Audit engagement checklist for efficient data-driven audits
Digital transformation has revolutionized auditing, and today's audit engagement checklist must incorporate the latest technological tools. A 2021 finance and audit technology survey by KMPG and Forbes Insights found that most finance executives now regard cloud computing, artificial intelligence, and smart analytics as must-have technologies. Most see blockchain as another vital emerging technology, and 66% expect technology to dramatically change auditing processes by 2026.
In this dynamic market, you need to integrate digital technology into your auditing procedures to deliver auditing quality and efficiency that meets client expectations and compliance requirements. Part of that is using an audit engagement checklist that helps save time and prepares effective data-driven audits while delivering quality audits to clients.
Steps to an effective data-driven audit
A data-driven auditing approach integrates technology into each stage of the audit. While in general there are 4-5 generally accepted steps in an audit engagement (planning, risk assessment, fieldwork/execution, reporting, and follow-up), the digital audit workflow breaks down into the digital audit workflow breaks down into seven steps, due to the focus on data:
- Pre-engagement (client onboarding)
- Audit planning
- Data collection and ingestion
- Risk assessment
- Audit fieldwork & execution
- Audit reporting and wrap-up
- Audit follow-up
With a digital audit workflow, special attention is paid to the pre-engagement and data collection/ingestion steps since those drive so much of the engagement.
Audit engagement checklist
Within the framework defined by today's technology, an audit engagement checklist provides a guide that ensures the completion of all required steps and enables the automation of routine tasks. Coupled with a sound audit methodology, an auditing checklist is a powerful tool for optimizing efficiency and productivity.
Here's a checklist template based on the approach used by Wolters Kluwer to guide you in developing your own customized list:
1. Pre-engagement: client onboarding
Pre-engagement onboarding sets the stage for a successful audit. The key steps include:
- Conducting an independence assessment
- Conducting a pre-engagement assessment, including any required anti-money laundering (AML) checks
- Communicating with any previous auditors
- Sending an engagement letter
- Securing the client's engagement letter response
- Setting the new client up with an account
A client collaboration platform can help you get new customers onboarded efficiently.
2. Planning the audit
Engagement planning defines the goals, strategies, and procedures you will use to conduct your audit. Elements to cover include:
- Defining the audit objective
- Scoping the parameters of the audit
- Identifying constraints, including time, budget, and resources
- Establishing auditing procedures
- Generating knowledge-based audit forms
- Answering tailoring questions to customize the audit
- Adding risks based on risk assessment
An audit software solution with knowledge base tools can save you significant time by automating the process of customizing your auditing procedures, forms, questions, and risks.
3. Collecting and ingesting data
After establishing an auditing plan, you can begin ingesting the data needed to execute the audit. Important items include:
- Linking trial balance data to workpapers and financial statements
- Extracting text from documents
- Matching workpapers to supporting documents
- Conducting interviews
A digital tax workflow solution that automatically links trial balance data saves you time importing and updating information. Smart scanning software also reduces the labor of manually importing data from documents.
