An audit is a third-party review of a company’s financial information or operational compliance. Publicly held firms must undergo frequent audits to remain compliant with federal reporting agencies. Accounting firms are the primary source of auditors and these firms provide skilled individuals to review a company’s financial information. The audit is often similar for companies subjected to these reviews because offering a similar process to each client ensures that no deviation occurs from accounting principles or other standard business practices.
Submit an audit proposal to the client. Detail the audit scope and necessary charges for all audit services.
Meet with the company’s ownership or management to establish a relationship. Create an understanding for the audit timeline, scope, number of auditors and strategy.
Develop a written audit plan. The plan should detail the fieldwork operations and information necessary for the client to prepare. Clients must usually prepare and submit information for auditors to review.
Conduct the fieldwork phase of the audit. This involves reviewing the client's prepared information, interviewing the company’s staff, observing operations and testing internal controls.
Make extensive notes of any misstatement or deviation from accounting principles. Review a second sample of information if necessary to determine the depth of accounting errors.
Discuss the audit findings with the company’s ownership or management. Review all errors and misstatements prior to issuing a final audit opinion.
Issue an audit opinion. An unqualified opinion indicates that no errors were present in the client’s information. A qualified or adverse opinion details auditor misgivings about the inability to complete the audit or the discovery of material errors.