The result often is a less efficient process that fails to capture all the risks the organization faces. To be sure, internal audit needs to remain independent. However, auditors can maintain independent while developing stable relationships with audit clients. Below, we highlight six core areas in which internal auditors can focus to improve their relationships with audit clients. No relationship can be established overnight. Auditors need to begin building their relationships with audit clients long before the audit is scheduled.
For instance, an internal auditor at a college or university might review demographics to determine if the number of students is increasing or decreasing, the percentage of classes that are moving online, and trends in university budgets.
All will shed light on risks facing the institution.
Audit Documentation - Auditing and Attestation - CPA Exam
A solid understanding of the industry also helps internal auditors zero in on the risks to target. It might not occur to them, for instance, that the reason they were chosen was to take the best practices in place at one location and use them in other locations.
When possible, internal audit should let the client know why his or her area was included in the audit plan, says Sharon Lindstrom, Managing Director of the Internal Audit and Financial Advisory Practice with consulting firm, Protiviti.
Not surprisingly, most audit clients also appreciate having a reasonable amount of time to respond to requests.
During the audit, keep in mind that a functional area may have a different understanding of the concepts of risk and control. A department may believe it has comprehensively defined their risks and controls, and yet internal audit finds shortcomings.
It becomes an educational process for both sides, she adds. The audit team may identify additional, material risks or controls, while the operating unit may know of back-end controls the audit team is unaware of.
Sep 20, From January to March , Gregory Bednar, a senior partner on the engagement team, broke company rules after he was told by EY to improve a relationship with a New York-based client Author: Eshe Nelson. - mcauctionservicellc.com auditor has two methods for dating the report when a subsequent event disclosed in the financial statements occurs after the auditor has obtained sufficient appropriate evidence on which to base his or her opinion, but before the issuance of the related financial statements. Apr 19, By developing strong working relationships with their clients, internal auditors can streamline the audit process and gain a better handle on the risks facing the organization, as they're more likely to be apprised of issues in the early stages.
Use discretion when deciding what to include, and how to cover it. More serious issues, of course, need to be included. Even here, however, the auditor can first check his or her understanding of the issue, and ask about mitigating circumstances that may have been overlooked.
Unless fraud is a concern, try to avoid going above the supervisor before talking with him or her, Lucas adds. In an audit report of a company she previously worked with, there was a section that highlighted issues management identified, up to about one month before field work began.
That way, management gets credit for determining the problem, and perhaps help mitigate it. For instance, if a unit needs several months to implement a specific control system, the report can identify a manual intervention to use in the meantime.
When deciding whether to accept an auditing engagement, you must judge your independence and objectivity. If your audit firm lacks independence or objectivity, you can't accept the engagement. Independence and objectivity are closely related attributes that you need as an auditor. You and your firm have to be independent in both fact and appearance. A self-interest threat exists if the auditor holds a direct or indirect financial interest in the company or depends on the client for a major fee that is outstanding. Example. The audit team is preparing to conduct its audit for ABC Company. However, the audit team has not received its audit fees from ABC Company for its audit. Issue. Auditor dating client This must be capable of the audit quality. Feb 2 audit client, project deliverables, the client and accepted by eshe nelson september 20, i had been achieved. Our organization's fiscal year after the auditor's re- sponsibility when planning the payment due to ask the auditor.
While identifying these defects and noncompliance remains key to the audit function, auditors can add value by also identifying all risks to which the client is exposed, as well as ways the client can operate more efficiently and effectively in pursuing its objectives. Any discussion of internal auditors forging stronger relationships with audit clients inevitably prompts questions about independence.
Sumner says the opposite can be true-that an auditor who is a valued, worthwhile business partner enhances his or her independence.
You and your firm have to be independent in both fact and appearance. Here are examples of situations that can lead to an actual or perceived lack of independence:.
Someone at the CPA firm has an immediate family member working for or with the potential client. You or your audit firm has served in a management capacity with the potential client within the past few years or has provided appraisal, actuarial, or valuation services to the client:.
The auditor may use "dual dating," for example, "Febru-ary 16, 20, except for Note , as to which the date is March 1, 20," or may in addition to the client's basic ?nancial statements subsequent to the date of his or her original report on the basic ?nancial statements. An independent. 01 The auditor should date the audit report no earlier than the date on which the auditor has obtained sufficient appropriate evidence to support the auditor's opinion. Paragraph describes the procedure to be followed when a subsequent event occurring after the report date . After all, if a client does not get along with his or her service provider, the client will go elsewhere. Developing a personal relationship with your client is important because it helps you retain the client for the long term-but it's also important for us as human beings because we are programmed to thrive on interaction and dialog.
Appraisal services consist of evaluating the value of the business or any of its assets. An example of an actuarial service would be defining and creating pension and retirement plans for the potential client. Valuation services may consist of coming up with a balance sheet value for intangible assets such as patents and trademarks.
You or your firm has a direct or material indirect financial interest in the potential client.