Audit checklists represent the steps or procedures an auditor follows when conducting internal or external audits. Companies use audits to ensure their financial information or business operations meet certain guidelines. While the checklist is meant to aid the auditor through this process, it does carry a certain amount of risk. Business owners and managers should pay careful attention to the audit checklist to ensure that the amount of risk in the checklist is as limited as possible.
Scope
Audit checklists typically outline the scope of the audit. The number of departments, divisions or accounting periods is commonly found in the audit checklist. Auditors will often meet company management to ensure the audit scope is sufficient for the type of audit. However, the audit scope does carry the risk of being too limited or too aggressive. A limited audit scope does not accurately review enough procedures or processes during the audit. This gives auditors a very small view of the company's operations or employees.
Conversely, aggressive audits run the risk of being too time consuming to complete. Companies are usually unwilling to pay for more accounting services than are required. Auditors will be unable to complete everything in a timely manner and properly assess the company's operations.
Inaccurate
Audit checklists can be inaccurate. Although the auditors and company managers discuss the audit prior to beginning, the checklist may still contain inaccuracies regarding the company's operations. Inaccuracies may be more prevalent in a compliance or operational-style audit. Auditors are responsible to measure and review current business operations against the company's standard operating procedures or manual. If a company's procedures or manual are incorrect, then the audit checklist cannot be completed as scheduled.
Poor Sampling
Audit checklists usually outline the sampling procedures for an audit. Sampling represents the randomly selected documents auditors will test during the financial or operational audit. Poor sampling techniques in the checklist will not allow auditors to test enough information or an appropriate amount that will accurately represent the entire function. One sampling technique may not be appropriate for all process. Auditors must carefully include sampling instructions in the audit checklist.
Tags: Audit checklists, audit checklist, audit scope, company operations, amount risk