How large audit teams can create ‘base’ audits to save time and provide insights across multiple audit entities
Achieving efficiencies in our audits without compromising the quality and standards of our audits is something many teams aim for, but struggle to attain. Lack of time and resources are often key factors, but should they really be? Audit teams should learn to work smarter, not harder, and here is how large audit teams / companies can achieve audit efficiencies through ‘base’ audits.
What is a base audit?
A base audit is a standard audit that could easily be applied at any organisation. For instance, a base payroll audit will capture standard risks and controls expected in any payroll process. It is generic, and therefore won’t reference any specific systems, teams or personnel. It will however, include a generic test plan to coincide with the already listed genetic risks and controls.
Why would you have base audits?
Consider this an investment. You’re a large, multinational organisation with a sizeable audit plan. Your strategic / 5 year audit plan shows you are going to perform a payroll audit for each of your subsidiaries over the next 5 years. Why would you spend time writing 5 bespoke payroll work programs, when you can take the base program and expand on this? Your team is no longer preparing an entire work program, but rather updating or expanding on it to suit the relevant subsidy.
This base audit saves time at the following levels:
the preparer only needs to update the program to include specifics, or add additional tests to address risks identified during planning; and
the reviewer / manager can limit the amount of review necessary as they already know expected controls are included in the work program.
How do you build a base audit
Building the initial base audit does require investment from the business. You will need to:
ensure the team members are allocated sufficient time to build a base plan;
managers are able to actively assist and guide their teams to ensure base plans are complete, but also tangible; and
there is time allocated for refresh and update after the initial practice run.
For instance, when planning for your first payroll audit, teams will effectively need to do two audits concurrently. The first audit will be the base audit. As they undertake planning, they will capture genetic risks and controls in the base / generic audit work program. This base audit program will be saved in your templates folder. At the same time, a copy of the base program will be duplicated and expanded upon to suit the relevant business area / subsidiary.
Where are base audits more beneficial?
Large audit teams working within large multi-national companies will receive the most benefit from having base audits. Benefits include:
Ensures audit consistency as a minimum standard has been set and can be guaranteed for all audits of that particular topic.
Team members will have a good starting / reference point for what they should consider during their planning phase as part of their risk assessment.
Can help 'speed up' the audit process, allowing for additional audits to be performed during the year.
Allows for comparison between subsidiaries / other operations. I.e. If doing a payroll audit, the results from the audit can be compared against each location / operating company. This can provide value and insights to management, but also help share knowledge and best practice across the business.
Whilst there are benefits to base audits, there are also risks. Team members should still be encouraged to do a proper planning process and risk assessment. If team members place a large amount of reliance on the base audit work program and fail to do appropriate planning, there is a risk that the audit scope and objectives do not target the appropriate risks and controls, undermining the value which can be provided to management and the business.
My Audit Spot has a range of template audit programs to assist audit teams in achieving audit efficiencies. Templates can be purchased online from our store. Additionally, paid members can access all templates as part of their membership.
Let us know in the comments in your business already has base audits.