Audits are essential for all businesses. While businesses are mostly concerned with audit reports presented at the end of the process, the audit plan holds even more significance. The planning phase is the most important among all the phases of the audit process as it involves risk assessment, ground data research and gives auditors a chance to gain significant exposure to the interests of key stakeholders.
Five essential parts of an audit plan
On the basis of all this work carried out in the planning phase, an auditor’s job becomes easy. When you hire an auditor for your company, you must ensure that you let them take their time in the planning phase as it lays the essential groundwork for the whole purpose.
When you choose an auditor, make sure the resource is experienced and very capable of carrying out risk assessments. If you are in the UAE, you have a valuable resource around you. You can easily get in touch with one of the Top audit firms in Dubai for ensuring an unbiased and comprehensive audit for your business. Planning involves the following:
1. Resource planning and allocation
The first thing that your auditor will look into is the amount of time you are willing to provide them to carry out the complete audit process. Apart from time, the auditor will require your assistance in the assessment and allocation of other resources as well.
Auditors will need to plan the number of team members they will require every step of the way, and the level of competency the team members should have for any given task.
2. Understanding internal control
Every company has its own system of governance and control. The auditors need to study those mechanisms which involve control and check and balance on matters of threats of fraud and any misrepresentation of financial data.
The policies and codes of regulations are part of the documents that auditors analyze so as to find any loopholes in the handling of affairs.
3. Risk assessment
In any company, there are many impending risks pertaining to financial and non-financial matters. Auditors need to identify any and all sorts of risks. Without a thorough risk assessment of all the financial ad non financial matters of your workplace, an auditor’s job remains incomplete. The audit performed as a result of a shallow risk assessment will also be ineffective and hence futile.
It is an auditor’s job to identify the areas of the workflow which are prone to small or big risks. Without this key identification, you cannot expect the audit in your company to be effective for your business.
4. Materiality assessment
Materiality means the quality of being relevant or significant. In accounting, materiality means the level of impact an act of omission in your organization’s financial matters lies on the user. Sometimes the omission or misstatements in the financial statements do not affect the activity of the user, or the impact is not quantifiable.
If the impact is material and can be estimated in costs, then the item is considered to a materiality value. This analysis is a key component of the audit planning process.
5. Identification of conflict of interest
Every business has multiple groups of stakeholders. Your business has to take care of the interests of all those parties in order to survive and improve the business image in the longer run. The interests of various stakeholders can be in conflict with one another. The client’s expectations can be exactly in opposition to the demand of the investor. Both are equally important to your business.
An auditor will have to analyze your business priorities, client expectations, as well as the demands of your investors. If there is a conflict of interest, then the auditor carries out the risk reduction according to guidelines set forth.
Are you looking forward to an effective audit for your company?
Audits are essential to keep the operations of your company clean and clear. Among the three main phases of an audit process, i.e., planning, performances, and reporting, planning requires the most attention.
Secondly, you need to get seek the most reputable independent auditors available around you. If you are in the UAE, you have many trustworthy service providers. You can get in touch with Top audit firms in Dubai to ensure that each phase of the audit takes place in the best interests of your organization.
Seeking Independent auditing service providers has many benefits from an objective and unbiased outlook on the matters to a reduced risk of nepotistic practices. The plus point is that your company’s policies will improve by identification and elimination of loopholes.
