Audit support and audit procedures
Audit is an indispensable part of any business irrespective its nature, industry, size and location. Whether it is required by the regulators, stakeholders or financial institutions audits are unavoidable parts of doing any business. However, audit preparation may take a lot of extra effort over and above regular operations of the business. The process can overwhelm your team and quickly go awry without a strategic plan. Advance planning and thorough documentation with a well executed approach is required to sail through the audit season. Audit readiness not only means creating the checklist and collating the documentation, it is an embedded function within each and every role of the business controlling the flow of transactions and business eventually. An expert’s attention is required to each process to review and establish the operating efficiency and effectiveness of such audit procedures on a continuing basis which can be extensive requiring thorough procedures to be performed.
What areas of a business are covered during preparation for the audit?
Audits procedures are extensive and intended to review the operating efficiency and effectiveness of the controls and checks in the business as a whole. This shall include all major functions of the business including finance, human resources, marketing, sales, procurement, corporate legal and operations among others. Additionally, audits may also be conducted for the systems and procedures being used by each such function. Each separate function of the business, directly or indirectly, impacts the financial position of the business and hence needs to be periodically reviewed to identify the instances of non-performance, non-compliance, mis-management so that corrective action may be taken by the management in time. Report on such audit procedures or reviews may be required by stakeholders, investors or regulatory authorities to safeguard their interests in the company.
What are the types of audit any business is required to undergo?
Depending on the need and purpose of conducting the audit, the types of audit may be bifurcated into two major categories - statutory audits and non-statutory audits. Statutory audits are required to be conducted as mandated by the laws in force under applicable statutes. This shall include statutory audit under the Companies Act, 2013, tax audit under Income Tax Act, 1961 and others. Non-statutory audits are generally conducted for control and review purposes which provides insights into the business operations and genuinity of transactions being carried out in a fair and transparent manner. Such thorough audits or reviews may be carried out to bring in greater efficiencies, improve cost effectiveness, identify redundancies, implement control mechanisms, drive performance, review financial position regularly etc which in turns helps with critical decision making by the board, stakeholders, internal teams. Such audits may include management audits, process reviews, vendor audits, internal audits, internal financial controls audits, IT systems audits etc.
What are the basic steps in preparing for audits?
A well defined audit approach may require expert knowledge. Company may look to set up its own internal audit teams or appoint a professional firm who are well versed in the audit field. Steps to define a result oriented audit approach may include (1) defining the types of audit to be conducted (2) preparing an exhaustive list of requirements in discussion with the audit team (3) openly communicating with audit teams on timelines (4) Preparing the data room as per the defined checklist and creating documentation to demonstrate the controls in place, collating requested financial information (5) Regular coordination with the audit team and dedicated effort in resolving the audit issues and observations. It is worthwhile to note that steps defined here are not exhaustive and may change depending on the type of audit, timelines and purpose of the audit. It is advisable to consult an audit consultant to strategise the right structure.
Why choose Us?
We at Plutus are well versed with the audit procedures and audit requirements under various laws. As audit consultant our team works closely with your team and acts as a bridge between your company and the external auditors to facilitate a smooth execution. Our team may position themselves in your company office or work remotely to overcome geographical restrictions. Areas where our expertise and approach adds value to the audit support services include :-
- Managing the relations with the external auditors regarding audit procedures and documentation
- Discussion on complex technical accounting matters
- Preparation of financial statements with Notes to Accounts
- Coordinating and managing audit PBC checklists with the auditors
- Internal coordination between your teams to gather data and prepare reconciliations and audit working papers as requested by the auditors.