An audit is the examination and verification of a company's financial records to ensure accuracy and fair representation. Your organization must undergo external audits conducted by AFD to ensure that its processes, systems, and documentation are still appropriate and, most importantly, beneficial to the organization.
Essentially, an external audit examines the compliance and financial performance of your organization. Auditors typically review financial statements, so it's vital to keep accurate records for your business. During an external audit process, an auditor usually visits your premises, but remote audits are also possible.
Planning an external audit process can be daunting, but here are some experts recommended practical tips to help your preparations go smoothly.
Understand the Expected Standards
External audits are reports that assess your organization's performance against an external standard, so make sure you read the standard and understand it well. A fundamental understanding of the external auditors' approach is essential. As a result, you can avoid unnecessary actions by discussing topics outside the audit. With that general understanding, you can manage external audits more effectively.
Read More: Understanding Internal Audit Processes Types, Values & Standards
Make Sure You Identify Your Subject Matter Experts (SMEs)
It is unlikely that anyone is more familiar with your internal processes than your SMEs. Decide which of your employees has the best knowledge to assist the external auditor in understanding and evaluating your business processes and information security policies. It is important to educate the SMEs on the importance of external audits, as well as present your understanding of the standards so the auditor can prioritize preparations based on their knowledge and expertise.
Allocate Adequate Resources to SMEs
You should understand that the experts and specialists you have chosen already have a lot on their plates. The audit process requires a great deal of time, energy, and effort on the part of your SMEs. Ensure your audit team has the resources necessary to complete the work efficiently.
Make Sure Your Internal Procedures Are in Order
Assemble your SMEs and conduct internal audits relevant to the controls that will be examined in upcoming external audits. A key objective of this assessment is to identify any gaps in processes or inadequate compliance with the standards you will be audited against. Thus, ensure that you have implemented all the controls required by the standard and that you have taken corrective actions where necessary.
Document Your Procedures
An excellent starting point is to ensure that all internal procedures are in place. The audit process will, however, involve external auditors requesting supporting materials. An auditor will likely request copies of your policies, financial statements, accounting records, and "process artifacts" (evidence that your processes are operating as intended by you).
Prepare a list of documentation that demonstrates the existing internal control structure based on the business processes determined in the previous step. It also assesses the accuracy and completeness of your documentation.
Steps of an External Audit Process
As part of your preparation, you should also consider the process of external auditing. Despite the unique characteristics of each audit, all audits follow a similar process:
1. Decide What You Want to Accomplish
An audit goal is a fundamental part of the planning phase and will help you determine what is needed going forward.
2. Publicize the Audit
Your entire company, including senior management and stakeholders, should be aware of the audit.
3. Hold an Audit Entrance Meeting
Give a brief explanation of your audit objectives, the process that will follow, and the timeframe for completion.
4. Fieldwork
After you have created an action plan, you can begin the audit process. Tests of controls and an investigation of your security system will be part of this process.
5. Evaluate & Communicate the Results
You should analyze and communicate your audit findings to your audit committee and staff.
6. Meetings to Discuss Audit Exits
Keep everyone on the same page by following up with them.
7. Summary of Audit Findings
Keeping track of your results is key to preparing for your next audit.
You will save both time and money moving forward if you learn these steps before you begin your external audit.
Hire a Top Audit Firm in Dubai
With the help of this guide, you should be able to better understand all the ins and outs of the external audit process. To ensure compliance with UAE laws, regulations, and accounting standards, you must hire top-rated audit firms in Dubai. Audit firms in Dubai can assist you in meeting your compliance requirements.
Our firm specializes in accounting and auditing in Dubai. In addition to ensuring regulatory compliance, our Dubai auditors provide an accurate, complete, and unbiased audit.
Get in touch with us if you would like more information.
Kasun Liyanage is an Audit Manager with over 7 years of experience dealing with diversified corporate clients. He not only manages the team’s work schedule but also is an expert in handling audit areas such as external audits and fraud investigation, Internal control benchmarking and best practices and well as preparation of financial statements and IFRS compliance.
