Here is a peer review violation that is still common. “Failure to communicate or document required communications with those charged with governance.”
- How do you avoid this violation?
- Furthermore, how can you still save on the overall time it takes to complete the audit?
To start, it is important to understand what is required of the auditor.
- AU-C section 260, The Auditor’s Communication with Those Charged with Governance, establishes guidance regarding the auditor’s requirements. It also provides guidance regarding the auditor’s responsibility to communicate with those charged with governance regarding the audit.
- AU-C section 265, Communicating Internal Control Related Matters Identiﬁed in an Audit, addresses the auditor’s responsibility to communicate appropriately to those charged with governance any signiﬁcant deﬁciencies or material weaknesses in internal control that the auditor has identiﬁed in an audit of ﬁnancial statements.
Source: (1) “The AICPA General Accounting & Auditing Developments 2017/2018″
Data analytics tools and a robust audit methodology increase quality and save hours
First of all, Knowledge Coach with its Knowledge Based Audit Methodology has correspondence designed specifically to avoid this deficiency. Also, there is guidance in the methodology to prompt you to use them! When a team member documents a deficiency in an audit program it flows to a communication hub. Then a series of diagnostics prompts you to take the next step.
Secondly, even with all of that, there are still even more opportunities to maximize your audit quality and efficiency. Data analytics opportunities will differentiate your service to your client.
The use of a data analytic tool within the audit will help you have a deeper understanding of your client’s operations and risks, including fraud risks. It will help you detect material misstatements, as you are now able to look at larger data sets. The findings from these tests will empower you to have the right conversation with your client. It provides the right level of breadth and depth into potential matters that concern those charged with governance. Even more helpful to the conversation is the fact that visualization capabilities can be very useful. As a result, the auditor has a more complete picture of the audit at hand.
Data driven insights — a picture is worth a thousand words
Visualization of the data will help you describe the “matters identified by the audit”. Simply use the various graphs created when running the data analytic tool. The discussion is, then, targeted on the reasons why matters occurred – and the possible implications for control, financial reporting or governance processes.
TeamMate Analytics has very robust visualization capabilities that are available to every auditor within test modules. You can create robust dashboards, quick visualizations, and even perform regression analysis.
Here is one example. You can create a dashboard to show key insights with respect to the client’s accounts payable data. Depending on the business, these insights may trigger you to ask the client about a spike in invoices in a particular month or a significant payable to a vendor.
(1) This visualization was created using TeamMate Analytics.
Many other examples exist. They all help you:
- Plan a quality audit
- Execute a quality audit
- Differentiate your client service and save hours of time.
That, as they say, is a Win, Win, Win!
Do you see the value that data driven insights can bring to your audits? If so, then now is the time to act. Start by visiting our website to learn more about our Knowledge Based Audit Titles and TeamMate Analytics.