The audit process can be a source of stress for many businesses, but understanding what to expect can help companies approach audits with confidence. This guide provides an overview of the key stages of an audit and what businesses can expect during each phase.
Corey Roder, CPA PLLC does not itself perform audits, reviews, or other assurance engagements. This article describes how a business can organize its accounting records and schedules in advance of an engagement performed by an independent firm. Need an audit, review, or other assurance engagement? We can help coordinate it. Corey Roder, CPA PLLC maintains referral relationships with independent CPA firms that provide these services. The assurance engagement is separately contracted with and performed by the independent CPA firm.
1. Initial Planning and Risk Assessment
The audit process begins with the planning and risk assessment phase. During this stage, auditors meet with key stakeholders to understand the business, its operations, and the financial reporting environment. The auditors assess potential risks, define the scope of the audit, and develop an audit plan.
2. Gathering Financial Records and Documentation
Once the audit plan is in place, auditors request financial records and documentation for review. This includes financial statements, bank statements, invoices, contracts, and other supporting documents. Businesses should be prepared to provide accurate and complete records promptly.
3. Fieldwork and Testing
Fieldwork is the main phase of the audit, where auditors conduct detailed testing and review of financial transactions. This involves analyzing financial records, verifying account balances, and assessing internal controls. Auditors may also interview employees and perform site visits, if necessary.
4. Communication of Findings
Throughout the audit, auditors maintain open communication with the business to share preliminary findings and address any issues. Once fieldwork is complete, auditors present their findings in a closing meeting, highlighting any discrepancies, recommendations, or areas of concern.
5. Final Audit Report
The final phase of the audit involves issuing the audit report. The report includes the auditor’s opinion on the financial statements, along with any recommendations for improving internal controls or financial reporting. Businesses should carefully review the report and take corrective actions as needed.
Conclusion
Understanding the audit process helps a business prepare and work constructively with the independent firm performing the engagement. Corey Roder, CPA PLLC can help organize the underlying accounting records and schedules as part of outsourced accounting support.
Written by Corey Roder, CPA. Corey Roder is a licensed CPA and the founder of Corey Roder, CPA PLLC. He founded a construction company and served as its COO and CFO, managing the financial and operational decisions of that business. Earlier in his career he worked as an auditor at Grant Thornton, and he later worked at national consulting firms on technical accounting including ASC 606 and ASC 842. Corey Roder, CPA PLLC does not itself perform audits, reviews, or other assurance engagements.