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Audit Methodology in a Nutshell

Generally, an audit will have the following three phases: 1. Planning Phase  Here the auditor: Develops the understanding of the entity, its environment and the overall engagement Performs a detailed risk assessment by considering risk factors Develops the overall strategy and plan for the assignment 2. Execution (also called evidence gathering or fieldwork) Phase  Here… Continue reading Audit Methodology in a Nutshell

Generally, an audit will have the following three phases:

1. Planning Phase 

Here the auditor:

  • Develops the understanding of the entity, its environment and the overall engagement
  • Performs a detailed risk assessment by considering risk factors
  • Develops the overall strategy and plan for the assignment

2. Execution (also called evidence gathering or fieldwork) Phase 

Here the auditor:

  • Tests the overall effectiveness of the internal control framework relevant to financial reporting
  • Performs test of details and analytical procedures to gather evidence regarding the substance of the transactions
  • Document the work performed

3. Reporting Phase 

Here the auditor: 

  • Develops the draft report (which is reviewed by the proper authority)
  • Communicates relevant findings with those charged with governance
  • Prepares management or board letter detailing the control weaknesses identified during the assignment
  • Shares the final report with those charged with the governance

The overall audit methodology can be summarised in the following figure:

audit methodology summury

Ozair Siddiqui
1 min read
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