Posted 10 September 2018 By David Wilce, Senior Manager – Business Services
Why do you ask so many questions?
I’m sure we told you that last year?
Why do you need to photocopy everything?
Didn’t you used to do more work on site in previous years?
I have been a Senor Audit Manager for more years than is probably good for me so am used to hearing these sorts of questions from our clients. I have also worked in industry, so have been on the receiving end of the audit process and can empathise with these views. We know that the audit process can seem to be disruptive at times, but we always endeavour to minimise any adverse impact on your day to day operations.
Hopefully, this guide will help you understand why we do what we do, when our audit teams come into your premises.
Essentially, we are gathering evidence to help us understand your business and to establish that the year-end accounts fairly represent the financial impact of the business activities.
We don’t seek to check every single transaction that has taken place, as that would be impractical and not cost-effective; instead we sample transactions and balances to assess how well your systems and procedures are working. This may well enable us to make recommendations for improvements to help your business become more efficient.
This evidence-gathering is a cumulative process designed to give a complete picture, supporting our audit report which is the end-product of the exercise.
The days when audit firms used to send large teams of very junior staff out to clients for weeks at a time carrying out lots of detailed tests have now passed; the emphasis now is much more on a higher level of review which tends to be done by more senior staff.
We place great emphasis on “analytical review” - this is an assessment of the results to establish that they make sense in the light of what we know about your business and our expectations of how the accounts should appear. We, therefore, might look at the trend of gross margins over the years, or the relationship between staff costs and employee numbers.
The popular perception of auditors is that we are seeking to uncover fraud – this is not the primary function of the audit but the risk of fraud, at any level, features very highly in our thought processes when conducting the audit.
One final thought……please be nice to our audit staff; we’re trying our best to be helpful. If you employ a scary credit controller, (and isn’t that the only sort to have?), our junior audit team member is much more nervous of approaching her or him than she/he is of answering our questions.
If you would like to discuss this or anything else, please contact David Wilce on 01225 785520 or send him an email.