By understanding the process that that an auditor goes through and why audits are carried out it is much easier to get the perfect job.
Money Wastage – Believe it or not the vast majority of companies are wasting money needlessly, either because of problems they were unaware of or unsure how to deal with. The detailed process which an auditor goes through is able to uncover these problems and usually recommend solutions which will help reduce this wastage. This is one of the most appealing outcomes of an audit for a company.
Inaccurate or Incomplete Information – Businesses rely on their internal information, it guides decisions made by the company on a daily basis. Similarly information produced about the financial status of the company for external parties is hugely important with legal implications for inaccuracy. Auditors are able to assess this information to determine any irregularities, intentional or not.
Misuse of Assets – it’s possible that companies may be misusing their assets either by not making full use of them or other inefficiencies. Auditors may be able to highlight to companies an over-capacity in their manufacturing or illustrate the cost of unused office space.
Embezzlement and theft – the amount of money that companies lose annually from theft and embezzlement is huge and would surprise a large many. Auditors are specifically trained to spot the signs of this kind of crime and can draw attention to these problems before they get out of hand.
The Audit Process
The processes used by audit firms can be very complicated, however there are 5 steps which any auditor must go through.
Identify Objectives – what is it the company wants to achieve; these goals can also be taken to a macro level, department by department, team by team. By isolating what the company is hoping to achieve the auditor is able to benchmark their aims and understand the processes required to achieve them.
Risk that could affect Objectives – the auditors in consultation with the companies must outline risks which would prevent them from being able to achieve their strategies. These can be simple unpredictable factors like a product which relies on the weather to more complicated factors such as the outcome of an ongoing inquiry that might introduce legislation that would affect the company.
Controls to Manage Risk – once the risk has been identified the auditor is able to help introduce controls that can help negate the risk, whether it is widening the product portfolio or taking appropriate insurance. The financial auditors are able to help bring in these controls to reduce the risk.
Are Controls Cost Effective? – it’s also the responsibility of the auditors to make recommendations as to whether the suggested controls are cost effective. While the risk might be quite small, would the financial damage justify the expense to manage them?
Review of Introduced Controls – the process is completed by reviewing the controls to see whether they are successfully managing the risk and whether new risk which wasn’t present in the past would now be needed.
Written by Jonathan Hickstead for CareersinAudit.com
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