The Auditing Process: Important Phases Of The Audit Process

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The Audit Process:
An auditor is requested to convey an opinion on whether the financial statements are fairly stated, be it through a voluntary audit or a statutory audit. Before embarking on an audit of the financial statements the auditor is obligated to follow certain steps; this is called the Audit Process. The Audit Process allows the auditor to perform a high level service to the client, ensure that the auditor complies with the auditing standards and limits the auditor’s risk of legal liability or reputational damage. The audit process is subdivided into four phases which is:
• Engagement Activities
• Planning Activities
• Obtaining of Audit Evidence
• Evaluating, Concluding and Reporting Figure 1.1 Important Phases of an Audit
Thus, these phases aids in the planning of execution of the audit and obtaining evidence regarding the audit, which in tail enables the auditor to get a good insight into the entity’s operations and procedures. This in turn can be used to identify any weaknesses or risks and in turn recommendations can be made. This adds value to the entity and
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This can limit risk to a minimum. There are certain matters an Auditor need to consider prior to the audit. The client and the entity’s reputation must be considered, including the nature of its operations and practices. A closer look needs to be taken to the owners and those in key management positions to establish if there is any criminal activities taking place or looking at the overall attitude concerning the audit. These attitudes may include limiting the auditor’s scope of work in an in an inappropriate approach or wanting to keep the cost of the auditing low which could lead to influencing the outcome of the audit. But the reason behind the audit may also be relevant, matters such as appointing a new Auditing firm and the reason behind non-reappointment of a previous auditing firm can play a vital
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