Audit procedures are the formalised systematic evidence gathering and examination activities carried out by the appointed auditor in compliance with the Australian Auditing Standards and/or Standards on Assurance Engagements. The specific audit procedures applicable to each individual audit will vary according to the scope and nature of the audit, as determined by the auditor during the planning and risk-assessment stage of the audit process.
An audit that complies with the standards, and therefore suitable for entities with a financial audit requirement in their reporting obligations, can be broken into three stages:
Due to the increasing complexity of financial reporting standards and accounting frameworks, the requirement for systematic and standardised audit procedures is more important than ever. Kingston & Knight Audit ensure that stakeholders receiving your statements and disclosures have access to an audit report outlining the nature of the audit procedures used so that they receive assurance of the highest standard.
Substantive procedures and analytical procedures are the critical components of the financial audit process. These audit procedures are designed and carried out to satisfy an appointed auditor’s objectives of obtaining sufficient appropriate evidence with which to form an opinion and document reasonable conclusions in the audit report. Substantive procedures include the evaluation of relevant data, including:
Analytical procedures are designed and carried out to assist the auditor in forming an opinion about the content of financial reports, or a compilation of financial statements, by analysing reasonable relationships that occur within the entity’s financial and non-financial information. The scope of these procedures must be sufficient as to enable the investigation of any fluctuations or inconsistent relationships in relation to other relevant data. This is part of the auditor’s responsibility to investigate, through the gathering of audit evidence and testing of relevant information, any inconsistencies in the financial statements or values that differ from the expected figure.
Analytical procedures are conducted toward the end of the financial audit process and are informed by findings from previously-conducted substantive procedures. The auditor is responsible for designing and performing analytical procedures to improve the reliability of their documented conclusions and overall opinion. As with the audit process in general, analytical procedures are designed to investigate any potential fluctuations or inconsistent relationships in the information evaluated during the audit. Suitable analytical procedures will be designed by the auditor in order to test individual assertions, or auditor expectations, in such a way that the findings of analytical procedures can be reasonably accepted without any further investigation.
During the design and performance of analytical procedures, the auditor may conduct inquiries with management and then evaluate management responses in relation to appropriate evidence. When the relevant analytical procedures have been completed, the auditor can begin to compile their findings and record an opinion on the final audit report.
Kingston & Knight Auditors Melbourne ensure that your financial audit is about more than the delivery of assurance to stakeholders. Our extensive professional experience as independent auditors and detailed knowledge of auditing standards and procedures enable us to deliver an audit report that gives genuine insight into the financial position of your entity. This can bring information to light which could change the direction of an entity’s fortunes, especially when inconsistencies are identified. As approved, independent auditors we are obligated to provide an informed opinion in-line with the auditing standards. We take utmost responsibility when it comes to your audit and its importance for stakeholders, contact Kingston & Knight Auditors Melbourne on 1800 283 471 or via email at email@example.com to learn more about audit procedures and why they matter to you.