During the Audit

Engagement Letter

The Engagement Letter serves to notify the auditee – client – that an audit for his/her area is scheduled to be conducted. It also advises the auditee of the audit objectives, the audit proposed time table, and who will conduct the audit.

The Engagement Letter also includes the Internal Audit Office’s invitation to meet with key personnel – Opening Conference – to discuss the audit and acquire more information about the audited area.

Opening Conference

Once the area scheduled to be audited is notified, the auditor starts planning the audit to determine the audit scope of work, and ensure that resources are available and scheduled to conduct the audit.

The auditor conducts an opening conference with key personnel of the audited area to introduce the mission and goals of the Internal Audit Office, explain the audit process, obtain pertinent background information about the activities of the area subject to audit, discuss logistics for access to records and personnel, determine how, when, and to whom the audit results will be communicated, and discuss any issues that may have a significant impact on the audit.

The opening conference is an integral part of planning the audit for which the auditor generally prepares an audit questionnaire for such interviews.

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Planning the Audit

Once the opening conference is conducted, the auditor plans the audit. Planning the audit is a process during which the auditor determines the audit scope of work, develops the audit program to meet the audit objectives, and allocates and schedules the necessary resources to each part of the audit.

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Fieldwork

The Fieldwork is when the auditor identifies, examines, and collects sufficient and reliable information to accomplish the engagement scope and objectives, reaches a conclusion, and expresses an independent and objective opinion. The conclusions reached by the auditor will be based upon and supported by appropriate examination, analysis, and evaluation of the information and the data gathered during the fieldwork.

The auditor communicates and discusses the audit findings encountered throughout the audit process with the auditee and key personnel of the audited area.

The data and the information acquired by the auditor is safeguarded and kept confidential as mandated by applicable federal and state laws, the standards and the code of ethics of the Internal Audit Office.

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Draft Audit Report

Once the audit fieldwork is completed, the auditor drafts the audit report. The audit report is the mechanism for communicating the results of the audit to the interested users. The standard audit report contains an introductory paragraph, a scope paragraph, and an opinion paragraph. As a general rule, the report should include:

Note: Template audit report: Disclosure of financial statements

(1) Auditor’s Report: In this report, the auditor states that the financial statements are presented fairly in all material respects. The standard report format includes all of the following:

a- Header: the header of the audit report contains the following:

1. Date of the report. The date of the report is generally the date of the last day of the audit fieldwork.
2. Addressee: All the reports of the Internal Audit Activity of Austin Community College are addressed to the President.

b- Introductory paragraph: The introductory paragraph contains the following statements:

1. That the financial statements, as stated in the report, were audited.
2. That the financial situation and the procedures are the responsibility of the management of the audited area.
3. That the auditor’s responsibility is to express an opinion.

c- Scope paragraph: The scope paragraph contains the following statements:

1. That the audit was conducted in accordance with the Generally Accepted Audit standards.
2. That the audit was planned and performed to obtain a reasonable assurance that the financial statements are free of material misstatement.
3. That the audit included examining evidence on a test basis; assessing the accounting methods used and significant estimates made by management; and that the overall presentation has been evaluated; and
4. That the audit provides a reasonable basis for an opinion.

d- Executive Summary: The executive summary contains a summary of the findings the Auditor considers material or of an importance to report to an executive reader of the audit report.

e- Opinion paragraph: The opinion paragraph of the report contains the following:

1. A restatement specifying the financial situation and procedures again.
2. An opinion as to the fair presentation of the financial situation and procedures; and,
3. A statement regarding conformity with Generally Accepted Accounting Principles (GAAP).

f- Auditor’s name: The auditor’s print his/her name at the end of the audit report.

g- Auditor’s signature: The auditor signs the audit report.

(2) Notes to the accounts: These notes include the informative disclosures assumed to be sufficient for the user of the audit report to conclude his/her conclusions. Informative disclosures include the format and content of the financial statements, all the related notes, terminologies, account classification, parenthetical comments, and the degree of details in the statements and related notes. The financial information is not abbreviated to the extent that informative disclosures are not communicated. On the other hand, the informative disclosures are not detailed to the extent they may be misunderstood.