In an audit, whether it be internal or external, reviewers follow specific procedures to perform tasks, most of which draw from edicts as diverse as industry principles, regulatory guidelines and generally accepted auditing standards (GAAS). These guidelines inform auditors what to do before and during an audit, as well as strategies and tactics to establish in the post-audit process.
Understanding the Financial Post Audit
To understand the term "post-audit process," it's important to understand what an audit is, its relevance in accounting, the steps involved in the review and the importance of audit reports to readers as varied as investors, lenders, regulators and business partners. Typically, an audit starts with an engagement letter from the client, continues with the constitution of the review team, goes through tests of account details and examinations of account balances, and ends with the issuance of an audit report.
Some business commentators call "post-audit period" the time frame that starts at the end of document reviews and account tests, whereas others believe a post-audit period starts after a company publishes its operating data summaries, including financial statements and auditors' recommendations and findings.
Before Issuing the Audit Report
After ending fieldwork tests, auditors talk to managers of the area under review, discussing problems they found during the examination and recommending ways to mitigate them effectively. To ease analytical work and prioritize mitigation initiatives, reviewers ascribe a scale of seriousness to audit findings – ranging from "high" and "medium" to "low." This rating scheme depends on operating loss expectations, and top leadership typically heeds all high-rated problems to make sure they ultimately don't break the company's bank.
After the Report, the Post-Audit Evaluation
An auditor-in-chief issues a final report after receiving feedback from corporate leadership and ensuring that department heads will take care of significant operational deficiencies. Terms such as "deficiency," "process gap" and "control weakness" mean the same thing and usually figure in an audit report. After the audit report's issuance, department heads work with business-unit chiefs and subordinates to ensure process gaps raised during the audit figure prominently on the "most important things to do" list.
Preparing for the Next Audit
Preparing for the next audit is a collective task, one that brings together auditors, company principals and financial managers to the negotiating table. Here the main goal is to discuss what went wrong during the last audit, how to avoid them in the next review, staffing considerations to heed and ongoing changes in the organization's operations. The latter element is important, especially if the area under review will experience a shift in operational processes, management reshuffle or change in regulatory guidelines.