a person working on financial audit documentation

How To Assemble Audit Documentation 

a person working on financial audit documentation

Audits, and thus audit documentation, are a normal part of business and life. They happen all day and every day around you, whether you realize it or not.

There are many types of audits covering topics such as financial audits, regulatory compliance audits, internal audits, and so much more. Each type of audit is different from the next as each all have its own documents needed to make them comprehensive and successful.

When it comes to actually performing audits, the auditor has a comprehensive process of recording all the procedures your company undergoes; this evidence and analysis help them come to a conclusion – this is their job and what an Audit Documentation” actually does.

Financial Audits

Financial auditing is the most common type of audit, either internally in the company or from a government agency such as the Internal Revenue Service (IRS).

When it comes to internal auditing, it is important to perform this on a consistent basis. One of the biggest benefits is to just know that your finances are in good standing. More importantly, you also need to keep an agency such as the IRS off your doorstep. The IRS can seize assets while performing an audit.

However, when it comes to doing an audit, the auditor must record the procedures performed. Some of the procedures in a financial audit are:

Inspection

This is the start of any audit process, inspecting the record and documents that the company may have. In today’s day and age that can be either physical or digital records.

Observation

Observing the process of record-keeping is next. The purpose of this section is to demonstrate how information/data is stored, managed, and processed. Observing may lend you some light to other steps in the auditing process. It also needs to record observations based on location and time.

External Confirmation

Making sure you have permission to audit is a very important thing. Most people and companies will not let you see internal records. This is true even if you have the right paperwork. When performing an internal audit of a company, it is important to have an unbiased third party available to do the audit and audit documentation.

Recalculation

In this step, you check the math of the documents the person and/or company has provided to you for accuracy. This is another step to glimpse into the effectiveness of their record keeping.

Reperformance

The auditor in this step will independently perform a task in the audit team at the company they are auditing. This gives the auditor a chance to perform one of the most reliable tests for control in an audit. The auditor can also get ample notes from the documentation. This is helpful for gathering direct evidence.

Analytical procedures

Financial statements receive an overall review during this step.. The auditor uses this step to make sure the company and/or person have an understanding of the procedures. In essence it is a form of record keeping.

Inquiry

While listed last here, an inquiry is used throughout the whole auditing process. Any inquiry is normally paired with any other procedure the auditor will take to make sure compliance is happening. Within the audit documentation, the auditor has to prepare everything. A single inquiry should be noted down and time tracked. Inquiries should also be noted if it was met or not.

a picture of a graph, representing the importance of audit documentation

Why Audit Documentation is Important

All these processes help to show how an auditor got their evidence. Additionally, it helps contribute to the audit’s conclusion. Moreover, they will provide a reconciliation of all accounting records to the financial statements provided to the auditor during the audit.

All the procedures listed above may not need to be used. It is, however, important to document it if you use one. It also needs to explain why they were necessary to perform the audit. This will help keep the auditor in compliance and make sure no wrongdoing happened during the course of the audit which could skew results.

Having an auditing document will also help with the planning of how to carry out the audit along with showing the performance of the auditor and helping supervise the auditor if needed.

You should make sure that all your audit documentation is complete enough to have evidence back up your findings. Moreover, anyone reviewing the document needs understand the nature in which you are auditing. Your conclusions should supported by evidence.

Types of Audit Documentation Files

When it comes to providing auditing services, there are different types of files you should be keeping on your client, Permanent and Current files.

Permanent files refer to the type of files you will need to keep for a long period of time. These files most likely will not change from year to year as you perform yearly audits. The types of documents in permanent files are things such as corporate charters, long-term contracts, internal controls, and terms of stock and bond issued.

Current files are the type of files that will change based on the audit year you are working on. These are files such as current financial statements, meeting paperwork, audit plans, and programs, to name a few.

In the business/public world audits occur every day and all the time. Having well-structured documentation will only help the process in the auditing moments. In the audit process, it is critical to ensure your company and documentation are on track; this can be a laborious task, but look no further. The expert team of technical writers at Essential Data are here to help ensure your company is on track with documentation of all types!

We have a team of consultants ready to produce a complete line of documentation. Perhaps you may only need a single technical writer for a brief project. Either way Essential Data’s Engagement Manager will lead the project from start to finish. At Essential Data Corporation, we guarantee the quality of our work. Contact us today to get started. (800) 221-0093 or sales@edc.us

Written by Dylan Friebel

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