The company I work, will be undergoing a statutory audit for the first time In January. From what I understand, the auditors are keen to check if the figures are all correct, and they will cross check bank statement, do some sample checks etc.. and advise on accounting practise done in the company? Am i correct? How minute the auditors are going to check?
Thanks for reading!
Have a good day!!
Gracias
-- Edited by Martina Sepulveda on Monday 17th of November 2014 02:57:25 PM
The detail depends on size and number of transactions. Its mathematically calculated how many checks are needed. They will check accounting policies adopted, banking recons, VAT recons, PAYE recons, company secretarial, dividends, sample check on invoices both sales and supplier. They also do a stock check. Bookkeeping abilities are determined and structure and processes. They will give people an oppertunity to explain any queries and comment on recommendations they may make. They are supportive rather than confrontational. They are there to help.
Depending on the firm involved they do go into quiet a depth. EG trace a sales invoice from initial order to delivery and payment. Its not to identify fraud although at times, not always, the checks may pick it up if it has happened. An audit is resource intense rather than scary. Mind you some audit firms are slack and then its easy.
Thanks very much Richard - i am sort of relieved!!. We are up to date in terms of Vat recon, Bank Recon, Paye recon, supplier side etc.. Although, we do have some silly errors like coding insurance as T0 instead of T2 etc.. which doesnt make any difference to Vat Paid.
Just curious, when you say book keeping abilities are determined, is it like they ask questions to measure your knowledge or is it something they advise based on the info we provide them in terms of the weaknesses we highlight from our side?
Don't worry - they are not going to test your knowledge or catch you out. They are trying to substantiate the figures in the accounts and reduce the risk of a material misstatement. There are a number of different ways of obtaining 'audit evidence' and asking questions is just one of them.
- i am sort of relieved!!. We are up to date in terms of Vat recon, Bank Recon, Paye recon, supplier side etc.. Although, we do have some silly errors like coding insurance as T0 instead of T2 etc.. which doesnt make any difference to Vat Paid. 
