When thinking that your company will start its first audit, it is normal to consider how your company should be minimally prepared, since there is an audit offinancial, accounting, payroll, tax, internal controls and countless other information depending on the company's profile. The auditor performs a series of preliminary work at the beginning of the audit and specifically, must analyze the particularities of the company and the sector in which it operates.
From this, the fundamental basis for the audit work is the accounting information, so this process must have been planned and elaborated.
The first audit is always a novelty in the company, it is normal that the usual procedures for the execution of the work are not known. As it is the first audit, the preparation of documentation, as well as the meetings that will be held with the auditor, will be more time-consuming and complicated than in subsequent audits. Once the first audit is approved, those responsible for the company already know how the process is carried out, how the auditors work and what documentation to prepare for the start of the following audits.
Typically, the auditor will tell you what information he needs before starting his work. With this information, he will be able to start his task more effectively on schedule, as he has been able to analyze the financial statements in advance and will be aware of which ledger accounts are the most significant and in which areas review work is necessary.
It is standard for the auditor to submit a list of the basic accounting documentation that he or she will need to perform his/her work, so that it is prepared prior to the commencement date of the audit engagement. This list will contain a checklist of the information to be verified. The documentation list must be requested in a timely manner so that it can be properly prepared. The content of the checklist will, of course, depend on the type of company.
The documentation to be prepared can be much more extensive, if the auditor previously requests a copy of internal information, such as the structure of the company. However, in the case of a first audit, it is more common for this type of information to be requested in person during a meeting, thus allowing a more detailed discussion of the same with the company's managers. It is also possible, in the case of companies that have an internal audit department, to request access to the audit reports prepared by this department.
The documentation may also be expanded, containing requests for details of the accounts relevant to the audit. It is important to highlight the need to supervise all information before handing it over to auditors, to ensure its correctness and consistency. Subsequently, auditors will request more details of a few more accounts and will verify physical supporting documents for certain entries. It is relevant to verify that the detailed lists that are given to the audit team correspond to the general information.
In a first audit, more verification work is usually required, as this is the first time the auditor has evaluated your company. However, in subsequent audits, the level of verification tests may be lower, especially if the company's level of internal control is perceived as adequate by the auditor.
The auditor needs a series of basic accounting documents to carry out his/her work, which must be prepared before the start date of the audit work. This list will constitute a checklist of the information to be verified. The required documentation varies from one company to another, but as a general indication, the company must have prepared, before the start of the audit, a copy of the articles of association and amendment of the articles of association, accounting balances, annual accounts at the accounting closing date year, balance sheet, income statement, statement of changes in equity, statement of cash flows and company report, the list of tax settlement models for the year audited, as well as having updated the respective minutes books, both of the Board of Directors and the General Meeting.
EGet in touch with TATICCA – ALLINIAL GLOBAL, which provides integrated services for auditing, accounting, taxes, corporate finance, financial advisor, risk advisory, technology, business consulting and training. For more information, visit www.taticca.com.br or e-mail taticca@taticca.com.br. Our company has professionals with extensive experience in the market and has certified methodologies for carrying out activities.