Conducting an Internal Audit: What Your Business Needs to Know
By Fatima Wallizadeh
Updated 7/30/2019. When an internal audit is conducted, auditors set up in a conference room with boxes of files, stacks of binders and open laptops. They might stay for a day, a week or longer.
But do you really know what goes on during an audit, and why doing one is so important to a company’s operations? Here is what happens during an audit, and how auditors work with their clients to help them improve their businesses.
Learning the client
It’s essential for auditors to learn about your business before they arrive on the premises. Every audit happens within the context of the client’s operations, so they need to understand how your company works and the items the business’s leader want to focus us. By getting to know the client in advance of the audit, the auditor also learns about the company’s history, including any previous problems with inaccurate data or poor recordkeeping.
Preventive and detective audits
When examining the internal controls of a company, auditors have to view everything through two lenses – preventive and detective. Preventive analysis aims to discover flaws in the system that could lead to inaccurate recordkeeping, incomplete data, or potential opportunities for fraud should sensitive information fall into the wrong hands. Detective analysis ferrets out bad data, inaccuracies and fraud in progress.
Checks and balances
Because auditors work in teams, each member of the team is tasked with a specific part of the audit. One auditor is responsible for gathering data, providing status updates to key executives of the client and verifying mistake or inconsistencies that are uncovered, to help ensure that the mistake wasn’t the fault of another auditor.
Auditing standards are constantly changing, and auditors must regularly stay up to date on new auditing standards and guidelines, as issued by the AICPA. Before choosing an auditor, ask about experience and continuing education to ensure you are getting the best auditor for your company’s needs.
A day in the life of an auditor can be complex, but that doesn’t mean the process has to be complex for your business. An experienced professional can take on the onus of the audit, making it easier for your company to focus on doing business. For more information about how an audit works, and what you can expect when an auditor visits your company, contact Wiss today.
Fatima Wallizadeh is an Audit Associate here at Wiss & Company. If you would like to get in contact with Fatima, you may reach her at email@example.com or at 973.994.9400.