Planning and Business Analysis
A good understanding of your business is an important step to planning an efficient and appropriately focused audit. We will work closely with the client to identify and understand the critical elements of the business and operating environment, and the external forces on your operations.
We will work with the corporate staff in order to make the audit process run as smoothly as possible. We will meet with them and review the list of audit schedules that we will require, including the timing of the preparation of these schedules as part of our audit plan. We will share our risk analysis of your operations as part of our audit planning process.
Interim Procedures & Control Testing
We will work with management to gain an understanding of the business processes that are most important to achieving your objectives and how those impact the integrity of the financial statements. We will perform tests of key internal controls, detailed transactions and significant agreements. Additionally, we will perform preliminary analytical procedures, review board minutes and perform other audit procedures, as appropriate, at this interim date.
Substantive Analysis and Testing
Once we gain an understanding of the client’s business processes, internal controls and risks, we focus our audit efforts on the areas that can have the greatest impact on the financial statements. For those areas deemed to be of greatest risk, we will design and perform substantive testing, which may consist of audit analyses of year-end balances, analytical review of transactions, independent confirmation of balances, vouching of transactions and other substantive procedures. At Brown Smith Wallace we use a paperless approach to our audits and rely on technology in many aspects of the audit engagement. This has made our audits more efficient for both our clients and for our staff. We will use our Risk Services department in the evaluation of your IT department as it relates to the audit. As your outside auditors, we are required to evaluate the company’s internal controls over electronic data processes (IT department).
We are one of the few audit firms that utilize experienced and trained CISAs for the evaluation of the internal controls over your IT department. We have had outstanding results for our clients by using this approach, generating meaningful comments and recommendations in this area. We will also use audit software programs in our actual testing of account balances, which allow for us to efficiently and effectively test key accounts on both your balance sheet and income statement. We also use risk analysis and analytical procedures to supplement our detail substantive testing.
Reporting and Business Improvement
During this final phase, we will work with the client to review a draft of the financial statements, in accordance with generally accepted accounting principles, and complete a comprehensive reporting disclosure checklist to identify appropriate footnote disclosures. We will provide a draft copy of the reports for your review and approval prior to final issuance. We anticipate issuing an unqualified opinion on the financial statements. Should circumstances arise that would preclude us from issuing an unqualified opinion, we will notify you as soon as possible.
Throughout the engagement, we will strive to identify opportunities for performance and internal control improvement. Our analyses of your key issues, business processes and management controls can lead to the timely identification of business improvement opportunities. As part of our audit engagement, we will formally communicate the results of the audit with Management and the Board of Directors. We believe that this is a critical component of our responsibility as external auditors, and welcome the candid interchange between our audit team and these parties.
For more information regarding our audit approach, please contact Anthony J. Caleca, CPA, CGMA at 314.983.1267 or email@example.com.