Financial Audit Checklist | Process Street Financial Audit Checklist – Process Street

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 centuryAs 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.

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

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. 

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.
Risks associated with engagement

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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.

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.

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.

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.

Assess budgets

  • 1
    Annual budgets are prepared and approved to cover both income and expenditure.
  • 2
    Performance is measured against budgets at regular intervals.

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.

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.

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.

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.

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.

Substantive procedures:

Analyze historical and forecast data

  • 1
    Conduct ratio comparison with historical, forecast and industry results to spot anomalies.

Assess cash

  • 1
    Review bank reconciliations.
  • 2
    Review count on-hand cash.
  • 3
    Confirm restrictions on bank balances.
  • 4
    Issue bank confirmations.

Assess marketable securities

  • 1
    Confirm securities.
  • 2
    Review subsequent transactions.
  • 3
    Verify market value.

Assess accounts receivable

  • 1
    Confirm the account balances.
  • 2
    Investigate subsequent collections.
  • 3
    Test year-end sales and cutoff procedures.

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.

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.

Assess accounts payable

  • 1
    Examine subsequent payments.
  • 2
    Compare balances to prior years.
  • 3
    Recompute accruals.

Assess debt

  • 1
    Confirm with lenders.
  • 2
    Review lease agreements.
  • 3
    Review references in the board of directors minutes.

Assess revenue

  • 1
    Examine documentation supporting a selection of sales.
  • 2
    Review subsequent transactions.
  • 3
    Confirm unusual items with suppliers.

Assess expenses

  • 1
    Examine documentation supporting a selection of expenses.
  • 2
    Review subsequent transactions.
  • 3
    Confirm unusual items with suppliers.

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.

Generate financial audit report

Financial Audit Report 

Audit completed on the {{form.Date_of_audit_completion}}

Audit completed by {{form.Your_name}}

Accounting analysis 

Accounting requirements 

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{{form.Notes:_Accounting_requirements}}

Organizational structure 

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{{form.Notes:_Organizational_structure}}

Budgets 

{{form.Budgets_attainment}}

{{form.Notes:_Budgets}}

Banking and custody procedures 

{{form.Banking_and_custody_procedures_attainment}}

{{form.Notes:_Banking_and_custody_procedures}}

Checks of income records 

{{form.Check_of_income_records_attainment}}

{{form.Notes:_Check_of_income_records}}

Controls over purchases 

{{form.Control_over_purchases_attainment}}

{{form.Notes:_Control_over_purchases}}

Staff and salaries 

{{form.Staff_and_salaries_attainment}}

{{form.Notes:_Staff_and_salaries}}

Bank accounts 

{{form.Bank_accounts_attainment}}

{{form.Notes:_Bank_accounts}}

Substantive Procedures 

Analysis 

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{{form.Notes:_Analysis}}

Cash 

{{form.Cash_attainment}}

{{form.Notes:_Cash}}

Marketable securities

{{form.Marketable_securities_attainment}} 

{{form.Notes:_Marketable_securities}}

Accounts receivable 

{{form.Accounts_receivable_attainment}}

{{form.Notes:_Accounts_receivable}}

Inventory 

{{form.Inventory_attainment}}

{{form.Notes:_Inventory}}

Fixed assets 

{{form.Fixed_assets_attainment}}

{{form.Notes:_Fixed_assets}}

Accounts payable 

{{form.Accounts_payable_attainment}}

{{form.Notes:_Accounts_payable}}

Debt

{{form.Debt_attainment}}

{{form.Notes:_Debt}}

Revenue 

{{form.Revenue_attainment}}

{{form.Notes:_Revenue}}

Expenses 

{{form.Expenses_attainment}}

{{form.Notes:_Expenses}}

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

Re-open a blank version of the Finance Audit Checklist and click on the 'Edit Template' option on the screens right-hand side. Once you have opened the 'Edit Template' view, go to the 'Your Report' task and copy and paste the entire text into a new google document as above. Name this document and save. When the 'Zap' has been created using Zapier, the relevant information from your final report will populate the form fields in this document.
Set up a Zapier account, and click on 'Make a Zap'. Select Process Street as your Trigger application. By doing this, you will then be able to access the Finance Audit Checklist from your Process Street account in the next steps.
Select 'New Task Checked' as the trigger task. When a new task is checked in the Finance Audit Checklist, a response will be triggered in Zapier.
Make sure to select the Finance Audit Checklist and the 'Export the Report' task. Then test to see if the trigger works.
Choose an appropriate action app. The Finance Audit report is to export as a new google document, and so Google Documents is our action application.
Select 'Create a Document from Template' as the action step. This will create a google document from the Finance Audit Checklist.
Edit the new document. Insert the fields from your completed Finance Audit Checklist. This will pull the information from this template and populate the linked google document.
Your final report should come through to your google drive as a new document. The information in the google document report should match the information in your final report created in the Finance Audit Checklist.

Sources:

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