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](https://i0.wp.com/www.learnsignal.com/wp-content/uploads/2023/01/audit-methodology-summury.png?resize=512%2C293&ssl=1)
Read More: Fraud in Audit & Check out our track on The Importance of Audit Planning
Ozair Siddiqui
1 min read
good overview
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