Financial Audit Checklist has condensed the financial reporting process into the following tasks such as Engagement acceptance, Planning, Audit testing, and Account analysis, Procedures, Reporting. Financial auditing has progressed a lot through years to reach at the level it is now. Financial auditing is the process of evaluating an organization’s financial reports and financial reporting processes in an objective and independent manner.
The objective of the financial audit has been tripled. The first is to ensure that there are systems in place to manage the business to achieve the highest levels of profitability. The second is to ensure compliance with all applicable regulatory bodies. Third is to protect all business stakeholders from the risk of fraudulent activity. To achieve this, all businesses – whether public or private – must conduct periodic research to protect their financial security. At the very least, a basic checklist should be used and the assessment should be managed by an impartial committee from within the business. However, the most sensible course is to conduct an audit conducted by a qualified firm, an external auditor twice a year.
Budgets and Financial Statements
A prudent business has a set of budgets and financial statements that allow them to monitor and measure the financial performance of the company until the end of the year. Budgets should be compiled at the beginning of each year for profit and target costs, and reviewed monthly. The four basic financial statements, the balance sheet, the income statement, the owners’ equity statement and the cash flow statement, should be reviewed for accuracy, completeness and compliance with general accounting principles.
Transaction Records
All financial transactions must be recorded in the company’s general ledger. Whether handwritten or electronic, each transaction must be recorded in the same manner with sufficient information to indicate who created it and for what purpose. Each must be certified on the date of the transaction.
Costs of Revenue and Sales
The audit staff must perform the income and expenditure tests on the standard ledger and the following financial statements. Sales entries must be verified by proving product shipping; service delivery; or accounting for the termination of accounting termination, which allows entities to record periodic revenue from long-term contracts. Cost-selling inputs should be properly timed for the corresponding investment and check for accuracy.
Cost Approval
All costs, whether paid in cash or by check, must be controlled by written procedures and governed by the appropriate pre-payment standards. Checks and cash transfers should be locked with minimal access. Duplicate signatures are required and verified for withdrawals or checks, including salary costs.
Collection Accounts
Accrrrones should be available to establish a balance sheet for pending payments. This should include items such as employee salaries pending the consideration of salaries, holidays or sick leave and bonus or commission agreements. Accruals must also be subsidized by state, domestic and state taxes on property, sales or income, as required by law.
Temptation Balance
The company’s “trial balance” includes the values of all accounts as a summary of time. Audit procedures should verify estimates with special care paid for large-scale reconciliation. Documents should be provided with support for estimates of available and paid accounts, in the form of detailed detailed aging reports. Assets and immovable assets should be guaranteed by item, quantity and value, with the verification of the time cycle calculation to ensure accuracy throughout the year. Currency estimates should be confirmed by reconciling bank statements.
Division of Functions
It is important to ensure the separation of duties from all financial transactions, providing internal controls that help prevent errors or fraudulent activity. For example, the person who writes the purchase order must not be able to write a check to pay the supplier. For small companies, this can be a challenge. However, financial staff may ask staff from other departments to support such assessments and estimates.
Major contracts
Because large contracts with suppliers or customers can significantly affect a company’s financial position, all agreements must be reviewed to ensure that the entity meets its contractual obligations. This includes the review of major lease agreements, buy and sell agreements, insurance policies or any other written company obligation.
City rules and meeting minutes
By-laws adopted by the board of directors for the benefit of business and stakeholders should be documented and reviewed to ensure compliance with all instructions. Minutes of company meetings should also be reviewed to ensure that appropriate measures are taken to address any issues discussed at these meetings.
Ensure compliance
Audit must be done to ensure compliance with all regulatory bodies governing the business. This should include the fulfillment of local, provincial or corporate taxes. It should also include compliance with structures that require periodic reporting of statistics or other actions to reduce physical risk or maintain a good business environment.
