
•Streamline lower-risk areas to optimize time efficiency.
SETTING TIMELINES
•Pre-Audit Planning: •Fieldwork/Execution:
• Timeline: 1-2 weeks • Timeline: 3-6 weeks (depending on complexity)
• Activities: Define audit scope, risk assessment, and gather preliminary • Activities: Perform detailed testing, internal control assessments, and
information. transaction reviews.
•Reporting and Review: •Follow-Up and Final Report:
• Timeline: 1-2 weeks • Timeline: 1 week
• Activities: Review findings, prepare the draft audit report, and conduct • Activities: Finalize the audit report, discuss with management, and prepare
internal for follow-up actions.
Setting Goals
•Specific: Clearly define audit objectives (e.g., verifying compliance with tax laws, ensuring financial statement accuracy).
•Measurable: Determine criteria for success (e.g., reducing errors in transactions by 10%).
•Achievable: Ensure goals are realistic given the resources and timeframe (e.g., completing an audit within 6 weeks).
•Relevant: Align audit goals with the organization’s business and financial strategies (e.g., focusing on high-risk areas that affect financial health).
•Time-Bound: Set clear deadlines for each audit phase (e.g., complete fieldwork by end of month).
Identifying Risk Areas
•High-Risk Transactions: •High-Value Accounts:
• Focus on significant or complex transactions (e.g., large contracts, acquisitions, • Prioritize areas involving significant balances (e.g., revenue recognition, accounts
or mergers). payable/receivable).
•Internal Control Weaknesses: •Operational Efficiency:
• Identify areas with inadequate internal controls (e.g., lack of segregation of • Review areas of inefficiency or cost overruns (e.g., procurement processes, inventory
duties or weak approval processes). management).
•Non-compliance Risks: •Fraudulent Activity:
• Identify regulatory or tax compliance risks (e.g., changes in tax laws, • Focus on areas vulnerable to fraud (e.g., cash handling, related-party transactions).
environmental regulations).
FIELD WORK
1. Collect Data 2. Conduct Research
•Financial Records: Gather financial statements (balance •Regulatory Compliance: Research relevant laws,
sheets, income statements, cash flows), ledgers, and regulations, and industry standards to ensure the
reconciliations. organization is in compliance.
•Internal Controls: Obtain documentation of internal •Historical Audits: Review prior audit reports to
policies, procedures, and control activities. understand past findings and areas of concern.
•Transactions: Collect records of significant transactions, •Market & Industry Data: Analyze industry trends,
invoices, contracts, and journal entries. competitors, and economic conditions that may impact
•External Confirmations: Obtain third-party confirmations the audit.
(e.g., from banks, customers, suppliers).
FIELD WORK
3. Interview Stakeholders 4. Gather Information
•Management Interviews: Interview key personnel (e.g., •Documentation: Gather formal documents like
CFO, finance managers) to understand operational contracts, agreements, regulatory filings, and
processes, risk areas, and strategies. correspondence that support financial reporting.
•Employee Interviews: Speak with staff involved in •Audit Trail: Collect evidence supporting the flow of
financial and operational processes to assess internal transactions, including electronic and manual records.
controls and their execution. •System Reports: Obtain system-generated reports from
•Subject Matter Experts: Interview experts for specialized ERP systems, logs, and databases that track transactions.
areas (e.g., IT, tax, legal) to ensure all audit aspects are
covered.
FIELD WORK
5. Validate Evidence
•Cross-Check Data: Compare collected data against external
sources (bank statements, third-party confirmations, tax
filings).
•Analytical Procedures: Use ratios, trends, and comparisons to
identify inconsistencies or unusual fluctuations in the data.
•Testing: Perform sample testing of transactions and controls to
validate their accuracy and adherence to policies.
•Reconcile Discrepancies: Investigate and resolve any
differences or gaps in data between internal records and
external evidence.
1. Executive Summary
•Audit Objective: To assess the accuracy of financial statements and compliance.
•Key Findings: Summary of significant issues (e.g., financial misstatements, internal control weaknesses).
•Conclusion: Overall outcome (e.g., clean opinion, areas needing attention).
2. Audit Scope
REPORT •Scope of Work: Financial statements, internal controls, compliance with laws.
•Methodology: Data analysis, testing transactions, interviews.
DRAFT
•Limitations: Access issues, data gaps
3. Audit Findings
•Financial Findings: Any discrepancies or errors in financial statements.
•Internal Control: Weaknesses or risks identified.
•Compliance: Non-compliance with regulations (e.g., tax issues).
4. Audit Opinion
•Unqualified Opinion: Financials are accurate.
•Qualified Opinion: Exceptions noted but overall fair.
•Adverse/Disclaimer: Significant issues or inability to form an opinion.
5. Recommendations
•Internal Controls: Strengthen controls to reduce fraud risk.
•Compliance: Ensure timely tax reporting.
•Efficiency: Improve processes to mitigate risks.
6. Conclusion
•Summary of audit results and key takeaways.
•Action Required: Address internal control weaknesses and compliance gaps.
Thank You
For your attention
