Auditing practices – a core industry requirement or just a quorum for industries

Auditing Practices in Industries – a basic need

Auditing a core need of industry

Auditing is a detailed examination of the verticals of an organization. It is used to provide confidence for all stakeholders that the organization’s accounting or systems processes are accurate.

Auditing is referred to as the accumulation and evaluation of evidence to determine and report on the degree of correspondence between the information presented (i.e., the datas) and the established processes. Auditing should be done by a competent, independent person or entity.

 Overall, auditing is a more specialized field of expertise but the two go hand in hand. This means that auditors cannot be totally unaware of functional or systems understanding. In fact, auditors must be qualified and competent in standard or processes in order to properly conduct an audit.

Auditor under auditing practices are the Lead or managerial level best practices followed in Audit management under audit Certification.

It is used to remove the gaps identified through Audit practices in any organization. Audit applies to all types of organizations where ISO or similar standards are implemented.

It doesn’t matter what size they are or what they do. It can help both product and service organizations achieve standards of quality that are recognized and respected throughout the world, using meaningful Gaps analysis by a Certified Auditor.

Internal auditing is the independent and objective evaluation of an organisation’s internal controls to effectively manage risk within its risk appetite.

Internal audit should monitor that any weaknesses identified are also addressed.

As an internal auditor, one should have the freedom to fulfil their responsibilities as they see fit. They must decide what subjects they audit and when, what issues they raise and what rating they give.

Here we aim to highlight just a few major benefits that an audit provides.

1. Compliance

Obviously this is one of the main reasons to conduct an audit: to meet the statutory requirements and regulations in your industry. An audit provides complete peace of mind for business owners and shareholders that the organisation is 100% compliant with all of its current statutory obligations.

2. Business Improvements / System Improvements

A thorough, in-depth audit takes an impartial look at your organisation’s internal systems and controls. This means it’s an ideal opportunity for the auditing experts to suggest improvements that can make your business more efficient.

3. Credibility

An audit provides independent verification that the financial statements are a true and fair representation of the entity’s current situation. This provides invaluable credibility and confidence to your organisation’s customers/clients, stakeholders, investors or lenders and even potential buyers. It is confirmation that financially everything is as it appears to be.

4. Detect and Prevent Fraud

Workplace fraud can occur for years without being detected and can be so substantial that some businesses never recover financially or repair their reputations. An audit can be an effective tool for identifying fraud and opportunities to commit fraud. Experienced auditors are skilled at pinpointing weaknesses in an organisation’s systems and controls and suggesting ways to strengthen these to prevent fraud occurring.

5. Better Planning and Budgeting

An audit confirms the accuracy of an organisation’s financial statements by analysing its financial transactions. It’s a detailed process and can result in certain types of income, expenditure, assets and liabilities being scrutinised..

Audit Phase-
Audit phase includes three stages – initiation, auditing, evaluation and closure.

  • Initiation: The initiation phase includes meetings and process initiation with auditors and audit team members. The lead auditor should conduct meetings with team members discussing about scope, purpose and process of an audit team. Along with this, the timeline too is evaluated; if the auditing can be completed within the time processes.
  • Auditing: The actual audit is in place in this phase. The plan and checklist are executed here. In this phase, it will be evaluated if an implemented process is worth it or not. The objective data needs to be collected, examined and documented. After every data is audited, the lead auditor examines if it is acceptable and needs to be continued in the process.
  • Evaluation: This is the evaluating phase where the results are evaluated. The audit team will discuss the information collected and tally with the plan. The results are documented with reviews and the final corrective action request or change request is documented.
  • Closure: This is the closing phase where the lead auditor and members will discuss and formally close the audit process. During situations when corrective action plan couldn’t be provided due to lack of information can be put forward in such meetings.

Audit Report
This is the primary responsibility of a lead auditor. Information related to the audit is documented and an audit report is created. Typically, an audit report covers information mentioned below.

  • Company profile for audit
  • Coverage of audit created in the planning phase
  • Time frame defined to complete the audit
  • Assignees with defined roles and responsibilities
  • Documentation of compliance and non-compliance activities
  • Audit results
  • Correction action request
  • Final observations of the audit

These are the phases that need to be led by a lead auditor. He or she needs to ensure that each member is delegated with their list of responsibilities and each of them is closing the same. Also, a lead auditor should be able to handle conflicts as auditing is always prone to lot of conflicts. So, if you are going to pursue a career as a lead auditor, you are clear about your roles and responsibilities as one.

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