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Audit Methodology in a Nutshell

Mastering the Art of Audit: A Guide to Effective Audit Methodology

 Generally, an Audit Methodology will have the following three phases:

1. Planning Phase 

Here is 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 is 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 is the auditor: 
  • Develops the draft report of analytical procedures (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 Read More: Fraud in Audit & Check out our track on The Importance of Audit Planning
Ozair Siddiqui
1 min read


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