1. EMBRACE STANDARDIZATION
Although firms may have standardized audit procedures, each partner often has his or her own working paper preferences, which can create inefficiencies when staff members document their work. The solution is to mandate use of standardized working papers. To ensure proper documentation, use a format designed to comply with professional standards, covering the nature, extent, and timing of procedures; the results of those procedures; and any significant findings, issues, or professional judgments.Eliminating unnecessary client documentation in the file boosts efficiency as well.
2. BE PREPARED FOR WHAT’S AHEAD
Good documentation also improves efficiency in subsequent-year audits. By documenting appropriately, the auditor provides next year’s audit team with a record of matters of continuing significance, helping them avoid duplication of effort, and giving them a solid foundation on which next year audit plan to be built. They can walk in with a better understanding of what’s ahead and the information that is needed and they don’t have to start from scratch.
Auditors will also be in better shape when it comes to internal inspections, peer reviews, and regulatory inspections. With more thorough documentation, less time should be spent addressing questions and concerns during reviews or inspections. By developing a cohesive set of working papers, the auditor is less likely to be required to redo work already performed in the field, make follow-up requests to clients, or, in a worst-case situation, recall an audit report.
3. TAKE A SMART APPROACH TO PLANNING
A sound audit plan is the foundation of an efficient and effective audit. When performing your planning procedures, take the time to really get to know clients and what is going on in their industry. Make sure the most experienced engagement team members are heavily involved in identifying audit risks and responses.
Once the audit plan has been established, map the audit in a memo, laying out the biggest risks, strategies to mitigate each risk, and references to where the work will be performed. This will give the partner a quick overview of the audit areas that matter the most while providing linkage to the working papers. Continue to update the memo as the audit progresses and new risks are identified.
Referencing the audit plan, ensure that your audit programs have been tailored to address your client’s unique risks. For firms that use standardized materials from third-party providers, actively eliminating procedures that aren’t necessary to support the audit opinion can increase efficiency while focusing the audit team’s attention on the accounts and areas that represent the greatest risk.
If your firm’s audit teams have been taking a SALY (“same as last year”) approach—or worse, if they have been performing whatever procedures appear on a third-party provider’s audit program regardless of risk considerations—they may be missing an opportunity to make significant gains in efficiency and effectiveness.
4. DOCUMENT IN A TIMELY MANNER:
Instead of documenting while performing the audit procedures, auditors in the field sometimes decide to catch up with documentation later which leads to unnecessary time lapses between performance and documentation which can cause auditors to forget how they developed an expectation, why they performed a calculation or why they reached a particular conclusion and try to clear open items as quickly as possible. However, there is a good reason that the standard calls for completing this step promptly. Documentation is more likely to be accurate if it is performed sooner rather than later. This approach also prevents the preparer from having to remember vast amounts of information or to repeat tasks after the procedure is performed.
In addition, meeting the requirements of professional standards by documenting in a timely manner allows supervisors and partners to spend less time dealing with unnecessary questions and misunderstandings. It improves the chances that working papers can be reviewed in the field and that a draft report and management letter can be ready before leaving the client’s office. It’s much easier to identify problems and address questions to client staff when you’re working down the hall from them than after you’ve left the field and you’re trying to tie up loose ends.
5. BE CLEAR AND CONCISE:
To promote efficiency in both the internal and peer review processes, be as concise—but thorough—as possible. This will also be helpful for future audits potentially involving different staff. It should be a speaking document.
Make sure documentation is complete (in accordance with the professional standards) and error-free and clearly conveys and backs up the significant findings to avoid calling audit evidence into question during reviews. Also be sure to double-check cross-referencing among work papers.
7. INTEGRATED APPROACH WITH STANDARDS ON AUDITING/ AUDIT DOCUMENTATION:
Documentation should be done in compliance with the professional standards with an objective that provides:
- Sufficient and appropriate record of the basis for the auditor’s report; and
- Evidences that the audit was planned and performed in accordance with SAs and applicable legal and regulatory requirements.
8. AUDIT DOCUMENTATION SHOULD NOT REFLECT YOUR BIAS-NESS:
Audit Documentation should be done in the manner that it should not reflect biased nature of auditor while performing his duties for the purpose of audit.
The auditor shall select the items for testing in such a way that each sampling unit has a chance of selection, so that sampling method adopted by the auditor should represent an unbiased manner of sample selection.
For instance, if we choose Judgmental sampling, where sample size and composition are decided on the basis of auditor’s experience, then it may lead to personal bias and sample may not be true representative of population.
On the other hand, Statistical sampling is more scientific, no personal bias and results of sample can be evaluated and projected in more reliable way.
9. INTEGRATE AUDIT SOFTWARE:
Last but not the least, to promote efficiency, effectiveness, and compliance of analytical procedures documentation, consider using software that integrates with audit programs and work papers. Technology offers several advantages:
- the team will not have access to change the standard audit methodology
- even the newest team member would have access to latest audit methodology
- all the audit documentation shall be maintained inline with each audit step and can be retrieve at just click of a button
- Maker-Checker shall be ensured by way of name and date stamp
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