Audit quality assurance processes and audit procedures are designed to provide reasonable assurance that the financial statements being audited are stated according to established criteria. Quality audit procedures can be placed into three categories:
An attestation engagement obtains a current understanding of internal control relevant to that company’s evaluated segment and provides sufficient evidence that it is effective or that due diligence has been performed. The engagement results in an expression of opinion as to whether adequate internal controls over financial reporting exist for the issuer’s benefit, thereby allowing management to report on its operating effectiveness
A review engagement focuses on the application of accounting principles related to one or more assertions within financial statements; another objective is the limited expression of the auditor’s opinion on compliance with a specific policy or procedure.
A compilation engagement focuses on presenting in the financial statements, in all material respects, a fair view of financial position and performance without undertaking a substantive audit.
What do auditors require?
Quality assurance requires auditors to have enough knowledge about the technology they use at work to use them appropriately and identify its characteristics and limitations. It is good practice that both internal and external auditors are familiar with using computer-assisted audit techniques (CAAT) because their awareness of appropriate input data enhances the assurance process; they can also ensure that CAAT methods cover certain procedures more efficiently than manual procedures.
It is not safe for an auditor to rely solely on hardcopy work papers as a source of evidence about the audit. CAAT provides opportunities to improve the documentation process and make it more efficient by automating routine procedures, reducing data errors and inconsistencies, and increasing data entry speed for manually compiled information. In using CAAT, auditors can examine control activities that affect the preparation of financial statements to assess their effectiveness in preventing misstatements from going undetected. Auditors should be familiar with a company’s internal controls over its computerized accounting system because they enhance an auditor’s ability to obtain sufficient appropriate evidential matter during an audit.
In summary, there are three types of technology tools to be used by auditors: Automated Tools, Electronic Tools, and Computer Aided Audit Techniques (CAAT). Automated tools are used to process data quickly and efficiently, and Electronic tools are used for communication within an audit team or with external auditors; CAAT is related to better documentation.
Why are Automated Tools Important?
Financial statements auditors require skills and tools to support them delivering a quality audit; Auditproo is an emerging auditing tool designed for small and medium audit practises.
Technology Tools Audit Quality Assurance is the process that is designed to provide reasonable assurance that the year-end financial statements being audited are fairly stated in accordance with established criteria. Auditors should be familiar with certain types of technologies they use at work because their awareness enhances the assurance process. There are three categories of technology: Automated Tools, Electronic Tools, and Computer Aided Audit Techniques (CAAT), which all play key roles in the audit process.
Automated tools are used to process data quickly and efficiently. Electronic tools are used for communication within an audit team or with external auditors; CAAT is related to better documentation. Automated tools allow a company’s financial data to be processed at a speed that would not otherwise be possible. Without automated technology, auditors would have to read every transaction manually, taking forever and costing more money. When automation was introduced into accounting information systems, it enabled many of these systems to produce results where before they had been unable to do so due to manual input limitations. Using the same steps as those outlined above for paper-based accounts payable/receivable processing techniques for accounts payable, automate processes similarly using standards-based computer applications in place of manual data entry.
Automated Tools also provide the ability to create a workflow-based solution that can improve auditor productivity. By automating some of the audit procedures, auditors are able to spend more time on higher-value activities. Automation speeds up work and reduces errors made in manual processes.