As we progress through an audit, there will be a number of observations / findings / issues, which may warrant being included in the final report, or at a minimum, followed up to verify whether the issue exists or not.
To ensure audit teams keep abreast of the issues which have been identified throughout the audit, it is beneficial to maintain a Potential Issues List.
The template should be saved in a central location and should be accessible by all team members, allowing them to update the document as they progress throughout the audit. The benefits of maintaining a central issues listing include:
- The audit lead and audit manager are able to check this document throughout the audit to understand the status of the review, what issues are arising and if there are any major issues, take immediate action on these;
- A check can be performed towards the end of the review to ensure all issues have been appropriately identified and recorded; and
- Follow up on issues can be performed to verify they exist (i.e. there have been no miss understanding between the auditor and the business area).
The template has been designed so that all observations identified in workpapers can be copied and pasted directly into the issues listing and referenced accordingly. This can help the audit lead / manager to ensure everything has been captured. Furthermore, the template has been designed so that it can feed into the Findings and Actions Workshop meetings and the final report.
As we all know, observations throughout the audit may be found to be mitigated by other controls or actions, can be merged with larger findings, or can simply be upheld and standalone observations. The template allows for the audit team to state the final conclusion of the recommendation through the status column and provide a comment as to why it may be removed or merged.
I have spoken previously about the ‘Golden Thread’. The magical line that links our audit scope to our work program. The work program to the testing workpapers, and the workpapers to the final report. This potential issues list does exactly that, showing the link between the work program, workpapers, issues and where it has been included in the final report.
For any audit manager, this workpaper is crucial in your review of the audit file to ensure the completeness and accuracy of both workpapers and the final report.
Simply CLICK HERE to download your free template.
Whether operating as an in-house internal audit function, or performing internal audit services for a client, a budget is an important document that should be prepared at the beginning of each review.
A budget should not just be ‘slapped together’ as part of the audit admin processes. It is important that a budget is consciously thought out, with consideration given to some of the following factors:
- Amount of effort required per scope area;
- Number of resources required (and any specialists);
- The level and rate (where applicable) of audit team members involved;
- The skills of the client / business area to be audited, and the level of involvement required in managing them throughout the audit process; and
- Technicality of the topic (do we require specialists knowledge, or will it require multiple reviews?); and
- Ease of finalising an audit report.
A preview of the budget template is included below:
As you proceed through the planning process, you should begin to form an answer against each of the above points. This will help you to develop a realistic budget.
A budget is important as it:
- Holds the audit team accountable and can prevent slippage;
- For private firms, helps to manage costs and work within margins;
- Helps future auditors understand the length of time taken to complete the audit procedure; and
- Can show areas that required significantly more effort than required.
The budget should be updated on a regular basis (weekly), and communicated to all team members to ensure they are aware of the current position.
It is essential that a budget is never seen as a constraint. A budget should not impact the level of detail, effort or time required to complete the audit procedures. A budget should not impact on audit quality.
Simply CLICK HERE to download your FREE template.
Terms of Reference, Audit Scope, Scoping Document, Assignment Plan. These are a few of the news commonly used for the main document issued prior to the commencement of the audit.
The Terms of Reference document is critical to the audit. It sets the audit objectives, scope and approach for the audit. Furthermore, it shows the risks being addressed by the audit, and, if desired, can show coverage against company wide objectives or strategies.
It is important that the Terms of Reference document is correct. Objectives and scope should be well defined to avoid any confusion or ‘scope creep’, and timeframes should be mutually agreed with the business area / client to ensure reports can be delivered on time to the audit committee without any unnecessary stress on either the business or the audit team.
The Terms of Reference document should be reflective of the work performed during the planning process. It should also be reflective of discussions with the business area / client. Care should be taken to ensure there is sufficient management buy-in to the Terms of Reference so that the client can feel a part of the audit, rather than a victim of it.
Simply CLICK HERE to download your FREE template in PowerPoint layout. Alternatively, CLICK HERE for the Word version.
Good planning is essential to delivering a quality audit that meets the expectations of the business area, management, and other dependant stakeholders. As such, it is important that all audits are preceded with a team planning meeting. This planning meeting should include some of the following topics:
- Outcomes from our planning activities – what we know about the process, what the risks are, who is involved, etc. These items will help bring the audit team up to speed with the audit topic.
- Proposed scope, objectives and approach – Based on everything we have learnt during planning, we should be able to prepare a proposed, objectives,and approach to audit testing.
- Timeframes, budget and team – Through the planning activities, we should understand how much effort will be required by the audit team, who will make up the audit team, and anticipated costs. We should also have an understanding of key dates and availability of audit contacts.
Good planning will not only summarise the work performed during planning, but also ensure a good quality, detailed audit, is delivered within the required timeframes.
Our dashboard template / placemat, acts as a guide to help summarise audit planning activities and communicate the audit approach in a more visual and engaging approach then a standard planning meeting.
A preview of the template is included below:
This activity forms part of a suit of planning activities which should be performed to make sure we fully understand the audit topic. The outcomes from this audit activity will help feed into our Audit Team Planning discussions, and ultimately, our Terms of Reference / Audit Assignment Plan.
Simply CLICK HERE to download your FREE template.
To buy an editable version of this template, PLEASE CLICK HERE.
Nobody understands current processes and activities better than those performing it on a daily basis. Its therefore important that, as part of the planning process, we meet with those within the business to understand what policies and procedures are currently in place. Furthermore, understanding their thoughts as the biggest risks, challenges and improvement opportunities, helps us to better scope and plan our audit.
Prior to meeting with the business, substantial legwork should have been performed by the audit team. We should attempt to understand what policies or procedures are already available, who makes up the team (i.e. organisation chart), what audit activities have already been performed, and what legislation or regulation impacts the business area. Many of these things can be found through the company’s intranet, leveraging a prior audit file, and even a simple Google search. Having this level of background knowledge will help show our level of investment into the audit topic and help build a trusting relationship with those from the business area. To meet with the business and not understand what they do would not gain us, as the auditor, any level of respect, nor would it instill confidence in the business area.
Templates have been developed to help cover these topics, and can be accessed from here.
A preview of the template is included below:
This activity forms part of a suit of planning activities which should be performed to make sure we fully understand the audit topic. The outcomes from this audit activity will help feed into our Audit Team Planning discussions, and ultimately, our Terms of Reference / Audit Assignment Plan.
Simply CLICK HERE to download your FREE template.
To buy an editable version of this template, PLEASE CLICK HERE.