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According to professional standards, auditors must plan audits using due professional care. This includes gaining an understanding of the audit client's business processes, objectives and risks. A common tool used during audit planning is the pre-audit checklist, or questionnaire. The checklist can have many uses, including gathering preliminary information to scope the audit, determining the key business risks, identifying areas for more audit attention and informing the client of data needs.
Client Information Collection
Pre-audit checklists are often used to gather important information from the audit client during the planning phase of an audit. For example, in a financial statement audit the auditor may send a checklist requesting specific information such as bank statements, lease agreements and insurance policies for a certain time period. A questionnaire can also be sent to the client to gather key information regarding business objectives and risks. The auditor can use this knowledge to target and prioritize audit fieldwork.
Audit Information Communication
A pre-audit checklist can be also be used as a tool to provide important information to the audit client. For example, a communication may announce the date and duration of an upcoming audit, preliminary audit scope and objectives and audit requirements, such as office space accommodation and data access needs. This announcement can be combined with preliminary information requests. The information can be either forwarded to the auditor during planning or be made available to the auditor at the audit location.
Internal Information Collection
A pre-audit checklist can also function as an internal document for the audit team to ensure key information is gathered. For example, a checklist may require the auditor to internally generate certain reports and metrics such as financial statements and key performance metrics. Gathering this information independent of the audit client lends more credibility to its accuracy. Also, the auditor can gather information from third party sources, such as suppliers, creditors, and customers using a checklist approach.
Internal Quality Assurance
Another purpose of a pre-audit checklist is to ensure internal audit guidelines and practices are followed. For example, a checklist may include items such as required data, reports or analyses for each audit or approval of audit objectives, scope and test procedures by audit management. Other checklist items may include audit client communications and auditor travel arrangement verification, Checklist documentation can provide credible evidence to outside parties that the audit planning process followed certain standards.
- Desktop Auditing: Preaudit, Audit and Post Audit Checklist
- United States Coast Guard: Pre Audit Checklist
- Calleywood Associates: Pre-Audit Checklist
- IRS. "The Examination (Audit) Process." Page 2. Accessed May 4, 2020.
- IRS. "Tax Audits: Triggers and Tips." Page 5. Accessed May 4, 2020.
- Daily, 2014.
- Michael, 2014.
- Habib, 2014.
- National Association of Enrolled Agents. "What is National Tax Practice Institute?" Accessed May 4, 2020.
Garrett Reese has been writing about a range of business topics for more than 15 years. He is a certified public accountant, certified internal auditor and real-estate broker. Reese received his Bachelor of Science in accountancy from the University of North Carolina.