Avoid these common audit errors
Preparing an audit is a great way to get a better picture of your company or organisation’s financial health, the risks it faces and improvements to processes.
While most audits go well, some common barriers can stand in the way of an effective audit, which may hinder the process or result in a final report lacking in detail.
Calling on our years of experience, we have put together a list of errors that should be avoided when undertaking an audit.
Lack of priority
Not everyone within an organisation may see the value of an audit, especially if it isn’t a statutory requirement. Sometimes these members of a team may not appreciate its importance to compliance or feel that their current controls and financial reporting are sufficient.
Unfortunately, the attitude of managers often influences those below them, and it may mean that they do not prioritise audits, which typically leads to poor collaboration and fewer resources to support auditors.
In some cases, this could result in a delayed audit or affect the quality of the final report delivered – leading to additional costs or compliance failure.
As auditors we are required to enquire about controls, review documentation that outlines the controls that are in place, observe these processes in action and test them ourselves.
Where an organisation doesn’t document or demonstrate its processes properly, it can add extra time to the initial enquiry stage, which can frustrate the process and lead to confusion.
In some cases, where there isn’t sufficient evidence, we may have to assume that the process is either not operating or being performed inconsistently.
A failure in controls due to poor documentation is a common finding in many reports, but it can be rectified through the creation of written policies and procedures.
A lack of prior risk assessment
The phrase risk assessment may spark fear in some business owners. That is why many businesses fail to create policies that deal with risks.
Most audit standards around the world are risk-focused and aim to eliminate risk. Without a sufficient assessment, organisations often waste resources on controls that aren’t effective.
It can be hard to assess the effectiveness of an organisation internally, and there is often an inclination for finance teams to promote the good and underreport the bad.
When external auditors review the organisation, they often find shortcomings that internal teams overlooked. They may, for example, report that they have lots of controls in place, but further review suggests that they aren’t conducted correctly.
Outwardly it looks like the organisation is complying, but the realities may differ exposing an organisation to risk.
The best way to eliminate errors and the risks that come with them is to work collaboratively with the audit team to resolve as many issues as you can early on. Rather than trying to hide failings, focus on fixing them.
If you are looking for advice or more information on audits, please contact your Seymour Taylor representative or for new enquiries contact our expert Audit team at email@example.com or call 01494552100.
This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 18 January 2022.