Financial Audit Checklist

Process Street's Financial Audit Checklist acts as an internal guide to aid you through the financial auditing process.

Introduction:

Record details

Engagement acceptance:

Evaluate risks associated with each engagement

Decline engagement

Email to communicate declined engagement

Accept engagement

Planning:

Perform pre-financial audit checklist steps

Risk assessment

Audit testing:

Test financial data

Account analysis:

Assess accounting requirements

Assess organizational structure

Assess budgets

Assess banking and custody procedures

Assess checks of income records

Assess controls over purchases

Assess staff and salaries

Assess bank accounts

Substantive procedures:

Analyze historical and forecast data

Assess cash

Assess marketable securities

Assess accounts receivable

Assess inventory

Assess fixed assets

Assess accounts payable

Assess debt

Assess revenue

Assess expenses

Reporting:

Finalize financial audit details

Generate financial audit report

Approval:

Email financial statement summary

Export the final financial report as a PDF document

Export the final financial audit report

Related Checklists:

Sources:

Introduction:

Process Street - Financial Audit Checklist

Process Steet’s Financial Audit Checklist acts as an internal guide, to aid you through the financial auditing process.

The checklist can be run from the financial audit procedures beginning, to the end when a final financial audit report is produced.

Process Steet’s Financial Audit Checklist has condensed the financial audit procedure into the following tasks:

Engagement acceptance
Planning
Audit testing
Account analysis
Substantive Procedures
Reporting

The earliest surviving mention of a financial audit like procedure dates back to the 13th century. As a procedure, financial auditing has progressed through the years to become what is currently a thorough assessment.

Financial auditing is the process of evaluating an organization's financial reports and financial reporting processes in an objective and independent manner.

Regular financial audits substantially benefit business performance by:

Ensuring consistent, up-to-date, detailed overviews of business workings.
Providing additional perspectives to ensure on-going full compliance.
Improving credit ratings.
Improving reliability.
Creating certainty in regards to business projection.
Promoting accountability.

For FTSE 350 companies, regular financial audits have aided the continual improvement of the companies financial reports and processes. With 56% of audit results classified as either good or requiring limited improvement in 2011/12, rising to 81% in 2016/17.

As such, regular financial auditing plays a vital role in the improvement and thus business success.

With this in mind, it is fundamental to deliver a comprehensive financial audit report, which requires a precise, accurate, and reliable audit assessment.

The aim of Process Steet’s Financial Audit Checklist is to enforce this precision, accuracy, and reliability during the financial auditing process.

Process Steet does this by utilizing the power of the checklist.

Effective checklists are noted to increase precision, accuracy, and reliability.

Process Steet’s Financial Audit Checklist has been meticulously and effectively designed for you, to deliver a financial audit report to the required standard.

As you work through this template, you will be presented with specialized questions given as form fields. Different form fields are used throughout the checklist, such as subtasks, dropdown menus, short answers, long answers, and weblinks.

You can populate each form field with your own specific data. This data is compiled to produce a final audit report once the checklist is complete.

On completion you are presented with the option to export the generated final report as a document. This is a conditional step, however, using our conditional logic feature. If this step is not required, you will not be directed to the relevant tasks.

In addition, our stop task feature has been used to enforce task order when needed.

Record details

In this Financial Audit Checklist, you will be presented with the following form fields, which you are required to populate with your own specific data. More information is provided for each form field via linkage to our help pages:

To begin the Financial Audit Checklist, enter the required details into the form fields below.

This is a stop task. You will be unable to move on through the Financial Audit Checklist until this task is complete.

Auditors details

Auditors full name

Auditee's details

Contact address line 1 (street address)

Address line 2 (apartment, suite, unit)

City

ZIP code

Country

Business name for financial audit

Contact name for financial audit results

Details for audit review and approval

Approver name

Engagement acceptance:

Evaluate risks associated with each engagement

Check off the subtasks below on completion.

You are presented with a long text form field, in which you can enter your own notes summarising the evaluation of risks. This will keep the required information on record.

The dropdown form field presents a conditional step in this process. By selection 'Yes' or 'No' from the form field, you will be directed to the relevant stage in the process.

1

Enquire about special circumstances
2

Enquire about the companies management and possible pending lawsuits
3

Evaluate staffing needed to complete the audit, and confirm each staff member is able to maintain an independent viewpoint

Notes: Evaluate risks associated with engagement

Do you accept engagement?

An audit engagement is an arrangement between the auditor and the client, for an audit to be performed of the client's financial statements and accounting records.

Decline engagement

You have declined engagement. You can summarize the reasons for this declined engagement in the long text form field below.

The dropdown form field presents a conditional step in this process. By selection 'Yes' or 'No' from the form field, you will be directed to the relevant stage in the process.

Summarise reasons why engagement was declined

Would you like to communicate declined engagement to the relevant stakeholders via email?

Email to communicate declined engagement

You can use our email widget below to email the reasons for declined engagement to the relevant personnel.

Accept engagement

Once you have accepted engagement, you must carry out the subsequent necessary steps which are indicated below.

Check off each task from the subtask form field below on completion.

This is a stop task. You cannot continue with the Financial Audit Checklist until this task is complete.

1

Prepare an engagement letter.
2

Ensure the engagement letter details the audits timings.
3

Ensure the engagement letter details the audits responsibility.

It is important the steps above are carried out so essential details to undertake the financial audit are recorded.

Planning:

Perform pre-financial audit checklist steps

During the planning phase, you will be presented with the subtask form field as below. Check off each subtask on its completion.

In addition, the long text form field is provided for you to add notes in regards to each task within the planning stage of this Financial Audit Checklist.

1

Obtain a business understanding and an understanding of the business environment in which it operates in.
2

Perform trend and ratio analysis.
3

Document the entity's process of internal control.

Notes on planning

Risks associated with engagement

Risk assessment

1

Understand and identify business risks and the business environment in which it operates in.
2

Assess whether there may be risks that could impact the financial statement.
3

Assess the risk of misstatement in the entity's financial statements.

Notes on risk assessment

Audit testing:

Test financial data

Financial data needs to be checked. Take the time to perform these checks by testing the financial data.

1

Perform tests on financial data.

Notes: perform tests on financial data

An example of testing financial data could be a random selection of forty disbursements, to ensure the correct amount is written on the checks and the checks are payable to the correct vendor. The invoice associated with this disbursement should then be checked to ensure the expense is classified correctly and the vendor exists.

Account analysis:

Assess accounting requirements

The attainment details and the notes provided on each task under headings 'Account Analysis' and 'Substantive Procedures' will be combined to produce the final financial audit report.

For tasks under headings 'Account Analysis' and 'Substantive Procedures' you will be presented with the subtask form fields as below. You are required to check off the tasks from this form field on the completion of each task.

You can then determine whether all requirements are attained by selecting 'Pass' or 'Fail' from the dropdown form field provided.

The long text form field can be populated with key information to be relayed into the final report at the end of the Financial Audit Checklist.

1

Proper books and records are kept of transactions.
2

Accounts comply with requirements for external scrutiny.
3

Accounts are formally approved at an annual meeting.

Accounting requirements attainment

Notes: Accounting requirements

Assess organizational structure

Now you need to assess the organizational structure, using the sub-checklist below to guide your analysis and recording your findings in the form fields below.

1

Organizational structure is shown in a plan.
2

Lines of authority and reporting are laid down in writing and communicated to staff.
3

Proper training is given to staff and volunteers.
4

Professional advice is taken where appropriate.

Organizational structure attainment

Notes: Organizational structure

Assess budgets

1

Annual budgets are prepared and approved to cover both income and expenditure.
2

Performance is measured against budgets at regular intervals.

Budgets attainment

Notes: Budgets

Assess banking and custody procedures

1

Incoming receipts are banked promptly and regularly.
2

Safe custody is ensured for valuables held on premises.
3

Keys of safe or cash box are signed for.
4

Insurance is held to cover the contents of safe or the cash box.
5

Incoming money is banked, with no amounts held over petty cash feeding/replenishment.
6

Written statements of banking and custody procedures are available to staff and volunteers.
7

Money belonging is held separately from individuals or staff members.
8

Control over receipt books are in place.

Banking and custody procedures attainment

Notes: Banking and custody procedures

Assess checks of income records

1

Regular checks are made to ensure records are accurate.
2

Regular checks are made to ensure discrepancies between records are absent.
3

Checks are made by someone other than the original recording officer.
4

Restrictions placed on donated income are identified and observed?
5

Over-expenditure is controlled.
6

Expenditures are properly authorized.
7

Required supporting documentation is present and maintained for expenditures.
8

Check books are kept in a secure place with access only by nominated persons.
9

Payment preparation is undertaken by someone other than the authorizing officer.
10

There is a written statement of policy and practice on payment procedures available to staff and volunteers.

Check of income records attainment

Notes: Check of income records

Assess controls over purchases

1

Invoices are checked against orders made.
2

Quality and quantity of goods supplied are checked against orders made.
3

Inventory stock checks are taken regularly.
4

Authority levels for placing orders are documented.
5

Payment is only made against original invoices.

Control over purchases attainment

Notes: Control over purchases

Assess staff and salaries

1

Personnel records are kept and held separately from wage records.
2

Wage/salary levels are properly authorized and recorded.
3

Checks are made to verify the existence of employees.
4

Cash payments are avoided wherever possible.
5

Staff are employed in compliance with state/federal regulations.
6

Background checks are completed, particularly for staff assigned financial duties.

Staff and salaries attainment

Notes: Staff and salaries

Assess bank accounts

1

Secure records are held of accounts
2

Regular bank reconciliations are carried out.
3

Instructions to open or close accounts are properly authorized and/or reported.
4

Checks are made to ensure there are no dormant records.
5

Bank statements are regularly inspected by officers not assigned to bookkeeping duties.
6

Cross checks are made between bank records and income and expenditure records.

Bank accounts attainment

Notes: Bank accounts

Substantive procedures:

Analyze historical and forecast data

1

Conduct ratio comparison with historical, forecast and industry results to spot anomalies.

Analysis attainment

Notes: Analysis

Assess cash

1

Review bank reconciliations.
2

Review count on-hand cash.
3

Confirm restrictions on bank balances.
4

Issue bank confirmations.

Cash attainment

Notes: Cash

Assess marketable securities

1

Confirm securities.
2

Review subsequent transactions.
3

Verify market value.

Marketable securities attainment

Notes: Marketable securities

Assess accounts receivable

1

Confirm the account balances.
2

Investigate subsequent collections.
3

Test year-end sales and cutoff procedures.

Accounts receivable attainment

Notes: Accounts receivable

Assess inventory

1

Observe the physical inventory count.
2

Obtain confirmation of inventories held at other locations.
3

test shipping and receiving cutoff procedures.
4

Examine paid supplier invoices.
5

Test the computation of allocated overhead.
6

Review current production costs.
7

Trace compiled inventory costs to the general ledger.

Inventory attainment

Notes: Inventory

Assess fixed assets

1

Observe assets.
2

Review purchase and disposal authorizations.
3

Review lease documents.
4

Examine appraisal reports.
5

Recalculate depreciation and amortization.

Fixed assets attainment

Notes: Fixed assets

Assess accounts payable

1

Examine subsequent payments.
2

Compare balances to prior years.
3

Recompute accruals.

Accounts payable attainment

Notes: Accounts payable

Assess debt

1

Confirm with lenders.
2

Review lease agreements.
3

Review references in the board of directors minutes.

Debt attainment

Notes: Debt

Assess revenue

1

Examine documentation supporting a selection of sales.
2

Review subsequent transactions.
3

Confirm unusual items with suppliers.

Revenue attainment

Notes: Revenue

Assess expenses

1

Examine documentation supporting a selection of expenses.
2

Review subsequent transactions.
3

Confirm unusual items with suppliers.

Expenses attainment

Notes: Expenses

Reporting:

Finalize financial audit details

You have so far assessed the financials of the given business. The final step is to generate a final financial report detailing the important information obtained from your assessment.

Form fields in this step are required. This is a stop task, meaning you cannot move onto the next stages of this Financial Audit Checklist until this task is complete.

The final results require review and approval from the relevant personnel before continuation in this Financial Audit Checklist is possible.

Date of audit completion

Financial audit attainment

Notes: Financial audit

Generate financial audit report

This report requires review and approval by the relevant personnel before continuation of this Financial Audit Checklist is possible.

Financial Audit Report

Audit completed on the {{form.Date_of_audit_completion}}

Audit completed by {{form.Your_name}}

Accounting analysis

Accounting requirements

Organizational structure

Budgets

Banking and custody procedures

Checks of income records

Controls over purchases

Staff and salaries

Bank accounts

Substantive Procedures

Analysis

Cash

Marketable securities

Accounts receivable

Inventory

Fixed assets

Accounts payable

Debt

Revenue

Expenses

Would you like to email the financial audit's summary to relevant stakeholders?

Would you like to export this final report as a PDF document?

Would you like to export this final report as a Google document?

Approval:

Generate financial audit report

Will be submitted
Finalize financial audit details

Will be submitted

Email financial statement summary

Export the final financial report as a PDF document

Exporting your Financial Audit final report as a PDF document is easy. Watch the video below which shows you how you can export your template, and therefore your final report, as a PDF document.

Export the final financial audit report

You can export the final report as a PDF straight from the checklist - show as a screen shot - if want to customise design can connect with google docs - auto filled everytime checklist is run.

Process Street has outlined how you can send the Financial Audit report from Process Street to Google Documents using the application Zapier.

Create a free account with Zapier here